CHAPTER NISM VA 10

— contains the list of all the risk that a mutual fund is exposed to.

—- refers to the ease with which an investment can be bought and sold in the market.

Liquidity risk is highest in case of

—- arises from the probability that income flows received from an investment may not be able to earn the same interest as the original interest rate.

If interest rate rises reinvestment risk —-

If interest rate falls reinvestment risk —-

—- refers to the risk that bond prices will fall in response to rising interest rate and rise in response to declining interest rate.

Bond prices and interest rate have inverse relationship.

Interst rate increases bond price decline.

Interst rate decreases bond price increases.

Total risk=——-

“—- risk is caused due to the factors that may affect the economy or market as whole and is undiversifiable.

Which of the following are systematic risk.

_____ risk is specific to individual securities or a small class of investment and is diversifiable.

Which of the following are unsystematic risk.

An investor purchases equity shares of a sugar producing company. the returns from his investment do not face

Investment in a government security issued at a fixed interest rate is subject to

The AMC does not manage currency risk for foreign portfolio investors and it is the sole responsibility of the foreign portfolio investors to manage or reduce currency risk on their own.

Which of the following is most volatile and prone to price fluctuations on a daily basis.

______ is the sale of shares or securities that the seller does not own at the time of trading. instead, he borrows it from someone who already owns it.

Short selling is exposed to which of the following risk:

Derivatives are highly leveraged instruments.

Which of the following are the risk derivative is exposed to :

—- is the risk of mis-pricing or improper valuation of derivatives.

—- arises due to a difference in the price movement of the derivative vis-à-vis that of the security being hedged.

Which of the following risk is debt exposed to:

— risk arise due to change in the credit rating.

____arises due to issuer’s inability to meet interest and principal payments on its debt obligations.

Credit risk is high in derivative transactions.

Which of the following risk is associated with floating rate securities:

In a floating rate security the coupon is expressed in terms of a — or mark up over the benchmark rate.

Risk associated with repo transactions in corporate bond are mitigated through:

The secondary market for securitised papers is not very liquid.

Which of the following are the risk factors associated with investment in reit and invit:

Credit risk associated with fixed income securities is managed by making investments in securities issued by borrowers, which have a good credit profile.

Certain factors that impact the broader market and prices of most securities fluctuate at the same time – this is called market price fluctuation; whereas some factors only impact individual securities, resulting into fluctuation in the price of an individual security. diversification can help reduce the former,but cannot reduce the latter.

—– refers to the probability that borrowers will not be able to meet their commitment on paying interest and principal as scheduled.

—- is a study of the business and financial statements of a firm in order to identify securities suitable for the strategy of the schemes as well as those with high potential for investment returns and where the risks are low.

—-believe that price behaviour of a share over a period of time throws up trends for the future direction of the price.

Technical analysis mainly involve study of:

Fundamental analysis mainly involve study of:

Earning per share=

Price to earning ratio=

The —- p/e ratio is normally calculated based on a projected eps for a future period

—- investment styles entails investing in high growth stocks i.e. stocks of companies that are likely to grow much faster than the market.

—investment style is an approach of picking up stocks, which are priced lower than their intrinsic value, based on fundamental analysis

Investors need a longer investment horizon to benefit from value investment approach.

—-, the portfolio manager evaluates the impact of economic factors first and narrows down on the industries that are suitable for investment. thereafter, the companies are analysed and the good stocks within the identified sectors are selected for investment.

—- analyses the company-specific factors first and then evaluates the industry factors and finally the macro-economic scenario and its impact on the companies that are being considered for investment. stock selection is the key decision in this approach; sector allocation is a result of the stock selection decisions.

— are short term debt instruments issued by the reserve bank of india on behalf of the government of india

—- are issued by banks (for 7 days to 1 year) or financial institutions (for 1 to 3 years)

—- are short term securities (upto 1 year) issued by companies.

—- measures the fluctuation in periodic returns of a scheme, as compared to its own average return.

Standard deviation is the square of variance

Standard deviation is a measure of total risk in an investment

A high standard deviation indicates lower volatility in the returns and greater risk

The systematic risk is measured using:

Market Beta=

Companies or schemes, whose beta is more than 1, are seen as more risky than the market

Beta as a measure of risk is relevant for:

Unsystematic risk can be reduced through diversification. state whether true or false.

Which of the following type of analysis tracks the price and volume data related to trading in the security?

Which of the following is a measure of fluctuation in periodic returns in an equity mutual fund scheme?