Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

Caselet: Sunita, 50, has a moderate risk tolerance but her only goal, her daughter's education, falls due in 2 years and needs Rs 15 lakh. Her current portfolio is 80% equity. Which recommendation best reflects aligning risk capacity with the goal horizon?

Sunita should move the money earmarked for the goal into low-volatility debt or liquid instruments. With only two years left and a fixed target, her capacity for loss is low, so equity volatility could cause a shortfall despite a moderate stated tolerance.

  1. AKeep the 80% equity allocation since her risk tolerance is moderate
  2. BMove the amount earmarked for the goal into low-volatility debt or liquid instruments as the goal nearsCorrect
  3. CShift the whole portfolio to gold
  4. DIncrease equity further to reach Rs 15 lakh faster

Explanation

With a short horizon and a fixed target, the ability to bear loss is low regardless of stated tolerance. Money for the goal should be moved to stable, low-volatility instruments. Raising equity or concentrating in gold increases the chance of a shortfall.

Did you get it right without looking?

One question tells you little. A timed set on Case Studies in Comprehensive Financial Advice shows your real accuracy, how long you take and where you lose marks.

Practise Case Studies in Comprehensive Financial AdviceFree diagnostic mock

More Case Studies in Comprehensive Financial Advice questions