Portfolio Management MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Portfolio Management, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Portfolio Management MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Portfolio Management mcq questions that explore various aspects of Portfolio Management problems. Each MCQ is crafted to challenge your understanding of Portfolio Management principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Portfolio Management MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Portfolio Management. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Portfolio Management knowledge to the test? Let's get started with our carefully curated MCQs!

Portfolio Management MCQs | Page 7 of 10

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Q61.
How do Fixed Maturity Plans (FMPs) compare to Fixed Deposits (FDs) in terms of returns?

a.

FMPs guarantee returns

b.

FDs have indicative returns

c.

Both guarantee returns

d.

FDs guarantee returns, FMPs do not

Discuss
Answer: (d).FDs guarantee returns, FMPs do not Explanation:Unlike Fixed Deposits (FDs), Fixed Maturity Plans (FMPs) do not guarantee returns. FMPs provide indicative returns, and their returns depend on the market interest rates and the performance of the instruments they invest in.
Q62.
What tax advantage do Fixed Maturity Plans (FMPs) offer over Fixed Deposits (FDs)?

a.

Higher tax rates

b.

Tax-free returns

c.

Indexation benefit

d.

Guaranteed returns

Discuss
Answer: (c).Indexation benefit Explanation:Fixed Maturity Plans (FMPs) offer indexation benefit for investments of more than a year, providing tax advantages over Fixed Deposits (FDs). Indexation helps compensate for the impact of inflation on real income.
Q63.
For what duration of Fixed Maturity Plans (FMPs) does indexation benefit apply?

a.

Less than one year

b.

One year or more

c.

Less than six months

d.

Three years or more

Discuss
Answer: (b).One year or more Explanation:Indexation benefit in Fixed Maturity Plans (FMPs) applies for investments of one year or more. FMPs with this duration provide tax advantages, particularly benefiting investors in higher tax brackets.
Q64.
What is the double indexation benefit associated with Fixed Maturity Plans (FMPs)?

a.

Two times the investment amount

b.

Enjoyment of benefits for two financial years

c.

Doubling of the maturity period

d.

Double the fixed returns

Discuss
Answer: (b).Enjoyment of benefits for two financial years Explanation:Fixed Maturity Plans (FMPs) provide double indexation benefit when an investor stays invested for two financial years, allowing for additional tax advantages. This benefit can be advantageous, especially when there is a loss in investments after double indexation.
Q65.
How can losses incurred in Fixed Maturity Plans (FMPs) after double indexation be treated?

a.

Set off against other FMP losses

b.

Ignored for tax purposes

c.

Set off against any other short- or long-term capital gain

d.

Carried forward indefinitely

Discuss
Answer: (c).Set off against any other short- or long-term capital gain Explanation:Losses incurred in Fixed Maturity Plans (FMPs) after double indexation can be set off against any other short- or long-term capital gain over the next eight years. This flexibility provides investors with potential tax advantages.
Q66.
What types of instruments do Fixed Maturity Plans (FMPs) typically invest in?

a.

Equities and derivatives

b.

Real estate and commodities

c.

Debt and money market instruments

d.

Cryptocurrencies and precious metals

Discuss
Answer: (c).Debt and money market instruments Explanation:Fixed Maturity Plans (FMPs) typically invest in debt market instruments such as treasury bills, bonds, government securities, or other money market instruments with short-term fixed tenures. They focus on providing capital protection along with appreciation.
Q67.
In India, what is the general type of Fixed Maturity Plans (FMPs)?

a.

Open-ended

b.

Close-ended

c.

Hybrid

d.

Index-based

Discuss
Answer: (b).Close-ended Explanation:In India, Fixed Maturity Plans (FMPs) are generally close-ended mutual fund schemes. They have a fixed tenure and are not open for continuous redemption, providing a specific maturity period for investors.
Q68.
What is the maturity range of Fixed Maturity Plans (FMPs)?

a.

15 days to several years

b.

1 year to 5 years

c.

6 months to 2 years

d.

3 years to 8 years

Discuss
Answer: (a).15 days to several years Explanation:Fixed Maturity Plans (FMPs) have a maturity ranging from as little as 15 days to several years. However, FMPs with a maturity period of 365 days or slightly more are considered most attractive, although liquidity for such investments is typically low.
Q69.
When considering Fixed Income Instruments as an asset class, what factors should influence the investor's choice of product?

a.

Historical performance

b.

Market trends

c.

Risk appetite, liquidity needs, investment horizon, and tax considerations

d.

Social media recommendations

Discuss
Answer: (c).Risk appetite, liquidity needs, investment horizon, and tax considerations Explanation:The investor's choice of Fixed Income Instrument should depend on factors such as risk appetite, liquidity needs, investment horizon, and tax considerations. Each product within the fixed income asset class has its unique features, and selecting the right one requires careful consideration of these factors.
Q70.
What is recommended for investors looking for a regular stream of income and capital preservation when investing in debt?

a.

Cumulative option of fixed deposit

b.

Non-convertible debentures (NCDs)

c.

Simple fixed deposit with interest every month or quarter

d.

National Savings Certificates (NSCs)

Discuss
Answer: (c).Simple fixed deposit with interest every month or quarter Explanation:For investors seeking a regular stream of income and capital preservation in debt investments, a simple fixed deposit that pays interest every month or quarter is recommended.
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