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 9 of 10

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Q81.
What does the Traditional Approach in portfolio management mainly focus on?

a.

Short-term gains

b.

Maximizing investor's wealth with reference to risk

c.

Ignoring investor profiles

d.

Speculative investments

Discuss
Answer: (b).Maximizing investor's wealth with reference to risk Explanation:The Traditional Approach in portfolio management is mainly concerned with maximizing the investor's wealth with reference to risk, considering the investor's profile, investment strategy, diversification, and individual investment selection.
Q82.
According to the Random Walk Theory, what characterizes the behavior of stock market prices?

a.

Predictability

b.

Unpredictability

c.

Strong correlation between present and future prices

d.

Linear movement

Discuss
Answer: (b).Unpredictability Explanation:According to the Random Walk Theory, the behavior of stock market prices is unpredictable, and there is no relationship between present and future prices.
Q83.
What is the basic premise of the Efficient Market Theory (EMT)?

a.

Limited access to market information

b.

Delayed dissemination of market information

c.

Investors acting on relevant information as soon as it becomes available

d.

Inefficient allocation of resources

Discuss
Answer: (c).Investors acting on relevant information as soon as it becomes available Explanation:The basic premise of Efficient Market Theory is that all market participants receive and act on all relevant information as soon as it becomes available in the stock market.
Q84.
According to the Markowitz Model of risk-return optimization theory, what are investors mainly concerned with?

a.

Maximizing risk

b.

Minimizing returns

c.

Two properties of an asset: Risk and Return

d.

Ignoring diversification

Discuss
Answer: (c).Two properties of an asset: Risk and Return Explanation:Investors, according to the Markowitz Model, are mainly concerned with two properties of an asset: Risk and Return, and diversification of the portfolio involves a Risk-Return trade-off.
Q85.
What does the Capital Asset Pricing Model (CAPM) focus on in terms of risk?

a.

Only Diversifiable risk

b.

Both Diversifiable and Non-diversifiable risk

c.

Only Non-diversifiable risk

d.

No consideration of risk

Discuss
Answer: (c).Only Non-diversifiable risk Explanation:The CAPM Model is only concerned with non-diversifiable risk, also known as systematic risk.
Q86.
According to the Arbitrage Pricing Theory Model, what are the factors explaining the risk premium relationship of a particular security?

a.

Weather conditions and technological advancements

b.

Inflation and money supply, Interest rate, Industrial production, and Personal consumption

c.

Market sentiment and speculation

d.

Political events and global economic trends

Discuss
Answer: (b).Inflation and money supply, Interest rate, Industrial production, and Personal consumption Explanation:The Arbitrage Pricing Theory Model identifies four factors explaining the risk premium relationship of a particular security: Inflation and money supply, Interest rate, Industrial production, and Personal consumption.
Q87.
What are some important considerations in portfolio management?

a.

Real return, Default risk, and Interest rate risk

b.

Short-term gains, Market sentiment, and Speculation

c.

Ignoring risk factors

d.

Maximizing liquidity

Discuss
Answer: (a).Real return, Default risk, and Interest rate risk Explanation:Real return, Default risk, and Interest rate risk are important considerations in portfolio management.
Q88.
Name some Fixed Income Products that investors can choose to invest in.

a.

Cryptocurrencies and Real Estate

b.

Mutual Funds and Stocks

c.

Public Provident Fund, Tax-free bonds, Company Fixed Deposits, Bank Fixed Deposits, and Fixed Maturity Plans

d.

Precious metals and Commodities

Discuss
Answer: (c).Public Provident Fund, Tax-free bonds, Company Fixed Deposits, Bank Fixed Deposits, and Fixed Maturity Plans Explanation:Public Provident Fund, Tax-free bonds, Company Fixed Deposits, Bank Fixed Deposits, and Fixed Maturity Plans are examples of Fixed Income Products.
Q89.
What factors should the choice of a Fixed Income Instrument depend on?

a.

Only market trends

b.

Only risk appetite

c.

Risk appetite, Liquidity needs, Investment horizon, and Tax considerations

d.

Ignoring risk and focusing on returns

Discuss
Answer: (c).Risk appetite, Liquidity needs, Investment horizon, and Tax considerations Explanation:The choice of a Fixed Income Instrument should depend on risk appetite, liquidity needs, investment horizon, and tax considerations.
Q90.
What are the four important factors that investors need to consider in their investment decisions for fixed-income options?

a.

Weather conditions, Global economic trends, Political events, and Market sentiment

b.

Security (less risk content), Return, Liquidity, and Taxability of income

c.

Speculation, Short-term gains, Market sentiment, and Ignoring risk

d.

Maximizing liquidity, Ignoring risk, Speculation, and Market sentiment

Discuss
Answer: (b).Security (less risk content), Return, Liquidity, and Taxability of income Explanation:Investors need to consider four important factors in their investment decisions for fixed-income options: Security (less risk content), Return, Liquidity, and Taxability of income.
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