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

Identify the TRUE statement/s - (A) Rolling returns are the average annualized returns calculated for alternate holding period (B) Holding period returns (HPR) do not provide an accurate picture of returns of fund if its initial value is too high or low.

Practice question from Nism Va Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Both 1 and 2

  2. B

    Only 2 is true

  3. Only 1 is true

    Correct answer

  4. D

    None of the above

Why this is the answer

(A) True → Rolling returns are indeed the average annualized returns calculated for overlapping/alternate holding periods. They smooth out volatility and give a better picture than point-to-point returns. (B) False → Holding Period Return (HPR) simply calculates return over a fixed period. It may not reflect consistency, but it is not distorted by initial value being high or low (that’s a misstatement).

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