Portfolio Managers Cert. Free Demo Test 8

Explanation:

Under relative valuation techniques, the value of a stock is estimated based on its current price relative to variables such as earnings, cash flow, and book value. Therefore, the correct answer is: All of the above.

Explanation:

Bonds with a maturity of a year or less are termed as money market securities. The money market encompasses short-term, highly liquid, and low-risk financial instruments. These securities include Treasury bills, commercial paper, certificates of deposit, and other instruments with short maturities. Money market securities are commonly used for short-term borrowing, lending, and liquidity management by both governments and financial institutions.

Explanation:

The risk of default on obligations arising out of trading is controlled by the exchange by imposing margins. Margins are funds that traders are required to deposit with the exchange to cover potential losses. By imposing margins, exchanges ensure that traders have sufficient collateral to cover their obligations, reducing the risk of default. This risk management measure helps maintain the integrity and stability of the financial markets.

Explanation:

Smart beta is referred to as an enhanced index-based investment strategy that aims to outperform a benchmark index by exploiting specific market or investment factors. Unlike traditional index funds that weight securities based on market capitalization, smart beta strategies may use alternative weighting schemes, such as fundamental factors or volatility measures, to seek better returns or risk-adjusted performance. Smart beta strategies are designed to capture factors that are believed to influence returns beyond traditional market capitalization-weighted indices.

Explanation:

Capital Preservation refers to the strategy of minimizing or avoiding the chances of erosion in the principal amount of an investment. Investors seeking capital preservation prioritize safeguarding the initial investment amount and are generally more focused on avoiding significant losses rather than maximizing returns. This strategy is often associated with low-risk investments and a conservative approach to wealth management.

Explanation:

NIFTY G-Sec Indices represent Government of India bonds across 6 distinct duration buckets. These indices are designed to measure the performance of the government securities market in India based on various maturity profiles. G-Sec stands for Government Securities, and these indices provide insights into the performance of government bonds across different durations.

Explanation:

The Net Asset Value (NAV) is the current value of a mutual fund unit. It represents the per-unit market value of all the securities held by the mutual fund, minus its liabilities. NAV is calculated by dividing the total value of the fund’s assets by the total number of outstanding units. It is a key indicator of the mutual fund’s performance and is used to determine the buying and selling price of units for investors.

Explanation:

Financial assets are generically classified into two broad categories: Debt and Equity. Debt represents loans or fixed-income securities, while Equity represents ownership or shares in a company. This classification helps investors differentiate between assets based on their characteristics and risk-return profiles.

Explanation:

Geopolitical risk refers to the risk associated with events and situations involving political instability, wars, terrorist acts, and tensions between states that can disrupt the normal and peaceful course of international relations. This risk factor can impact financial markets, investments, and business operations, making it an important consideration for investors and businesses operating globally.

Explanation:

All of the entities mentioned – Individuals, Non-resident Indians (as per RBI guidelines), and Hindu Undivided Family – can invest in Portfolio Management Services (PMS). Therefore, the correct answer is:  All of the above.