Portfolio Managers Cert. Free Demo Test 4

The increasing open interest represents new or additional money coming into the market. Open interest refers to the total number of outstanding contracts in the market. As it rises, it indicates growing market participation and suggests the influx of new capital or interest in the financial instruments being traded.

In the case of Portfolio Management Services (PMS), the minimum amount required for investment is Rs. 50 lakhs. This minimum investment threshold is set by regulatory guidelines for PMS offerings in India.

Tacking error is the standard deviation of the difference between the portfolio and its target benchmark portfolio total return. It measures the volatility of the active return, indicating how much the portfolio deviates from its benchmark and provides insight into the effectiveness of the portfolio management strategy.

The stock exchange becomes the counterparty to both the buyer and seller of a futures contract through a clearing house. The clearing house plays a crucial role in ensuring the integrity and settlement of futures contracts by acting as an intermediary and managing the financial obligations of the parties involved.

SEBI (Securities and Exchange Board of India) portfolio managers regulations mandate managers to disclose the details of all the above: a) Beneficial interest received, b) Expenses incurred in managing the portfolio, c) Details of commission paid to the distributor. This transparency ensures that investors are informed about key aspects related to their investment and the management of their portfolios.

In a cost leadership strategy, the firm seeks to be the low-cost producer and hence the cost leader in its industry. This strategy focuses on achieving the lowest production costs in the industry, allowing the firm to offer competitive prices and potentially gain a larger market share.