Skip to content

NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Portfolio Management Process

A PMS provider decides to invest a client's funds only in listed large-cap stocks because the client has stated a low tolerance for risk. This restriction is best described as part of the client's:

It is part of the investment policy statement and its constraints. The client's low risk tolerance leads to an agreed restriction to listed large-cap stocks, which is documented in the mandate and guides all security selection by the portfolio manager.

  1. AInvestment policy statement constraints and guidelinesCorrect
  2. BPerformance fee computation
  3. CCustodian settlement instructions
  4. DExit load schedule

Explanation

Limits on the types of securities, risk level and other restrictions agreed with the client are recorded in the investment policy or mandate, which guides the manager. Fees, settlement and exit loads do not define the permitted investment universe.

Did you get it right without looking?

One question tells you little. A timed set on Portfolio Management Process shows your real accuracy, how long you take and where you lose marks.

Practise Portfolio Management ProcessFree diagnostic mock

More Portfolio Management Process questions