n NISM Certifications
XXI NISM Series XXI-A
Medium

Why is the Asset Allocation decision very important?

Practice question from NISM XXI A for PMS - Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. It indicates the risk appetite of the investor while drafting the investment agreement

    Correct answer

  2. B

    It must be legally mentioned in the investment agreement

  3. C

    It is the dominant factor that influences portfolio returns

  4. D

    It helps create a hedge against market risks

Why this is the answer

Asset allocation reflects the investor’s risk profile and is central to tailoring investment strategies.

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