NISM Series X-B — Investment Adviser (Level 2) Flashcards
7 cards from real Investment Advisor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 NISM Series X-B — Investment Adviser (Level 2) flashcards as text
Which risk assessment tool is used to estimate the maximum potential loss in a portfolio over a given time period at a specified confidence level?
Answer: Value at Risk (VaR)
Value at Risk (VaR) quantifies the maximum expected loss over a defined period at a given confidence level (e.g., 95% or 99%).
An investment adviser recommends a product in which the adviser's associate holds a significant stake without disclosing this to the client. This violates which principle?
Answer: Fiduciary duty and disclosure requirement
Failing to disclose a related-party interest breaches the adviser's fiduciary duty and SEBI's mandatory disclosure requirements.
Which of the following is an example of tactical asset allocation?
Answer: Temporarily overweighting equities because valuations appear attractive
Tactical asset allocation involves short-term, opportunistic deviations from the strategic target based on market outlook or valuations.
Modified duration of a bond fund is 5 years. If interest rates rise by 1%, the approximate change in the fund's NAV is:
Answer: −5%
NAV change ≈ −Modified Duration × Change in yield = −5 × 1% = −5%; bond prices fall when rates rise.
Which SEBI regulation governs the registration and conduct of investment advisers in India?
Answer: SEBI (Investment Advisers) Regulations, 2013
The SEBI (Investment Advisers) Regulations, 2013 establish the framework for registration, conduct, and obligations of investment advisers.
A client with low risk tolerance is invested in mid-cap equity funds. The adviser's FIRST recommended action should be:
Answer: Review suitability and recommend reallocation to lower-risk instruments
When a client's holdings do not match their risk profile, the adviser must first review suitability and recommend appropriate reallocation.
Which of the following statements about the efficient frontier is CORRECT?
Answer: Portfolios on the efficient frontier offer the highest possible return for any given level of risk
The efficient frontier represents the set of optimal portfolios that maximize expected return for each level of risk (standard deviation).