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

Question 1

The greatest diversification benefit generally occurs when asset correlations are:

Question 2

A correlation coefficient of -1 between two assets theoretically allows:

Question 3

An investor selects a portfolio solely based on expected return without considering volatility. This approach ignores:

Question 4

The efficient frontier is constructed using combinations of portfolios with varying:

Question 5

A portfolio containing only assets with identical return behavior provides:

Question 6

A portfolio manager believes adding more securities always reduces risk indefinitely. This belief ignores:

Question 7

Can diversification eliminate company-specific risk while market risk remains?

Question 8

A portfolio lying on the efficient frontier primarily represents:

Question 9

According to MPT, rational investors are assumed to:

Question 10

Can a portfolio with lower expected return still be preferred under Modern Portfolio Theory?

Question 11

A portfolio contains two highly volatile assets with strong negative correlation. Compared to holding either asset individually, the portfolio may:

Question 12

An investor chooses a portfolio below the efficient frontier despite another portfolio offering higher return at the same risk level. According to MPT, the chosen portfolio is:

Question 13

Can two individually risky portfolios combine to create a lower-risk portfolio?

Question 14

An efficient frontier portfolio may become inefficient over time mainly because:

Question 15

The primary reason diversification reduces portfolio risk is because:

Question 16

A portfolio manager adds multiple stocks from the same industry expecting strong diversification benefits. The biggest limitation is:

Question 17

An investor chooses a higher-risk portfolio despite another portfolio offering the same return with lower risk. According to MPT, this choice is:

Question 18

Can two portfolios with identical asset holdings have different risk levels?

Question 19

Can a low-risk asset increase total portfolio risk if correlations are unfavorable?

Question 20

A correlation coefficient close to zero between two securities suggests:

Question 21

A perfectly positively correlated portfolio provides limited diversification because:

Question 22

Can adding a risky asset to a portfolio ever reduce total portfolio risk?

Question 23

A portfolio manager focuses only on increasing the number of securities without considering correlations. The main weakness is:

Question 24

Can an efficient portfolio still experience losses during market downturns?

Question 25

Practice Set - 2