Investment Portfolio and Diversification
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Questions and Answers

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?

    <p>It reduces the impact of a decline in any one security</p> Signup and view all the answers

    What is the goal of diversification in portfolio management?

    <p>To minimize the risk of the portfolio</p> Signup and view all the answers

    Why is diversification considered a key risk management technique?

    <p>Because it reduces the impact of any one security on overall portfolio performance</p> Signup and view all the answers

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

    <p>To invest a fixed amount of money at regular intervals</p> Signup and view all the answers

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

    <p>It reduces the tax liability of the investor</p> Signup and view all the answers

    What is the primary goal of diversification in a portfolio?

    <p>To reduce the risk of the portfolio</p> Signup and view all the answers

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

    <p>AMFI</p> Signup and view all the answers

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

    <p>To identify potential risks in a portfolio</p> Signup and view all the answers

    What is the primary feature of a Floating Rate Scheme?

    <p>It adjusts its interest rate in response to changes in the market</p> Signup and view all the answers

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

    <p>It allows investors to transfer funds from one scheme to another</p> Signup and view all the answers

    What is the primary objective of a Gilt Fund?

    <p>To invest in government securities</p> Signup and view all the answers

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

    <p>To manage the cash flow of the portfolio</p> Signup and view all the answers

    What is the primary benefit of a Debt Mutual Fund?

    <p>It offers a relatively low-risk investment option</p> Signup and view all the answers

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

    <p>To provide a platform for trading securities</p> Signup and view all the answers

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

    <p>To provide a detailed description of the company's financials</p> Signup and view all the answers

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

    <p>To hold securities in electronic form</p> Signup and view all the answers

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

    <p>To assess the company's profitability</p> Signup and view all the answers

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

    <p>To minimize risk</p> Signup and view all the answers

    What is the role of SEBI in the securities market?

    <p>To regulate the issue of securities</p> Signup and view all the answers

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

    <p>The process of listing securities on a stock exchange</p> Signup and view all the answers

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

    <p>To minimize risk</p> Signup and view all the answers

    What is meant by the term 'Investment'?

    <p>The act of putting money into something with the expectation of earning a profit</p> Signup and view all the answers

    What is the primary objective of portfolio management?

    <p>To optimize returns for a given level of risk</p> Signup and view all the answers

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