Skip to content

NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Performance Measurement and Evaluation of Portfolio Managers

A PMS portfolio was worth Rs 50,00,000 at the start of the year and Rs 58,00,000 at the end. No money was added or withdrawn and there were no other cash flows. The benchmark returned 12% over the same year. What is the portfolio's excess return over the benchmark?

The portfolio return is 8 lakh on 50 lakh, which is 16%. Subtracting the benchmark return of 12% gives an excess return of 4%. The other figures either ignore the benchmark or reverse the subtraction.

  1. A4%Correct
  2. B16%
  3. C8%
  4. D-4%

Explanation

Portfolio return = (58,00,000 - 50,00,000)/50,00,000 = 16%. Excess return = 16% - 12% = 4%. Option 16% ignores the benchmark, 8% confuses the rupee gain in lakh with percentage, and -4% reverses the sign.

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.

Practise Performance Measurement and Evaluation of Portfolio ManagersFree diagnostic mock

More Performance Measurement and Evaluation of Portfolio Managers questions