n NISM Certifications
NSM General NISM
Medium

A fund has a portfolio PE near its category average. How should a distributor classify this fund's valuation?

Practice question from A-CWM B1 S4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Reasonable — the fund is trading at a discount to peers

  2. B

    Expensive — near-average PE signals overvaluation

  3. Average — the fund is priced in line with its category

    Correct answer

  4. D

    Cannot be determined without checking the PEG ratio first

A full explanation for this question is being written. In the meantime, the correct answer is highlighted above.

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