n NISM Certifications
V-A NISM Series V-A
Medium

Identify the TRUE statement(s): 1. The Beta of a fully diversified stock index is greater than 1 2. An investment with a beta of 0.8 will move 8 percent when markets move by 10%. 3. Beta as a measure of risk is relevant only for equity schemes.

Practice question from NISM series VA - Mid length mock test — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Only 1 and 2 are true

  2. Only 2 and 3 are true

    Correct answer

  3. C

    Only 1 and 3 are true

  4. D

    All 1, 2 and 3 are true

Why this is the answer

A diversified stock index has a beta of 1 by definition. A beta greater than 1 indicates a riskier investment relative to the market, while a beta of less than 1 indicates a less risky investment. An investment with a beta of 0.8 will typically move 8% when the market moves by 10%. Beta is most commonly used to measure risk in equity schemes, not other types of funds.

Test yourself for real

Take a full NISM Series V-A mock test.

Same duration, same weighting, same difficulty distribution as the real exam — with explanations on every question.

NISM series VA - Mid length mock test