Investment Portfolio and Diversification

Play an AI-generated podcast conversation about this lesson

What is the primary purpose of diversification in a portfolio?

To minimize the impact of any one security on overall portfolio performance (correct)
To increase returns on investment
To increase the risk of the portfolio
To reduce the overall value of the portfolio

What is a key advantage of having a diversified portfolio?

It eliminates the possibility of losses
It guarantees a fixed return on investment
It reduces the risk of the entire portfolio being affected by a single security (correct)
It increases the volatility of the portfolio

What is meant by 'not putting all your eggs in one basket' in the context of investment?

Investing in a single asset class
Liquidating the entire portfolio
Investing in a single security
Diversifying across various asset classes (correct)

What is the main benefit of having a mix of asset classes in a portfolio?

It reduces the impact of a decline in any one security (B) Signup and view all the answers

What is the goal of diversification in portfolio management?

To minimize the risk of the portfolio (A) Signup and view all the answers

Why is diversification considered a key risk management technique?

Because it reduces the impact of any one security on overall portfolio performance (A) Signup and view all the answers

What is the primary objective of a Systematic Investment Plan (SIP)?

To invest a fixed amount of money at regular intervals (C) Signup and view all the answers

What is the main benefit of indexation in capital gains taxation?

It reduces the tax liability of the investor (D) Signup and view all the answers

What is the primary goal of diversification in a portfolio?

To reduce the risk of the portfolio (A) Signup and view all the answers

What is the name of the industry association for the Mutual Fund Industry?

AMFI (A) Signup and view all the answers

What is the main purpose of stress testing in asset management?

To identify potential risks in a portfolio (A) Signup and view all the answers

What is the primary feature of a Floating Rate Scheme?

It adjusts its interest rate in response to changes in the market (C) Signup and view all the answers

What is the main benefit of a Systematic Transfer Plan (STP)?

It allows investors to transfer funds from one scheme to another (D) Signup and view all the answers

What is the primary objective of a Gilt Fund?

To invest in government securities (A) Signup and view all the answers

What is the main purpose of portfolio churning in liquid funds?

To manage the cash flow of the portfolio (B) Signup and view all the answers

What is the primary benefit of a Debt Mutual Fund?

It offers a relatively low-risk investment option (A) Signup and view all the answers

What is the primary role of a stock exchange in a financial market?

To provide a platform for trading securities (C) Signup and view all the answers

What is the purpose of a prospectus in an initial public offer (IPO)?

To provide a detailed description of the company's financials (B) Signup and view all the answers

What is the role of a depository in the securities market?

To hold securities in electronic form (D) Signup and view all the answers

What is the purpose of ratio analysis in financial statement analysis?

To assess the company's profitability (D) Signup and view all the answers

What is the primary objective of diversification in investment portfolio management?

To minimize risk (B) Signup and view all the answers

What is the role of SEBI in the securities market?

To regulate the issue of securities (D) Signup and view all the answers

What is meant by the term 'Listing of Securities'?

The process of listing securities on a stock exchange (D) Signup and view all the answers

What is the primary objective of risk management in investment portfolio management?

To minimize risk (A) Signup and view all the answers

What is meant by the term 'Investment'?

The act of putting money into something with the expectation of earning a profit (C) Signup and view all the answers

What is the primary objective of portfolio management?

To optimize returns for a given level of risk (C) Signup and view all the answers