Preview Questions Portfolio Manager | Role Specific Skill

Question 1: In the case of portfolio diversification, which of the following risk factors should be considered when allocating across different asset classes in the BFSI sector?

Which action should you take?

Choose only one option

Liquidity risk and currency risk

Market risk, interest rate risk, and credit risk

Company-specific risk and inflation risk only

Operational risk and default risk only

Question 2: When diversifying a fixed income portfolio, which of the following factors is most important to consider?

Which action should you take?

Choose only one option

The performance of the underlying equity market

The geographical location of the bond issuers

The bond maturity dates only

The interest rate sensitivity and credit quality of the bonds

Question 3: What is the main risk associated with investing in emerging market debt in a portfolio?

Which action should you take?

Choose only one option

Currency risk, as the value of the local currency may fluctuate significantly against the portfolio's base currency

Liquidity risk, as emerging market bonds may be difficult to sell in turbulent times

Political risk, as changes in government policies or instability can significantly impact returns

Interest rate risk, as rising rates can disproportionately affect emerging market bonds

Question 4: Which of the following asset classes typically has a negative correlation with equities in a diversified portfolio?

Which action should you take?

Choose only one option

Corporate bonds

Real estate investment trusts (REITs)

Government bonds

Private equity

Question 5: Which of the following market risk factors would most influence the performance of a global equity portfolio?

Which action should you take?

Choose only one option

Geopolitical risks such as trade policies, political instability, and government actions

Company-specific risk, related to the performance of individual stocks

Liquidity risk, related to the ability to sell assets without significant price changes

Systematic risk, related to overall market movements

Question 6: How is the concept of "alpha" used in market analysis in evaluating portfolio performance?

Which action should you take?

Choose only one option

It measures the portfolio's performance relative to its benchmark, after adjusting for risk

It calculates the potential return of a portfolio by considering all market variables

It reflects the risk premium associated with a specific asset

It represents the correlation between a stock's returns and the broader market