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

As the complete exposure is to a single sector, Sector Funds are high on _____.

Practice question from NISM Series V A - Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Credit Risk

  2. Concentration Risk

    Correct answer

  3. C

    Interest Rate Risk

  4. D

    Liquidity Risk

Why this is the answer

Sector funds invest in a specific sector, which leads to concentration risk. If that particular sector underperforms, the entire fund is likely to experience poor returns due to its concentrated exposure. Diversification helps reduce this risk.

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