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

Question 1

A free-float index differs from a full market capitalization index mainly because it:

Question 2

An investor assumes index investing eliminates all risks because indices are diversified. This assumption is:

Question 3

An equal-weighted index generally requires more frequent rebalancing because:

Question 4

Can two indices tracking the same market segment generate different returns?

Question 5

A broad market index may fail to fully represent the economy because:

Question 6

A company undergoes a stock split. In a properly adjusted price-weighted index, the split should:

Question 7

An index provider replaces illiquid companies with highly traded stocks mainly to improve:

Question 8

Can a sectoral index become more volatile than a broad market index?

Question 9

A sectoral index strongly outperforms the broad market during an economic boom. This most likely indicates:

Question 10

A price-weighted index is most likely distorted by:

Question 11

A company’s total market capitalization increases significantly, but most newly issued shares are locked with promoters. In a free-float market capitalization index, the stock’s weight may:

Question 12

Can frequent index rebalancing increase transaction costs for passive funds tracking the index?

Question 13

An equal-weighted index compared to a market-cap weighted index is generally more exposed to:

Question 14

Which of the following best explains survivorship bias in indices?

Question 15

An investor incorrectly assumes that companies with higher stock prices always have larger weights in all indices. This assumption ignores:

Question 16

A broad market index rises while the majority of constituent stocks decline. The most likely explanation is:

Question 17

Can a company’s inclusion in a major index increase investor demand for its shares?

Question 18

A company’s stock price doubles while the number of publicly tradable shares halves. In a free-float market-cap index, the company’s weight may:

Question 19

A narrow index tracking only a few companies is most likely to:

Question 20

A market-cap weighted index may become heavily concentrated when:

Question 21

Can an index fund exactly match index returns at all times?

Question 22

Can a broad market index decline even when several major sectors perform strongly?

Question 23

Can a stock’s weight decline in a free-float index even if its share price rises?

Question 24

Which index methodology is most directly affected by stock price level rather than company size?

Question 25

Practice Set - 2