n NISM Certifications
X NISM Series X
Medium

Which risk arises from errors in estimating returns, risks, and correlations among securities during portfolio construction?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Market Risk

  2. B

    Constraints of investors

  3. Estimation Risk

    Correct answer

  4. D

    All of the above

Why this is the answer

Estimation risk stems from inaccuracies in the inputs used for portfolio optimization, impacting the portfolio's risk-return profile.

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