Sample Questions

NISM-Series-21B: Portfolio Managers Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 When is a portfolio considered "efficient"?

  • A. No other portfolio has lower risk for the same return
  • B. No other portfolio has higher return for the same risk
  • C. Both A and B Correct Answer
  • D. When it has the highest possible return regardless of risk
Explanation:
An efficient portfolio sits on the "efficient frontier," meaning you cannot get a better return without more risk, or lower risk without losing return.

Marks: 1

Q2 What is the term for the difference in interest rates between a 3-year government bond and a 10-year government bond?

  • A. Default spread
  • B. Sovereign spread
  • C. Dividend spread
  • D. Term spread Correct Answer
Explanation:
"Term" refers to time. A term spread is the extra interest you get for locking your money away for a longer period (10 years) compared to a shorter one (3 years).

Marks: 1

Q3 While managing equity portfolio, a portfolio managers aims at taking a long position when the market is rising and takes a short position when the market is in a declining. This strategy is referred as: (NISM workbook)

  • A. Momentum investing Correct Answer
  • B. Value investing
  • C. Factor based investing
  • D. Growth investing
Explanation:
Momentum investing involves buying assets that have been rising and selling those that have been falling, aiming to profit from trend continuation.

Marks: 1

Q4 Which of these is NOT an investment constraint?

  • A. Tax situation
  • B. Ethical beliefs
  • C. Need for cash (Liquidity)
  • D. None of the above Correct Answer
Explanation:
Constraints are limitations like liquidity needs, time horizons, and unique preferences (like ethics). Taxes also significantly influence and constrain investment decisions.

Marks: 1

Q5 What are the key priorities of the MSCI India Index?

  • A. Liquidity (how easily stocks trade).
  • B. Investability (how easy it is for foreigners to buy).
  • C. Replicability (how easy it is to copy the index).
  • D. All of the above. Correct Answer
Explanation:
The MSCI India index is designed for global investors. It focuses on large companies that are easy to buy and sell without moving the price too much.

Marks: 1

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