NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Performance Measurement and Evaluation of Portfolio Managers
A PMS client invests Rs 50 lakh at the start of the year. At year-end the portfolio value is Rs 57.5 lakh, with no inflows or outflows in between. What is the absolute return for the year?
The absolute return is 15%. The gain of Rs 7.5 lakh is divided by the opening investment of Rs 50 lakh. The base must always be the starting value, not the ending value.
- A12.5%
- B15%Correct
- C13.04%
- D7.5%
Explanation
Absolute return = (57.5 - 50)/50 = 7.5/50 = 15%. The 13.04% option wrongly uses the ending value as the base (7.5/57.5). The 12.5% and 7.5% options do not follow from the data.
Did you get it right without looking?
One question tells you little. A timed set on Performance Measurement and Evaluation of Portfolio Managers shows your real accuracy, how long you take and where you lose marks.
More Performance Measurement and Evaluation of Portfolio Managers questions
- A PMS investor's portfolio was worth Rs 20,00,000 at the start of the year and Rs 23,00,000 at the end, with no additions or withdrawals dur…
- A portfolio manager's strategy earned 15% in a year, while its benchmark returned 11%. The risk-free rate was 6%. What is the excess return …
- A portfolio manager's portfolio returned 14% in a year, the risk-free rate was 6%, and the portfolio's standard deviation was 16%. What is i…
- A portfolio manager's portfolio returned 15% in a year while its benchmark returned 11%. The portfolio's beta is 1.0 and the standard deviat…
- A PMS portfolio returned 15% with a beta of 1.2. The risk-free rate is 7% and the market return is 12%. What is the Jensen's alpha?
- A portfolio manager's PMS strategy is compared with the Nifty 50 TRI to judge how well it did. In performance evaluation, what is this refer…