Portfolio Management Services (PMS) Distributors Free Demo Test 7

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Portfolio Management Services (PMS) DistributorsFree Demo Test 7

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1. Why do bonds with longer maturities experience greater price fluctuations due to interest rate changes?

a) Short-term bonds are more volatile

b) Higher coupon payments

c) Distant cash flows are more sensitive to rates

d) No effect of interest rates on bonds

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2. What does the principle “risk leads return” imply?

a) Higher returns are achievable only by taking higher risks.

b) Investors should only focus on high returns, regardless of risk.

c) Risky investments should be avoided at all costs.

d) The return on investment determines the level of risk taken.

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3. What is the real risk-free rate of return?

a) The rate of return assuming no inflation and no uncertainty about future cash flows

b) The rate of return that includes expected inflation and risk premium

c) The rate of return adjusted for risk premium

d) The minimum guaranteed return on an investment.

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4. What type of investment risk arises due to government policy changes or instability?

a) Exchange rate risk

b) Political risk

c) Liquidity risk

d) Business risk

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5. Which of the following is NOT considered a security as per the Securities Contracts (Regulation) Act, 1956?

a) Fixed Deposits

b) Derivatives

c) Share and Stocks

d) Government Securities

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6. Which of the following is NOT a Market Infrastructure Institution?

a) Stock Exchanges

b) Clearing Corporations

c) Commercial Banks

d) Depositories

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7. Which of the following relative valuation methods is best suited for capital-intensive industries like infrastructure and telecom?

a) Price to Earnings Growth (PEG) Ratio

b) EV/EBITDA

c) P/E Ratio

d) Dividend Discount Model

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8. How do Category III AIFs differ from other categories of AIFs?

a) Allows access to invest in Angel funds and venture capitals.

b) Allows access to Invest in Structured Debt

c) Allows leverage and use of derivatives

d) Allows access to Invest in Private Equity

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9. What are investment constraints in portfolio management?

a) Restriction around number of investors

b) Restriction around number of strategies by portfolio manager

c) Restriction around investment choices

d) Restriction around performance reporting by portfolio manager

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10. How do InvITs generate income for investors?

a) From capital appreciation of their investments in infrastructure equity stocks

b) From interest income from their infrastructure assets

c) From toll collections, tariffs and service fees of their infrastructure assets

d) By providing consultancy to the central and state governments

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Portfolio Management Services (PMS) Distributors Free Demo Test 7

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