NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors Certification Examination

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If there is an uncertainty with respect to the future payment, the investor would require return more than the nominal required rate of return. The additional component is called ________

1) Alpha

2) Risk free rate of return

3) Risk premium

4) Both b&c

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Future value of the investment is influenced by __________.

1) Time period

2) Rate of return

3) Both a & b

4) None of the above

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____________________ represent ownership in a company that entitles its holders to participate in its profits and the right to vote on the company’s affairs.

1) Bonds

2) Commercial Papers

3) Equity Shares

4) All the above

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Financial assets are generically classified into two broad categories __________.

1) Debt & Equity

2) Bonds and deposits

3) Real estate & gold

4) Equity & gold

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In India, the Central Government issues ____________.

1) Treasury bills

2) Dated securities

3) Both a & b

4) Certificate of deposits

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Offer for sale (OFS) is method of share sale for ___________

1) listed companies

2) unlisted companies

3) startups

4) all the above

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Which of the following is essential for the public issue of a debt security?

1) The debt issue size should be greater than Rs. 5000 Crs.

2) The debt instruments must be credit rated

3) The debt issuer must stand as guarantor for the payment of principal and interest.

4) The debt instruments should have a minimum coupon specified.

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Which of the following is the function of the secondary markets?

1) Provide liquidity for securities issued

2) Provide a platform for making public issues

3) Provide information about public companies

4) All the above

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The risk of default on obligations arising out of trading is controlled by the exchange by ________.

1) Restricting types of investors

2) Blocking high value trades

3) Imposing circuit filters

4) Imposing margins

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A trade that is squared-off during the day ________.

1) Does not require delivery of shares

2) Is not guaranteed by the exchange

3) Is cancelled by the exchange

4) Is not considered in calculating trading volumes

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___________ industries rise and fall and very closely follow the general economic activity in comparison to other industries.

1) Cyclical

2) Consumer staples

3) Defensive

4) Financial

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Under the typical assumption that a stock’s dividend will grow at a constant rate, what will be the intrinsic value of the stock if D1=Rs. 3, k = 9%, g=6%?

1) Rs. 95

2) Rs. 105

3) Rs. 110

4) Rs. 100

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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 ______________.

1) Earnings

2) cash flow

3) book value

4) All the above

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.……………… ratio compares the price of the stock to the earning it generates.

1) P/E ratio

2) P/B Ratio

3) Price/Cash flow ratio

4) Price/sales ratio

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Which of the following is an example of trading rules and indicators?

1) Trend-line analysis

2) Moving averages

3) Bollinger-Band Analysis

4) All the above

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Government securities carry practically no risk of________ and, hence are called risk-free or gilt-edged instruments.

1) Tradability

2) liquidity

3) default

4) negotiability

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______________ 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.

1) Re-investment

2) Default risk

3) Credit risk

4) None of the above

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The feature that allows the issuing firms to retire the bonds before the maturity by paying a prescribed price is called ____________.

1) Callability (call option)

2) Putability (put option)

3) Convertibility

4) Redemption

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In a Nifty 50 futures contract ,the underlying is _______.

1) the top traded stocks of the Nifty 50 index

2) the average price of the stocks of the Nifty 50 index

3) the value of the Nifty 50 index

4) all of the above

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The counterparty risk in a futures contract is mitigated primarily through _____________.

1) collateralisation by one of the parties to the contract

2) settlement on gross basis between two parties

3) ~the functions of the clearing corporation

4) the limits on positions and trading volumes

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The settlement price for determining daily mark-to-market margins for a futures contract is ___________.

1) the last traded price

2) the average of the high, low and closing prices

3) the weighted average price of last 30 minutes of trading

4) the average of the last 60 minutes of trading

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Arbitrage opportunities can exist between _____________.

1) Spot and futures prices

2) Two futures prices

3) Futures and options prices

4) All of the above

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A ______________ is a trust that pools the savings of a number of investors who share a common financial goal.

1) Custodian

2) Depository

3) Bank

4) Mutual Fund

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The following is/are the benefits of investing through mutual funds:

1) Professional investment Management

2) Risk reduction through diversification

3) Convenience of making transactions and record keeping

4) All the above

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The types of securities purchased by the fund, depends on _____________.

1) the investment objectives of the fund

2) decisions of SEBI about the fund

3) decisions of RBI about the fund

4) Decisions of the fund advisors

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The SEBI (Mutual Funds) Regulations came in the year:

1) 1996

2) 199800.00%

3) 200000.00%

4) 196400.00%

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_______________ marked the beginning of PMS when SEBI issued SEBI (Portfolio Managers) Regulations.

1) Jan-93

2) Jan-99

3) Jan-10

4) Jan-20

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An ______________________ is a broad outlay of the type of securities and permissible instruments to be invested in by the portfolio manager for the customer, taking into account factors specific to clients and securities.

