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

Question 1

A portfolio manager rebalances by selling outperforming assets and buying underperforming assets. This strategy assumes:

Question 2

An investor changes from aggressive equity allocation to conservative debt allocation after retirement. This primarily reflects:

Question 3

An IPS primarily serves which purpose during volatile market conditions?

Question 4

Which type of risk is least likely to be eliminated through diversification?

Question 5

A client wants maximum return with zero risk. From a portfolio management perspective, this expectation is:

Question 6

A benchmark selected for a PMS portfolio should ideally be:

Question 7

A perfectly negatively correlated asset pair would have a correlation coefficient of:

Question 8

A portfolio invested equally in equities, bonds and gold is mainly attempting to achieve:

Question 9

Can Tactical Asset Allocation underperform Strategic Asset Allocation during incorrect market timing decisions?

Question 10

An investor whose income is unstable but risk appetite is high should most likely:

Question 11

An investor with very high risk tolerance but a short investment horizon should primarily base asset allocation on:

Question 12

Can two portfolios with identical returns have different risk profiles?

Question 13

A portfolio manager ignores the client’s IPS and aggressively increases equity allocation during a market rally. This action primarily violates:

Question 14

Which investor is most likely to require high liquidity in the portfolio?

Question 15

A portfolio manager selects an inappropriate benchmark intentionally to show superior performance. This practice is known as:

Question 16

A portfolio heavily concentrated in one sector despite multiple holdings may still face:

Question 17

The accumulation phase is generally associated with:

Question 18

Which of the following best describes a constraint in an IPS?

Question 19

Can a diversified portfolio still experience losses during broad market downturns?

Question 20

The main disadvantage of excessive portfolio rebalancing is:

Question 21

If two assets have zero correlation, it means:

Question 22

Which statement regarding benchmark selection is most accurate?

Question 23

A portfolio manager shifts allocation from equities to gold anticipating geopolitical uncertainty. This is an example of:

Question 24

Can diversification completely eliminate portfolio risk?

Question 25

The primary objective of portfolio benchmarking is to:

Question 26

Which factor is most likely to increase correlation between different asset classes?

Question 27

Can Strategic Asset Allocation remain unchanged forever regardless of changes in investor circumstances?

Question 28

A highly risk-averse investor chooses a portfolio with lower expected return but lower volatility. This decision mainly reflects:

Question 29

An investor allocates all wealth into a single rapidly growing stock to maximize returns. The biggest weakness in this strategy is:

Question 30

Can an investor’s tax situation influence portfolio construction decisions?

Question 31

A portfolio with assets having low correlation generally experiences:

Question 32

Which of the following is most likely to require revision of an IPS?

Question 33

An investor nearing retirement is generally expected to:

Question 34

Can portfolio diversification reduce volatility even if individual assets are risky?

Question 35

A portfolio benchmark should ideally be:

Question 36

Practice Set - 2