FinanceInsights has created mock tests for the NISM Portfolio Manager XXI-B exam. Questions are based on NISM Portfolio Manager XXI-B Workbook Version - May 21.
FinanceInsights has created a bank of about 300 questions.
Every time you take the mock test, 100 random questions from the question bank will be presented. Each question will carry 1 mark each. There will be negative marking of 25%. This bank of questions covers the entire syllabus and can be used to learn the course content.
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The stock market is known as a ______ economic indicator.
When an NRI becomes a Resident Indian, he needs to open a new trading and demat account with resident status and close the existing trading and demat account with NRI status.
The following is the premise of Prospect Theory: (from NISM)
The ____ Efficient Market Hypothesis (EMH) implies that investors who base their decisions on information after it is public cannot derive above-average risk-adjusted returns.
Tactical asset allocation (TAA) is ______asset allocation decision.
Income tax at the rate of 10 percent (without indexation benefit) on long-term capital gains are charged on long term capital gains exceeding Rs.____ provided transfer of such units is subject to STT.
Overseas funds managed by Indian fund managers need to be audited as per SEBI requirements.
Which are the two major strategies suggested by Michael Porter to achieve advantage over competitors?
Psychographic analysis of investors reveals their --- a) demographics (age, income, etc.) b) biases (likes, dislikes, etc.) c) irrational behaviour
Risk premium' is the difference between _______.
Section 9A of the Income tax Act provides that an eligible investment fund set up outside India shall be regarded as resident in India if its fund management is carried out in India.
The ____ Efficient Market Hypothesis (EMH) assumes that current stock prices fully reflect all historical information such as historical sequence of prices, rates of return, trading volume data etc.
Calculate the YTM of a bond whose tenure is 10 years, maturity date is 1-Jan-2032, settlement date is 1-Jan-2022, coupon is 8%, Market price is Rs 102, FV is Rs 100 and coupon frequency is semi annual.
Portfolio managers are permitted to aggregate purchases and sales for clients based on adhering to stipulations.
“I can calculate the motions of heavenly bodies, but not the madness of people”. Who said this in relation to stock markets?
The formula to calculate P/E ratio is ____________.
Long term capital gains on sale of listed bonds or listed debentures earned by FPIs are taxed at --
Given a portfolio of stocks, the envelope curve containing the set of best possible combinations is known as the __________. (from NISM)
There is no benefit of diversification when two assets have perfect positive correlation between them.
The above table gives the contribution made by the investor along with the portfolio value for five years period. Calculate the time weighted rate of return.
The market value of an investor’s portfolio on 1 April, 2017 was Rs.1,00,000. On 31 March, 2019 the market value of the portfolio stood at Rs.1,20,000. The investor received dividend of Rs 5,000 during this period. What is the holding period return of the portfolio?
A portfolio has generated a return of 22%. The market benchmark return for the same period is 15%. The beta of the portfolio is 1.5. Treasury bond yield is 6%. Calculate the Jensen Alpha return.
Who introduced the concept of ‘Efficient Frontier’ and ‘Mean Variance optimization’ to measure investment risk?
The initial margin to be offered to transact in derivatives has two components --
PEG ratio of less than one indicates the equity shares of the company are _________.
With respect to SWOT analysis, which factors are internal to the company and which are external?
As per section 6 of the Income-tax Act, an individual is said to be resident in India in any previous year:
Ramesh was resident in India for FY 20-21. He had been in India for 20 months during the preceding 7 financial years prior to FY 20-21. He is to be treated as --
_______ asset allocation decisions involve “time in the market” whereas ________ asset allocation decisions involve “timing the markets”.
What impact does a stock split have on a price-weighted series? (from NISM)
______________________ is the process of aligning portfolio weights to the strategic asset allocation. It is an important step in portfolio management process. (from NISM)
What is the expected rate of return of the stocks?
As per SEBI regulations, the net worth requirement of a portfolio manager is ______.
Long term capital gains earned on equity oriented mutual funds are exempt from tax up to _________.
An Indian investor has invested Rs. 50 lacs in a US equity fund when Rupee was 70 per US dollar. The fund has generated a return of 15%. During the period rupee appreciated to 65 per US dollar. What is the return investor has made?
Yield to call measures the estimated rate of return for a bond held to _____ call date.
_________ ratio compares the price of the stock to the earning it generates. (from NISM)
Which error(s) can be termed as Model Risk while developing a model to measure investment risks? (from NISM) I. Assuming the distribution to be normal, which may not be the case in reality II. Assuming the tails to be thin, which may be different for the observations III. Using 10-year G-Sec yield as risk-free rate while discounting equity cash flows
Portfolio managers are not permitted to execute off-market transfers except in case of certain conditions.
Calculate the (a) expected return, (b) standard deviation and (c) risk of a portfolio where the return on risk-free asset is 5% and the expected return on risky asset is 12%. The standard deviation of risky asset is 10%. The weight of risk-free asset in the portfolio is 70% and rest of the portfolio is invested in risky asset.
In case of FPIs, short-term capital gains arising on transfer of listed equity shares, to be listed shares sold through offer for sale and units of an equity oriented mutual fund on which securities transaction tax (‘STT’) has been paid are taxed at --
To calculate Free Cash Flow to the Firm (FCFF), weighted average cost of capital is calculated as --
When a Non-Resident Indian (NRI) makes investments from Non-Resident Ordinary (NRO) account, proceeds are repatriable to the extent of USD _____ per financial year.
Let's say risk free return is 5 percent, and a scheme with Beta of 1.2 earned a return of 8 percent. Calculate its Treynor Ratio.
The Capital Asset Pricing Model (CAPM) was developed by ______.
