Portfolio Management Services (PMS) Distributors Free Demo Test 6

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Portfolio Management Services (PMS) DistributorsFree Demo Test 6

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1. Why might investors adopt a more aggressive investment approach for low-priority goals?

a) Because SEBI mandates it for low-priority goals

b) Because low-priority goals have strict timelines

c) Because the impact of not reaching the goal is minimal

d) Because aggressive investments guarantee higher returns

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2. Which of the following best describes the management style of Tactical Asset Allocation (TAA) compared to Strategic Asset Allocation (SAA)?

a) Both TAA and SAA are passive management style.

b) TAA requires active management, while SAA follows a passive approach.

c) TAA is passive, while SAA is active.

d) Both TAA and SAA require active management.

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3. What is the main challenge of factor-based investing?

a) Backtesting of strategies are not possible

b) Individual factors don't work at all times

c) Lacks diversification.

d) Guaranteed losses in down markets.

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4. Which of the following is NOT allowed as a deduction while computing capital gains for Resident Individuals (RIs) under PMS?

a) PMS fees and expenses.

b) Distributor commission

c) Cost of acquisition of securities.

d) Transaction costs directly related to sale.

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5. What is the holding period for debt investments to qualify as long-term under PMS?

a) More than 6 months

b) More than 12 months

c) More than 24 months

d) More than 36 months

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6. How are management fees, brokerage, and GST treated in PMS for tax deduction purposes?

a) Not tax-deductible for individuals.

b) Tax-deductible only for NRIs.

c) Fully tax-deductible.

d) Tax-deductible if income exceeds Rs. 10 lakh.

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7. What is the main advantage of using Time Weighted Rate of Return (TWRR) over other return measures?

a) Considers only beginning and ending values

b) Eliminates bias due to external cash flowsEliminates bias due to external cash flows

c) Uses a single time period for returns

d) Simplifies cash flow adjustments

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8. Which return type is most relevant for investors in different tax brackets?

a) Net return

b) Pre-tax return

c) Post-tax return

d) Gross return

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9. For a well-diversified portfolio, which is true about Sharpe and Treynor Ratios?

a) Sharpe and Treynor give similar results.

b) Treynor ignores risk-free rate.

c) Sharpe considers only systematic risk.

d) Sharpe is always higher than Treynor.

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10. A portfolio allocated 60% to bonds with a return of 8%, while the benchmark allocated 50% to bonds returning 6%. What is the Asset Allocation Effect for bonds?

a) 1.0 percent

b) 0.8 percent

c) 0.6 percent

d) 1.2 percent

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Portfolio Management Services (PMS) Distributors Free Demo Test 6

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