CHAPTER NISM VA 11

An approach to assess the performance is to pre-define a comparable—a ——– against which the scheme can be compared.

What are the requirement of a credible benchmark ?

The —-has to mention the benchmark

—– only captures capital gains of the index constituents,—– takes into account all dividends/interest payments that are generated from the basket of constituents that make up the index in addition to the capital gains.

The gap between the returns between PRI and TRI is the amount of dividend.

Factors to be considered while selecting benchmark for equity scheme

If a comparison of relative returns indicates that a scheme earned a higher return than the benchmark, then that would be indicative of ——by the fund manager. In the reverse case, the initial premise would be that the fund manager ——–

Sharpe Ratio =

Treynor Ratio=

Risk Premium=

—–the Sharpe Ratio, better the scheme is considered to be

—–the Treynor Ratio, better the scheme is considered to be

Optimal Reurns are:

Alpha=

—— Alpha is indicative of outperformance by the fund manager; —– alpha might indicate under-performance

Market Beta=

The tracking error has to be low for a consistently out-performing fund.

The Scheme Information Document (SID) of each scheme needs to updated — every year.

_____are an official source of information of the fund’s objective, performance,portfolio and basic investment requirements issued by the fund house each month.

‘Once it is finalized, a mutual fund scheme’s benchmark cannot be changed at a later date.’ State whether the statement is True or False.

Which amongst the following is a measure of risk-adjusted returns of mutual fund scheme?

Which of the following cannot be considered for the purpose of selecting a scheme’s benchmark?

_________ takes into account all dividends generated from the basket ofconstituents that make up the index in addition to the capital gains.

Which is the most appropriate measure of evaluating how closely an index fund is tracking its benchmark?

CALCULATE SHARPE RATIO :RETURN ON PORTFOLIO 15%,RISK FREE RATE 7%,BETA 1.5,STANDARD DEVIATION 18%

CALCULATE TREYNOR RATIO : RETURN ON PORTFOLIO 16% , RISK FREE RATE 7% , BETA 1.5 , STANDARD DEVIATION 19%