Practice Set - 2 | Practice Set | NISM Series XXI-B: Portfolio Managers Certification Examination

Question 1

Can employee compensation structures create conflicts of interest in portfolio management?

Question 2

Which factor most directly strengthens investor confidence in PMS operations?

Question 3

Can excessive trading become unethical even if the portfolio generates positive returns?

Question 4

A portfolio manager uses client funds for purposes outside the agreed mandate temporarily, intending to replace them later. This behavior is:

Question 5

A portfolio manager recommends high-risk products to conservative clients mainly because commissions are attractive. This primarily violates:

Question 6

A portfolio manager intentionally mismatches client risk profiles to increase trading activity. This behavior mainly demonstrates:

Question 7

A PMS organization has strong written ethics policies but weak enforcement. The biggest concern is:

Question 8

Can an action be legally permitted but still create reputational risk for a portfolio manager?

Question 9

Can a portfolio manager comply with regulations yet still violate ethical standards?

Question 10

A portfolio manager receives confidential merger information from a company executive. The most ethical course of action is to:

Question 11

Can repeated minor compliance failures indicate broader governance weaknesses?

Question 12

A portfolio manager allocates highly profitable IPO shares mostly to personal associates instead of eligible clients. This primarily represents:

Question 13

A PMS firm intentionally delays reporting portfolio losses to avoid client withdrawals. This primarily violates:

Question 14

Which governance mechanism most directly improves oversight of management decisions?

Question 15

A portfolio manager encourages clients to ignore disclosed risks by emphasizing only historical gains. This conduct is:

Question 16

The main purpose of maintaining audit trails in PMS operations is to:

Question 17

Which of the following is the strongest indicator of weak corporate governance?

Question 18

A PMS provider changes valuation assumptions to artificially improve reported performance. This primarily constitutes:

Question 19

Which of the following situations most clearly indicates front-running?

Question 20

Can governance failures in a PMS organization affect clients even without direct investment losses initially?

Question 21

A portfolio manager intentionally structures disclosures in overly complex language to discourage client scrutiny. This primarily violates:

Question 22

A PMS provider advertises only profitable portfolios while hiding poor-performing accounts. This mainly reflects:

Question 23

A PMS provider selectively delays executing trades for smaller clients during volatile markets. This primarily violates:

Question 24

Which of the following best demonstrates ethical transparency?

Question 25

A PMS employee leaks confidential client holdings to outside traders. This primarily represents:

Question 26

A portfolio manager executes personal trades identical to client trades but only after client execution is completed. This activity is:

Question 27

Which of the following best describes fiduciary duty?

Question 28

Can conflict of interest exist even if clients are unaware of it?

Question 29

Can strong internal controls reduce operational and ethical risks simultaneously?

Question 30

Practice Set - 2