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 8 of 10

Discover more Topics under IC 89 Management Accounting

Q71.
What are the four important factors that investors need to consider in their investment decisions for fixed-income options?

a.

Risk, liquidity, market trends, and taxability of income

b.

Security, return, liquidity, and taxability of income

c.

Historical performance, risk, return, and liquidity

d.

Market trends, security, return, and taxability of income

Discuss
Answer: (b).Security, return, liquidity, and taxability of income Explanation:Investors need to consider security, return, liquidity, and taxability of income as four important factors in their investment decisions for fixed-income options.
Q72.
What is emphasized as an essential aspect when developing a fixed-income portfolio, along with safety and security?

a.

High returns

b.

Diversification

c.

Market timing

d.

Speculative investments

Discuss
Answer: (b).Diversification Explanation:Along with safety and security, diversification is emphasized as an essential aspect when developing a fixed-income portfolio. Diversifying fixed income options or debt investments is considered important for a complete asset allocation or investment plan.
Q73.
During times of uncertainty in the direction of interest rates, what is suggested as a low-risk opportunity for investors in the fixed-income market?

a.

Cryptocurrencies

b.

Equity market investments

c.

Fixed Maturity Plans (FMPs)

d.

Speculative bonds

Discuss
Answer: (c).Fixed Maturity Plans (FMPs) Explanation:In times of uncertainty regarding the direction of interest rates, low-risk opportunities like Fixed Maturity Plans (FMPs) are suggested for investors in the fixed-income market. FMPs can be considered as a good place to put money in for stable returns.
Q74.
What does Portfolio Management involve?

a.

Allocating funds to speculative investments

b.

Balancing risk against performance

c.

Maximizing returns without considering risk

d.

Focusing solely on short-term gains

Discuss
Answer: (b).Balancing risk against performance Explanation:Portfolio Management involves making decisions about the investment mix and policy, matching investments to objectives, asset allocation, and balancing risk against performance.
Q75.
What is Fundamental Analysis?

a.

Analyzing market trends and sentiment

b.

Evaluating a security's intrinsic value based on various factors

c.

Relying solely on technical indicators

d.

Ignoring economic and financial factors in security evaluation

Discuss
Answer: (b).Evaluating a security's intrinsic value based on various factors Explanation:Fundamental Analysis is a method of evaluating a security by attempting to measure its intrinsic value through the examination of economic, financial, and other qualitative and quantitative factors.
Q76.
What is the basis of Technical Analysis?

a.

Intrinsic value of a stock

b.

Economic indicators

c.

Supply and demand in the market

d.

Historical performance of a company

Discuss
Answer: (c).Supply and demand in the market Explanation:Technical Analysis is based on the assumption that the price of a stock depends on supply and demand in the market, with little correlation with its intrinsic value.
Q77.
What are the activities of Portfolio Management?

a.

Speculating on market trends

b.

Maximizing short-term gains

c.

Identifying financial assets and allocating investments

d.

Ignoring the performance of various securities

Discuss
Answer: (c).Identifying financial assets and allocating investments Explanation:The activities of Portfolio Management include identifying financial assets, allocating investments, determining weights of different assets, selecting securities within asset classes, and evaluating the performance of various securities.
Q78.
What are Systematic Risks in the context of Portfolio Management?

a.

Risks specific to a particular company

b.

Risks common to an entire class of assets

c.

Risks associated with market trends

d.

Unpredictable risks

Discuss
Answer: (b).Risks common to an entire class of assets Explanation:Systematic Risks are common to an entire class of assets and cannot be diversified. They include market risk, interest rate risk, social or regulatory risk, and purchasing power risk.
Q79.
How can Unsystematic Risks be avoided?

a.

Through diversification

b.

Through speculation

c.

By ignoring risks

d.

By focusing on short-term gains

Discuss
Answer: (a).Through diversification Explanation:Unsystematic Risks, which are specific to a particular company or industry, can be avoided through diversification.
Q80.
What do Portfolio Theories provide guidelines for?

a.

Maximizing risk without considering returns

b.

Selecting securities with the lowest risk

c.

Balancing risk against performance

d.

Ignoring risk and focusing on returns

Discuss
Answer: (c).Balancing risk against performance Explanation:Portfolio Theories provide guidelines for selecting appropriate securities that provide the highest expected rate of return for a given degree of risk or expose the investor to a degree of risk for a given expected rate of return.
Page 8 of 10