1) investment approach

2) investment statement

3) investment objectives

4) investment profile

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Except for the one that provides only the __________, every portfolio manager shall appoint a custodian in respect of securities managed or administered by it.

1) advisory services

2) discretionary services

3) Non-discretionary services

4) None of the above

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The following is the requirement for granting the certificate of registration under Portfolio Managers Regulations 2020:

1) the applicant is a body corporate;

2) the applicant has the necessary infrastructure like adequate office space, equipment and the manpower to effectively discharge the activities of a portfolio manager;

3) the applicant has appointed a compliance officer;

4) all the above

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_____________ portfolio manager manages the funds in accordance with the directions of the client.

1) Non-discretionary

2) Discretionary

3) Advisory

4) All the above

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The following entity is not eligible to invest into PMS:

1) Proprietorship firms

2) Association of person

3) Partnership Firms

4) None of the above

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The following entities can invest in PMS:

1) Individuals

2) Non-resident Indians (as per the RBI guidelines)

3) Hindu Undivided Family

4) All the above

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The minimum investment required for PMS investment is:

1) Rs. 50 lacs

2) Rs. 25 Lacs

3) Rs. 5 Lacs

4) Rs. 100 Lacs

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____________________ is the central, national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions to enforcement agencies.

1) FIU-IND

2) SEBI

3) RBI

4) CBI

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The agreement between the portfolio manager and the client should include the following:

1) the investment objectives and the services to be provided

2) period of the contract and provision of early termination, if any

3) investment approach, areas of investment and restrictions, if any, imposed by the client with regard to the investment in a particular company or industry

4) all the above

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The first step in the investment process is the development of _____________.

1) Objective statement

2) Investment Policy statement

3) Financial statement.

4) Statement of cash needs.

38 / 53

Which of the following is considered to be an investment objective?

1) Capital preservation

2) Capital appreciation

3) Current income

4) all of the above

39 / 53

Asset allocation is _____________.

1) The process of dividing funds into asset classes.

2) Concerned with returns variability.

3) Concerned with the risk associated with different assets.

4) Concerned with the relationship among investments’ returns.

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____________ phase is the stage when investors in their early-to-middle earning years attempt to accumulate assets to satisfy near-term needs, e.g., children's education or down payment on a home.

1) Accumulation

2) Spending

3) Gifting

4) Consolidation

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Which of the following is a step in the portfolio management process?

1) Develop a policy statement.

2) ~Study current financial and economic conditions.

3) Construct the portfolio.

4) All of the above

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The measure of performance which divides the portfolio's risk premium by the portfolio's beta is the _________.

1) Sharpe measure

2) Jensen measure

3) Fama measure

4) Treynor measure

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Sharpe's performance measure divides the portfolio's risk premium by the _________.

1) Standard deviation of the rate of return

2) Variance of the rate of return

3) Slope of the fund's characteristic line

4) Risk free rate

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Portfolio performance measure of “Information Ratio” ______________.

1) adjusts portfolio risk to match benchmark risk.

2) compares portfolio returns to expected returns under CAPM

3) evaluates portfolio performance on the basis of return per unit of risk.

4) calculates average differential return per unit of variability of differential return.

45 / 53

Commission received from business forms part of income from______.

1) Business and profession

2) Capital Gains

3) Salary

4) Other sources

46 / 53

For a person to be qualified as a NRI, he must have stayed outside India for more than days in a previous financial year.

1) 365

2) 280

3) 182

4) 150

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_____________ was inserted in the Income Tax Act, 1961 to provide a ‘safe harbour’ to overseas funds availing fund management services from India based managers.

1) Section 9A

2) Section 11

3) Section 12

4) Section 42

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As per Section 2(28B) of the Income-tax Act, 1961, ‘interest on securities’ means:

1) Interest on any security of the Central Government or a State Government

2) Interest on debentures/other securities for money issued by or on the behalf of a local authority or a company or a corporation, established by a Central or State or Provincial Act

3) Both a and b

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Up to Assessment Year ______, domestic companies and mutual funds were liable to pay Dividend Distribution Tax (DDT) on the dividend.

1) 2020-21

2) 2019-20

3) 2021-22

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Record of transactions to be maintained under the Prevention of Money Laundering Act includes Cash transactions of the value of more than ________.

1) Rs.10 lakh

2) Rs. 20 lakh

3) Rs. 25 lakh

4) Rs. 1 crore

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A foreign portfolio investor can invest in the following securities?

1) Domestic Mutual Fund Schemes

2) Derivatives traded on a recognised stock exchange

3) Rupee denominated credit enhanced bonds

4) All of the above

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The objective of the SEBI (Prohibition of Insider Trading) Regulations is to prohibit insider from ___________ on matters relating to insider trading.

1) Dealing

2) Communicating

3) Counselling

4) All of the above

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The SEBI Fraudulent and Unfair Trade Practices Regulations prohibit a person to, directly or indirectly _________ securities in a fraudulent manner.

1) Buy

2) Sell

3) Deal In

4) All of the above

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