PMS Quiz

If there is an uncertainty with respect to the future payment, the investor would require return more than the nominal required rate of return. The additional component is called ________.

• Alpha

• Risk free rate of return

• Risk premium

• None of the above

____________________ represent ownership in a company that entitles its holders to participate in its profits and the right to vote on the company’s affairs.

• Bonds

• Commercial Papers

• Equity Shares

• All the above

Which of the following statements about Speculation is FALSE?

• It is investment without any significant analysis or thought

• Speculation is based on some conjectures without evidence

• Profit is the strongest motivation for Speculation

• Speculation always leads to higher returns

Liquidity Risk refers to _________?

a. The ease with which one can convert an asset into Cash

b. The possibility of realising almost the entire economic worth of an asset.

• Only A

• Only B

• A and B

Under relative valuation techniques, value of a stock is estimated based upon its current price relative to variables considered to be significant in valuation, such as ______________.

• Earnings

• cash flow

• book value

• All the above

Market Risk refers to risk in equity investment arising due to _____________.

• The price dynamics in the market created by various players

• The gap between book value and market value of an equity share

• The price dynamics created by the underlying business profitability

• The price dynamics to government intervention in the stock markets

The counterparty risk in a futures contract is mitigated primarily through _____________.

• collateralisation by one of the parties to the contract

• settlement on gross basis between two parties

• the functions of the clearing corporation

• the limits on positions and trading volumes

Arbitrage opportunities can exist between _____________.

• Spot and futures prices

• Two futures prices

• Futures and options prices

• All of the above

An ______________________ is a broad outlay of the type of securities and permissible instruments to be invested in by the portfolio manager for the customer, taking into account factors specific to clients and securities.

• investment approach

• investment statement

• investment objectives

• investment profile

The following entity is eligible to invest into PMS:

• Proprietorship firms

• Association of person

• Partnership Firms

• All of the above