Tactical asset allocation regularly adjusts asset allocation as per the changing market conditions subject to forecasts, whims or guesses. The premise is that by doing this, one can optimize market exposure to best maximize risk-adjusted returns

This strategy allows portfolio managers to create extra value by taking advantage of certain situations in the marketplace.

Mr. Mohan has deposited Rs. 5 lakhs and the effective return has to be calculated on the total amount deposited.

Return on Investment = Net Return on investment / Cost of investment  X 100%

= 60000 / 500000 X 100%

= 12%

Portfolio managers are entrusted with managing clients' investments and have specific ethical and legal responsibilities. These responsibilities are designed to ensure that the manager acts in the best interest of the client, not for personal gain.

Deriving direct benefit from client funds is unethical and violates fiduciary duties. The portfolio manager should never use the client's funds for personal benefit.

As per Bailard, Biehl & Kaiser (BB&K) model, the five types of investors are - the adventurer, the celebrity, the Individualist, the guardian and the straight-arrow investor.

There are always people who are so well balanced that they cannot be placed in any specific quadrant, so they fall near the centre; this investor is called a Straight-Arrow investors. On average, this group of investors is a relatively balanced composite of each of the other four investor types, and by implication a group willing to be exposed to medium risk.

Compound return is earned when the interest earned in one period is added back to the principal amount to generate a new principal on which interest is computed for the next period.

Ideally, the retirement savings should start as early as possible so that smaller contributions made can also contribute to the corpus significantly with the benefit of compounding. Over time, the earnings form a greater proportion of the final value. This is the benefit of compounding, which accrues to an investment only with time.

The Portfolio Manager, before taking up an assignment of management of portfolio on behalf of a client is required to enter into an agreement in writing with the client specifying the details stated in the SEBI (Portfolio Managers Regulations), 2020. The Portfolio Manager is also required to provide the client with a Disclosure Document containing specified particulars.

The portfolio manager shall disclose the range of fees charged under various heads in the disclosure document.

Stock exchanges impose price bands on individual securities to limit volatility in prices.

Daily price bands applicable on securities are as follows:

- Daily price bands on 2%, 5% or 10% either way on securities as specified by the exchange.

- No price bands are applicable on scrips on which derivatives products are available

- Price bands of 20% either way on all remaining scrips.

A closed-end scheme offers units to investors only during the new fund offer (NFO). The scheme is closed for transactions with investors after this. The units allotted are redeemed by the fund at the prevalent NAV when the term is over and the fund ceases to exist after this.

In the interim, if investors want to exit their investment they can do so by selling the units to other investors on a stock exchange where they are mandatorily listed.

Tactical asset allocation decisions are taken more frequently because they involve adjusting portfolio weights based on market conditions, economic trends, and short-term opportunities.

Classifying investors using psychographic analysis -  Typically done once or infrequently, unless the investor’s profile changes significantly

Selecting individual assets for a portfolio - Done as part of the investment process, but not necessarily as frequently as tactical shifts

Strategic asset allocation - Long-term decision, typically reviewed annually or less often.

.

Business sector risk refers to risks that affect an entire industry or sector, such as IT, pharmaceuticals or energy.

In this case, immigration norms in the USA impact the IT sector as a whole, especially companies relying on overseas staffing.