Examius
🇮🇳 NISM Certifications · flashcards
NISM Certifications Investment Advisory and Wealth Management Flashcards
51 question-and-answer cards covering Investment Advisory and Wealth Management as it is examined in NISM Certifications. 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Investment Advisory and Wealth Management deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
What is the human life value (HLV) approach to determining life insurance need?
It estimates insurance need as the present value of the individual's future income (net of self-consumption) lost to dependents upon death - capitalising future earnings.
What is the 'needs analysis' approach to life insurance?
It calculates insurance cover required by summing the family's future financial needs (liabilities, goals, living expenses) and subtracting existing assets/resources.
What is the fundamental difference between term insurance and endowment insurance?
Term insurance is pure protection (death benefit only, no maturity value, low premium); endowment combines protection with savings (pays on death or maturity, higher premium).
What are the four main techniques of risk management?
Risk avoidance, risk reduction (control), risk retention, and risk transfer (e.g., insurance).
Why is health insurance important in a financial plan?
It transfers the risk of large, unpredictable medical expenses to the insurer, protecting accumulated savings and goals from being depleted by a health emergency.
What is the principle of indemnity in insurance?
The insured is compensated only for the actual loss suffered (restored to pre-loss financial position) and cannot profit from a claim; applies to general/non-life insurance.
Name the major asset classes considered in wealth management.
Equity, fixed income (debt/bonds), cash and cash equivalents, real estate, and commodities (e.g., gold); alternatives are sometimes added.
How do equity and debt asset classes compare on risk and return?
Equity offers higher expected long-term returns with higher volatility/risk; debt offers lower, more stable returns with lower risk and provides income and capital preservation.
What is the typical risk-return characteristic of cash/money market instruments?
Lowest risk and lowest return; high liquidity and capital safety, but vulnerable to inflation eroding real value.
What is strategic asset allocation?
Setting a long-term target mix of asset classes based on the investor's goals, risk profile, and time horizon, with periodic rebalancing back to the target weights.
What is tactical asset allocation?
Short-term deliberate deviations from the strategic allocation to exploit market opportunities or views, intending to add return; it is active and temporary.
What is portfolio rebalancing and why is it done?
Realigning portfolio weights back to target allocation after market movements; it controls risk, enforces buy-low/sell-high discipline, and keeps the portfolio aligned with the investor's risk profile.
What does diversification achieve in a portfolio?
It reduces unsystematic (specific) risk by combining assets whose returns are not perfectly correlated, lowering overall portfolio volatility without proportionally lowering expected return.
What is the difference between systematic and unsystematic risk?
Systematic (market) risk affects the whole market and cannot be diversified away; unsystematic (specific) risk is unique to a security/sector and can be reduced through diversification.
What does 'beta' measure in portfolio theory?
Beta measures a security's or portfolio's sensitivity to market movements (systematic risk). Beta = 1 moves with the market; >1 more volatile than market; <1 less volatile.
State the Capital Asset Pricing Model (CAPM) formula.
Expected return = Rf + Beta x (Rm - Rf), where Rf is the risk-free rate, Rm the expected market return, and (Rm - Rf) the market risk premium.
What does standard deviation represent as a risk measure?
It measures the total volatility (dispersion) of a portfolio's returns around its mean; higher standard deviation indicates higher total risk.
What is the Sharpe ratio and what does it measure?
Sharpe ratio = (Portfolio return - Risk-free rate) / Standard deviation. It measures excess return per unit of total risk; higher is better risk-adjusted performance.
What is the Treynor ratio?
Treynor ratio = (Portfolio return - Risk-free rate) / Beta. It measures excess return per unit of systematic (market) risk.
What does Jensen's Alpha measure?
Alpha is the portfolio's actual return minus its CAPM-expected return; a positive alpha indicates the manager added value (outperformance) after adjusting for risk.
What is the difference between time-weighted and money-weighted rate of return?
Time-weighted return removes the effect of cash flows and measures the manager's performance; money-weighted (IRR) reflects the investor's actual experience including the timing and size of cash flows.
How is long-term capital gains tax on listed equity shares/equity mutual funds treated in India (holding period and rate)?
Listed equity/equity-oriented funds held over 12 months are long-term; LTCG is taxed at 10% (now 12.5% post latest amendment) on gains exceeding the annual exemption limit (Rs. 1 lakh, raised to Rs. 1.25 lakh), without indexation.
What is the difference between estate planning tools 'Will' and 'Trust'?
A Will directs distribution of assets after death and takes effect on death (may require probate); a trust transfers assets to a trustee to manage for beneficiaries and can operate during life and after death, often avoiding probate and offering control/continuity.
In behavioural finance, what is 'loss aversion' and how does it affect investors?
Loss aversion is the tendency to feel the pain of losses more strongly than the pleasure of equivalent gains, leading investors to hold losing investments too long and sell winners too early.
What this deck covers
The Investment Advisory and Wealth Management deck follows the NISM Certifications Investment Advisory and Wealth Management syllabus — 4 chapters and 14 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 12.8 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 169 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Investment Advisory and Wealth Management flashcards FAQ
How many Investment Advisory and Wealth Management flashcards are in this NISM Certifications deck?
51 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these NISM Certifications flashcards free?
Yes. The preview here is free to read with no signup, and the full 51-card deck is free inside the Examius app.
What do the Investment Advisory and Wealth Management cards cover?
They follow the NISM Certifications Investment Advisory and Wealth Management syllabus — 4 chapters and 14 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.