Dividend received from mutual funds is _______.
______________ risk arises from the fact that income flows received from an investment at the coupon rate may not be able to earn the same interest. (from NISM)
Investors cannot directly be on-boarded by PMS companies; they have to use intermediaries.
In terms of capital gains, long-term is defined as a holding period of more than _____ year(s) in case of non-equity- oriented funds.
Correlations among asset class returns do not change over time.
In 1970 ___________ formalized the theory of efficient market hypothesis.
The expected return of a bond with positive convexity will be lower than the return of an identical duration, lower convexity bond when interest rate changes.
________ was honoured with the Nobel Prize in Economics for his ‘Portfolio Theory’.
Short-term capital gain arising from the transfer of unlisted shares shall be taxable at ______.
A security's beta measures the _______ portion of the risk.
Nobel laureates _____ and _______ are credited for bringing Behavioural Finance to the forefront.
A portfolio manager can borrow funds or securities to optimise a client's portfolio.
Given is the information about the size of the portfolio, investment period, fees, expenses etc. 1. Size of sample portfolio: Rs. 100 lacs 2. Investment Period: 1 year 3. Profit made during the year: 20% on the capital contribution 4. Hurdle Rate: 10% of amount invested 5. Other Expenses such as Brokerages, DP charges etc., charged on gross value of portfolio (0.50%) 6. Upfront fee – Nil 7. Setup fee-Nil 8. Fixed Management fee charged on average of capital contribution and gross value of portfolio (e.g. 1.5%) 9. Performance fee (e.g. 20% of profits over hurdle rate without catch-up) 10. The frequency of calculating all fees is annual. What is the gross return and net return on investment?
Find out the price of the following bond: Coupon - 7.25%; Name of issuers - Govt of India; Date of issue -08-Jan-18; Maturity - 08-Jan-28; Coupon payment - Half yearly; Minimum amount – Rs 10,000; Settlement day - 23-Mar-20; YTM - 7.50%; Face value – Rs 100
Under relative valuation techniques, value of a stock is estimated based upon its current price relative to variables considered to be significant in valuation, such as -- (from NISM)
Financial assets are generically classified into two broad categories __________. (from NISM)
The coupon of a bond is 7.07% with half-yearly payment frequency; Date of issue is 08-Jan-18; Date of maturity is 08-Jan-28; Settlement date is 23-Mar-20; Face value and Price is Rs.100.00; Yield is 7.07%. What is the duration of the bond?
The _____ standards are ethical standards for calculating and processing investment performance based on the principles of fair representation and full disclosure.
Dynamic asset allocation funds are categorized as _______ funds.
A derivative is a contract whose value is derived from the value of __________ (from NISM)
Prices of soft commodities are typically highly volatile due to their _________ nature.
Daniel Kahneman and Amos Tversky (1979) introduced __________. (from NISM)
Which technical analysis method uses normal distribution to calculate the deviation of the market price from the moving average?
The treatment of salary income differently from tax refunds and bonus amount etc. is an example of ___________.
It has been observed under many research studies that stocks with high book to price ratio have generated _________ risk adjusted returns.
Cross sectional risk diversification is reducing risk by holding equities _________.
The Income Tax Act allows setting-off of the short-term capital loss against long term capital gains. State whether True or False. (from NISM)
The measure of performance which divides the portfolio's risk premium by the portfolio's beta is the _________. (from NISM)
The weak form of the efficient market hypothesis states that _______________. (from NISM)
Rohit was resident in India for FY 20-21. He had been non-resident in India for 9 financial years prior to FY 20-21. He is to be treated as --
Can the underlying security for a derivative be another derivative?
Long-term capital gains arising from the sale of unlisted equity shares shall be taxable at the rate of ____ plus surcharge and health & education cess for non-residents.
As per Modern Portfolio Theory (MPT), ____ utility scores are assigned to those portfolios with better risk-return profile.
One of the assumptions of technical analysis is --
Non-discretionary portfolio manager manages the funds of each client ________.
Discretionary portfolio manager manages the funds of each client _______.
While managing equity portfolio, a portfolio managers aims at taking a long position when the market is rising and takes a short position when the market is in a declining. This strategy is referred as: (from NISM)
The stock has a 90% chance of rising; the stock has a 10% chance of falling. This is an example of which behavioural bias?
A client starting investing with a portfolio manager with an initial contribution of Rs 1 crore. This corpus grew to Rs 1.1 crore in a year. It then fell to Rs 90 lakh the next year. How will the portfolio manager based on high water mark?
The first step in the process of portfolio management is _______.
Smart Beta strategies use --
SEBI has permitted portfolio managers to charge upfront fees while onboarding an investor.
OTC derivatives are standardised contracts.
Which of the following is the function of the secondary markets? (from NISM)
Government securities carry practically no risk of________ and, hence are called risk-free or gilt-edged instruments. (from NISM)
The covariance between the return of a risk-free asset and a risky asset is ____.
A bonus issue once announced cannot be withdrawn.
Non-discretionary portfolio manager manages the funds of each client ________.
It is mandatory to obtain a credit rating before issuing any bond or commercial paper.
Which of these is NOT correct with respect to passively managed equity portfolio? (from NISM)
Which five competitive forces determine the intensity of competition in the industry according to Michael Porter?
Depository Receipts (DRs) issued by an Indian company, which are listed on a non-American stock exchange (e.g. London stock exchange) are called ---
Which period is generally the longest phase in the lifecycle of an industry?
Systematic risk is also called _____.
Provisions of the Prevention of Money Laundering Act stipulate that every banking company, financial institution and intermediary shall maintain a record of all cash transactions of the value of more than Rs. ____ or its equivalent in foreign currency.
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