NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance
A scheme returned 14% in a year. Its benchmark index (Total Return Index) returned 11% over the same year. What is the scheme's alpha, measured as excess return over the benchmark?
The excess return over the benchmark is 3 percentage points. The scheme returned 14% against the benchmark's 11%, so it outperformed by the difference. A negative figure would mean the scheme lagged the benchmark.
- A3 percentage pointsCorrect
- B25 percentage points
- C-3 percentage points
- D1.27 percentage points
Explanation
Excess return over the benchmark = 14% - 11% = 3 percentage points. The sign is positive because the scheme outperformed. Reversing the subtraction gives -3, which would indicate underperformance.
Did you get it right without looking?
One question tells you little. A timed set on Mutual Fund Scheme Performance shows your real accuracy, how long you take and where you lose marks.
More Mutual Fund Scheme Performance questions
- A scheme's returns over 3 years are 10%, 20% and -10% in successive years. What is the cumulative return over the three years?
- A scheme returned 14% over a year while its benchmark returned 11% over the same period. Which statement about this scheme is correct?
- Which statement about comparing a scheme's performance with its benchmark is correct under SEBI's framework?
- Which statement about comparing a scheme's performance with its benchmark is most appropriate under SEBI's framework?
- Why is a scheme's return generally compared with its benchmark, such as a Total Return Index, rather than a price-only index?
- An investor put Rs 1,00,000 in a scheme and the value grew to Rs 1,44,000 after exactly 2 years with no interim cash flows. What is the comp…