Preview Questions Portfolio Manager | Role Specific Skill

Question 1: How do you evaluate the effectiveness of a diversified portfolio in a BFSI setting when analyzing the relationship between assets over different market cycles?

Which action should you take?

Choose only one option

By disregarding correlations between assets

By using a simple mean-variance approach

By analyzing the portfolio's risk-adjusted return and volatility

By focusing solely on historical returns

Question 2: Which of the following strategies is typically used when an investor seeks to reduce the risk of a portfolio during periods of market uncertainty?

Which action should you take?

Choose only one option

Investing solely in long-term bonds

Allocating all assets into cash equivalents

Hedging using options or futures contracts

Concentrating investments in high-growth, high-volatility stocks

Question 3: What is the primary purpose of conducting a sector rotation strategy within market analysis?

Which action should you take?

Choose only one option

To adjust portfolio exposure based on economic cycles and sector performance

To minimize risk exposure across all asset classes regardless of market conditions

To ensure constant growth by focusing on the highest performing sector

To align portfolio with the current trend in government policy changes

Question 4: How does the yield curve signal a potential economic slowdown?

Which action should you take?

Choose only one option

Flattening curve

Steepening curve

Inverted curve

Shifting upward

Question 5: In asset-liability management (ALM), which key factor would most likely impact a financial institution's portfolio allocation?

Which action should you take?

Choose only one option

Credit risk, as it can impact the performance of financial assets held by the institution

Interest rate risk, as fluctuations can significantly affect both asset returns and liabilities

Regulatory changes, which could impose restrictions on asset classes or portfolio composition

Liquidity management, ensuring the institution can meet short-term obligations

Question 6: In client relationship management, what is the most effective way to handle situations where a client is unhappy with their portfolio's risk exposure?

Which action should you take?

Choose only one option

By denying that any changes are necessary and insisting the current strategy is the best

By ignoring the client's concerns and assuming they will adjust to the portfolio over time

By discussing alternative risk management strategies and offering adjustments to the portfolio

By immediately reducing all exposure to high-risk assets without discussing options