Preview Questions Portfolio Manager | Role Specific Skill

Question 1: When managing a multi-strategy portfolio, which approach is best for integrating alternative assets like hedge funds and private equity?

Which action should you take?

Choose only one option

Correlation minimization, selecting alternative assets with low correlation to traditional asset classes

Risk parity, ensuring each strategy contributes equally to overall risk

Asset class concentration, focusing on the best-performing alternative strategy

Leverage maximization, using leverage to amplify returns from alternatives

Question 2: What is the best approach for keeping a client informed about market developments and portfolio changes?

Which action should you take?

Choose only one option

Regularly scheduled, comprehensive portfolio reviews with proactive recommendations

Sending generic market updates without personalization

Only updating the client when performance dips or when requested, without proactive communication

Avoiding regular communication to prevent overwhelming the client with too much information

Question 3: What is the primary purpose of using technical analysis in market analysis for portfolio management?

Which action should you take?

Choose only one option

To predict future price movements based on historical data of an asset

To understand the underlying value of the asset through fundamentals

To predict interest rate movements that may impact the overall market

To analyze the economic environment, influencing the asset prices

Question 4: How does diversification reduce risk in a portfolio?

Which action should you take?

Choose only one option

By lowering correlation between assets

By focusing on a single asset class

By eliminating systematic risk

By increasing exposure to risky assets

Question 5: What does the term ?liquidity risk? refer to in an investment strategy?

Which action should you take?

Choose only one option

The risk that an asset's price will fluctuate unpredictably

The risk that an asset will not generate sufficient income to meet the investor's needs

The risk of overestimating the potential returns from an investment

The risk of being unable to buy or sell an asset quickly without significantly affecting its price

Question 6: In the context of asset allocation, what is the primary reason for incorporating alternative assets (like private equity, hedge funds) into a BFSI portfolio?

Which action should you take?

Choose only one option

To match specific liability profiles

To increase expected returns without additional risk

To improve portfolio diversification and reduce correlation with traditional assets

To hedge against interest rate fluctuations