Preview Questions Portfolio Manager | Role Specific Skill

Question 1: Which factor increases counterparty risk in derivative contracts?

Which action should you take?

Choose only one option

Lower interest rates

Reduced volatility

High correlation between assets

Mark-to-market value fluctuations

Question 2: Which of the following best describes the use of the "efficient frontier" in portfolio risk management?

Which action should you take?

Choose only one option

It measures the average return of a portfolio relative to risk-free assets

It shows the optimal combination of risk and return in a portfolio

It visualizes the relationship between a portfolio's alpha and beta

It models the potential loss in portfolio value over the next 12 months

Question 3: When analyzing global economic trends, how can a portfolio manager identify potential risks in emerging markets for the BFSI portfolio?

Which action should you take?

Choose only one option

Focus exclusively on developed market trends

Ignore emerging markets as they are too volatile

Invest equally in all emerging markets regardless of conditions

Assess currency risk, political stability, and economic growth forecasts

Question 4: What is the primary goal when incorporating derivatives into a portfolio strategy?

Which action should you take?

Choose only one option

To speculate on market direction and capitalize on short-term price changes

To generate income through options premiums or futures contracts

To hedge risk and protect against adverse price movements

To increase portfolio liquidity by using derivative instruments for quick trade execution

Question 5: In a low-interest-rate environment, which asset class is typically preferred in an asset allocation strategy?

Which action should you take?

Choose only one option

Real estate

Bonds

Commodities

Equities

Question 6: Which of the following is the best practice for handling a dissatisfied client regarding portfolio performance?

Which action should you take?

Choose only one option

Advise them to withdraw their funds and invest elsewhere

Offer a full refund on management fees

Blame external factors and avoid taking responsibility

Listen actively, acknowledge concerns, and work together to find solutions that align with their goals