Unit ko samjho · NISM Series XXI-B
Portfolio Management Process and Asset Allocation
8 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- What is the central purpose of an investment policy statement for a client?
- A known payment must be made next month. Which portfolio constraint does this most directly create?
- A manager temporarily deviates from long-term policy weights because of a short-term market view. What is this approach called?
- A client has ₹100 lakh and must reserve ₹20 lakh for a payment next year. The agreed plan excludes this reserve from the retirement portfolio. What amount remains for the long-term allocation?
- The client’s ₹100 lakh includes a ₹20 lakh near-term reserve. The remaining retirement pool has a 60% equity and 40% bond target. What is the target equity amount?
- The client’s retirement portfolio is ₹80 lakh. Its written policy caps each sector at 20% of that pool, but one sector holds ₹18 lakh. By how much does that holding exceed the policy cap?
- The client is comfortable with large market swings but still needs the reserved ₹20 lakh next year. The retirement goal is 15 years away and the two pools have different purposes. Which conclusion best distinguishes willingness from financial capacity?
- The retirement benchmark starts a year at 60% equity and 40% bonds, with no intra-year rebalancing. Equity returns 12% and bonds return 5%, including income. The managed retirement portfolio earns 10% on the same basis. What is its excess return over the benchmark?
Zaroori ideas
Practice bank se · 1
What is the central purpose of an investment policy statement for a client?
An investment policy statement records the client’s objectives and constraints. It provides a reference for selecting, monitoring and reviewing the portfolio. Remember: A portfolio should be guided by a documented client-specific policy.
Hint Think about the agreed framework that guides future decisions. Common mistake: Treating the policy statement as a return guarantee or a one-time formality.
XXI-B-049Practice bank se · 2
A known payment must be made next month. Which portfolio constraint does this most directly create?
The payment creates a constraint because the client needs accessible funds at a known near-term date. The portfolio must account for that need. Remember: Known spending requirements should influence portfolio liquidity.
Hint Focus on when spendable money must be available. Common mistake: Treating the entire portfolio as available for long-term investing.
XXI-B-050Practice bank se · 3
A manager temporarily deviates from long-term policy weights because of a short-term market view. What is this approach called?
Tactical asset allocation temporarily changes exposure relative to the strategic mix. It introduces an active decision that should remain within the client’s mandate. Remember: Tactical allocation is a temporary deviation from the strategic policy.
Hint Compare a long-term policy decision with a temporary active adjustment. Common mistake: Confusing the policy benchmark with every short-term portfolio adjustment.
XXI-B-051Practice bank se · 4
A client has ₹100 lakh and must reserve ₹20 lakh for a payment next year. The agreed plan excludes this reserve from the retirement portfolio. What amount remains for the long-term allocation?
₹80 lakh remains because the plan reserves ₹20 lakh from the ₹100 lakh total. Working: ₹100 lakh − ₹20 lakh = ₹80 lakh. Remember: Different goals can require separately defined investment pools.
Hint Separate the committed near-term money from the long-term investment pool. Common mistake: Applying a long-term allocation to cash already committed to near-term spending.
XXI-B-052Practice bank se · 5
The client’s ₹100 lakh includes a ₹20 lakh near-term reserve. The remaining retirement pool has a 60% equity and 40% bond target. What is the target equity amount?
The equity target is ₹48 lakh because 60% applies to the ₹80 lakh retirement pool. Retirement pool = ₹100 lakh − ₹20 lakh = ₹80 lakh. Equity target = 0.60 × ₹80 lakh = ₹48 lakh. Remember: A target weight must be applied to its defined portfolio base.
Hint Identify the portfolio to which the policy percentage applies. Common mistake: Using total wealth when a policy weight applies to only one goal-based pool.
XXI-B-053Practice bank se · 6
The client’s retirement portfolio is ₹80 lakh. Its written policy caps each sector at 20% of that pool, but one sector holds ₹18 lakh. By how much does that holding exceed the policy cap?
The holding exceeds the cap by ₹2 lakh because the policy permits only ₹16 lakh. Maximum = 20% × ₹80 lakh = ₹16 lakh. Excess = ₹18 lakh − ₹16 lakh = ₹2 lakh. This is a hypothetical client-policy cap, not a statutory limit. Remember: Policy limits should be checked against the correct portfolio value.
Hint Calculate the monetary cap before comparing the actual holding. Common mistake: Reporting the permitted amount when the question asks for the breach amount.
XXI-B-054Practice bank se · 7
The client is comfortable with large market swings but still needs the reserved ₹20 lakh next year. The retirement goal is 15 years away and the two pools have different purposes. Which conclusion best distinguishes willingness from financial capacity?
High willingness does not remove the reserve’s constraint because that money must still meet a near-term obligation. The retirement pool can have a different capacity for risk. Remember: Risk willingness, risk capacity and goal horizon are related but distinct.
Hint Evaluate the client’s attitude and the consequences of a loss separately. Common mistake: Using a confident client’s attitude as the only measure of suitable risk.
XXI-B-055Practice bank se · 8
The retirement benchmark starts a year at 60% equity and 40% bonds, with no intra-year rebalancing. Equity returns 12% and bonds return 5%, including income. The managed retirement portfolio earns 10% on the same basis. What is its excess return over the benchmark?
The excess return is 0.80 percentage points because the benchmark returns 9.20%. Benchmark return = 0.60 × 12% + 0.40 × 5% = 7.20% + 2.00% = 9.20%. Excess return = 10.00% − 9.20% = 0.80 percentage points. Remember: Evaluate a mixed-asset portfolio against its relevant mixed-asset benchmark.
Hint Calculate the policy-weighted benchmark before measuring the difference. Common mistake: Comparing the entire portfolio with only its best-performing asset class.
XXI-B-056Liquidity in the stock market means how easily a quantity can be bought or sold.
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