Investment Advisor NISM Series X-B — Investment Adviser (Level 2) 2

Question 1

Under SEBI Investment Adviser Regulations, an investment adviser providing advice on securities must ensure the advice is based on which primary criterion?

Accepted Answer

The client's risk profile and investment objective

Answer

SEBI regulations mandate that investment advice must be grounded in the client's individual risk profile and stated investment objectives.

Question 2

Which metric best captures the excess return of a portfolio per unit of total risk taken?

Accepted Answer

Sharpe Ratio

Answer

The Sharpe Ratio divides excess return (over the risk-free rate) by standard deviation, which represents total risk.

Question 3

An investment adviser recommends a client shift from equity to debt funds as the client nears retirement. This strategy is best described as:

Accepted Answer

Life-cycle or glide-path asset allocation

Answer

Life-cycle (glide-path) allocation systematically reduces equity exposure and increases debt as the investor approaches a target date such as retirement.

Question 4

Under the SEBI IA Regulations, how often must an investment adviser conduct a formal review of a client's financial plan?

Accepted Answer

At least once a year

Answer

SEBI requires investment advisers to review each client's financial plan at least annually to ensure it remains suitable.

Question 5

A portfolio has a beta of 1.4. If the market rises by 10%, the expected portfolio return (ignoring alpha) is:

Accepted Answer

14%

Answer

Expected return = Beta × Market return = 1.4 × 10% = 14%, assuming no alpha contribution.

Investment Advisor Practice Test

Investment Advisor Practice Test

Investment Advisor NISM Series X-B — Investment Adviser (Level 2) 2