n NISM Certifications
XVII NISM Series XVII
Medium

To manage the risk of underperformance, rebalancing the portfolio periodically to remove underperformers and align with risk/return preferences is the best strategy.

Practice question from NISM Series XVII- Retirement Adviser Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Rebalancing of the portfolio periodically to remove the under-performers from the portfolio.

  2. B

    Select the lowest risks assets and invest most of the money in those assets

  3. C

    See the historical returns and choose the best performers so that there is no under performance

  4. See the risk preference of the individual and allocate assets across different asset classes in the same proportion that reflects his risk and return preferences

    Correct answer

Why this is the answer

Asset allocation should be aligned with individual risk appetite and goals, with periodic rebalancing to maintain this balance.

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