Portfolio Management Services (PMS) Distributors Free Demo Test 4

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Portfolio Management Services (PMS) DistributorsFree Demo Test 4

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1. Mr. Suresh wants to invest in long term corporate bonds as they are giving higher returns. However his portfolio manager is of a strong belief that inflation and interest rates will be on a rise for the next 2-3 years. Which of these is/are valid arguments to convince Mr. Suresh not to invest in long term corporate bonds?

a) Due to rising inflation, the profitability of corporates may be negatively affected leading to corporate default

b) The bond prices and market interest rates are inversely related

c) Both of the above

d) None of the above

2 / 10

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

a) Tradability

b) liquidity

c) default

d) negotiability

3 / 10

The present value is calculated by discounting each cash flow at a rate known as _______.

a) Yield to maturity

b) Coupon yield

c) Risk free rate of return

d) Yield to call

4 / 10

The PMS shall disclose the audit observations of the preceding ______ to its clients.

a) 5 years

b) 2 years

c) 3 years

d) 1 year

5 / 10

What is the YTM of a 10% Coupon Bond of face value of Rs 1000 and which is currently being sold at Rs. 1000 and which has a balance maturity period of 3 years?

a) 10%

b) 10.3%

c) 10.15%

d) 10.15%

6 / 10

_________ is one of the statutory cost to the investor while engaging PMS.

a) Registrars fees

b) Auditors fees

c) Brokerage charges

d) Notary charges

7 / 10

Mr. Mehta’s initial contribution is Rs. 2 crores which then rises to Rs. 2 crores 30 lakhs in the first year. Therefore, a performance fee will be payable on Rs. 30 lakhs. Is this statement True or False?

a) True

b) False

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8. A PMS firm has suddenly found that there is a shortage of working capital funds. From the options given below, which will be most acceptable?

a) The PMS firm should borrow for short term from a commercial bank by pledging the securities of the client

b) The PMS firm should use the common pool of client’s funds in a scheduled commercial bank

c) The PMS firm should charge the client under PMS fees and reduce the distributions to be made to the client

d) The PMS firm should borrow from a commercial bank for short term

9 / 10

9. An offer to subscribe to securities, made to less than ______ persons, is called private placement of securities.

a) 100

b) 150

c) 200

d) 250

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10. Mr. Pawan own a house worth Rs 1 crore and has financial assets worth Rs. 40 Lakhs. He also has an outstanding home loan of Rs 20 Lakhs and an outstanding car loan of Rs 3 Lakhs. Calculate the estimated Net Worth of Mr. Pawan.

a) Rs. 1.17 crore

b) Rs. 1.20 crore

c) Rs. 1.40 crore

d) Rs. 1.63 crore

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Portfolio Management Services (PMS) Distributors Free Demo Test 4

Explanation:

Explanation:

The present value is calculated by discounting each cash flow at a rate known as _______.

Explanation:

The PMS shall disclose the audit observations of the preceding ______ to its clients.

Explanation:

What is the YTM of a 10% Coupon Bond of face value of Rs 1000 and which is currently being sold at Rs. 1000 and which has a balance maturity period of 3 years?

Explanation:

_________ is one of the statutory cost to the investor while engaging PMS.

Explanation:

Mr. Mehta’s initial contribution is Rs. 2 crores which then rises to Rs. 2 crores 30 lakhs in the first year. Therefore, a performance fee will be payable on Rs. 30 lakhs. Is this statement True or False?

Explanation:

Explanation:

Explanation:

Explanation:

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