NCFM Model Test Paper

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htm
NCFM Model Test Paper

Securities Market (Advanced) Module
Maximum Marks: 100 Test Duration: 120 minutes Pass Marks: 60 Time Left: 118:53 minutes
A 1 month put option is available with a strike price of Rs. 185. The stock is trading at Rs. 180. The price of the put
option is Rs. 7. The put will start making money for the buyer once the stock rises above Rs. ____. [ 2 Marks ]
(a) The stock price should fall below Rs. 178 for the put option to make money.
Q1 (b) 192
(c) 187
(d) The stock price should fall below Rs. 173 for the put option to make money.
(e) I am not attempting the question
1 EUR = Rs. 70 today. Suppose a month ago 1 EUR was equal to Rs. 68. The Indian Rupee has _____ as compared to
the EUR. [ 2 Marks ]
Q2 (a) strengthened
(b) weakened
(c) I am not attempting the question
An investor who holds equity shares becomes a ______ of the company. [ 1 Mark ]
(a) owner
Q3 (b) debtor
(c) creditor
(d) agent
"Suppose Party A has a right to buy USD6,000 from Party B, 1 month down the line, at Rs. 46 = 1USD (US Dollar).
However, after 1 month Party A does not exercise the right. This is possible in a(n) _______ contract." [ 1 Mark ]
(a) Swap
Q4 (b) Futures
(c) Forward
(d) Options
Diversified equity funds have a ______ risk than index funds. [ 2 Marks ]
Q5 (a) higher
(b) lower
A 1 month put option is available with a strike price of Rs. 125. The stock is trading at Rs. 130. The price of the put
option should be at least Rs. ____ which is the intrinsic vale. [ 2 Marks ]
(a) 9
Q6 (b) 5
(c) 7
(d) The option does not have an intrinsic value.
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"A company has profit after tax before exceptional items of Rs. 6,279.40 crs. Share capital of the company is Rs.
4230.50 crs. Face value of each share is Rs. 10. How much did the company earn on each share owned by the
investor?" [ 2 Marks ]
(a) 16.3
Q7
(b) 16.08
(c) 13.63
(d) 14.84
Exposure to _______ securities (which have a credit risk) contributes to the higher risk in diversified debt funds. [ 2
Marks ]
(a) stock index

Q8 (b) government securities
(c) non-government corporate
(d) equity derivative
"In a currency pair, the other (than the first) currency is referred to as the ______ currency." [ 2 Marks ]
(a) independent
Q9 (b) basic
(c) dependent
(d) terms
"An entrepreneur who wants some kind of technical or commercial capabilities to grow his business, would look for a
______ investor. " [ 2 Marks ]
Q10 (a) financial

(b) strategic
"A bond with a face value of Rs. 1000, returns Rs. 80 in year 1, Rs. 80 in year 2 and Rs. 1080 in year 3. What is the
duration of the bond in years?" [ 2 Marks ]
(a) 2.6
Q11 (b) 2.8
(c) 2.4
(d) 2.2
The regulations require that the AMC?s auditors are _______ the scheme?s auditors. [ 1 Mark ]
Q12 (a) same as

(b) different from
The mutual fund scheme incurs several expenses such as : [ 1 Mark ]
(a) Advertising and sales promotion expenses

Q13 (b) Fees to depository for demat arrangements
(c) Fees to stock exchanges for listing
(d) All of the above
"The KIM needs to be updated at least _____, every financial year." [ 1 Mark ]
(a) thrice
Q14 (b) twice
(c) once
(d) four times
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Section ____ of the SC(R)A defines securities to include Government securities. [ 2 Marks ]
(a) 4(g)
Q15 (b) 3(h)
(c) 2(h)
(d) 3(a)
The bond which can be bought at cheapest price from underlying bond market and delivered against expiring futures
contract is called the ______ bond. [ 2 Marks ]
(a) Cheapest to Deliver

Q16 (b) Cheapest to Settle
(c) Cheapest to Yield
(d) Cheapest to Maturity
"A company's profit after tax before exceptional Items is Rs. 10,396.71 crs. Its share capital is Rs. 7036.80 crs.
Reserves are Rs. 28,557.50 crs. What is the company's return on Equity?" [ 2 Marks ]
(a) 28
Q17 (b) 30.45
(c) 29.21
(d) 30.67
"In market parlance, when an investor offers his units for sale to the scheme, he is said to offer his units for ______. "
[ 2 Marks ]
(a) de-purchase
Q18 (b) pre-purchase
(c) post-purchase
(d) re-purchase
"The present value of an amount of Rs. 1,700 receivable 2 years down the line, assuming yield at 10% p.a. with
annual compounding is Rs. ________." [ 2 Marks ]
(a) 1495
Q19 (b) 1435
(c) 1465
(d) 1405
"Suppose the buyer of a property (Party A) took a loan on floating rate basis (say, T-Bill Rate + 2.75%). He wishes to
convert this loan into a fixed rate. He can do the following:" [ 2 Marks ]
(a) "He can find some other party (Party B), who is prepared to pay him, say T-Bill Rate + 2.75%. "
(b) "He can find some other party (Party B), who is prepared to pay him, say T-Bill Rate + 2.75%, in return for a
Q20 fixed payment of, say, 8%. "
(c) "He can find some other party (Party B), who is prepared to pay him a fixed payment of, say, 8%. "
(d) It is not possible for him to enter into any transaction which can help convert the floating rate loan into a
fixed rate loan.
"For a trading member at the NSE, the Interest Free Security Deposit (IFSD) has to be in _____. " [ 2 Marks ]
(a) fixed deposits

Q21 (b) bank guarantee
(c) securities
(d) liquid cash
SEBI regulations require that there should be at least _____ trustees (or directors in the trustee company) in a
mutual fund. [ 2 Marks ]
Q22
(a) 7
(b) 5
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(c) 6
(d) 4
"The beta of a diversified equity scheme is 1.45. Which means if the market rises / falls by 2%, the NAV of the
scheme would rise / fall by _____." [ 1 Mark ]
(a) 2.90%
Q23 (b) 3.55%
(c) 4.20%
(d) 4.85%
"Among futures and options, the counter party risk would be more in which contract?" [ 2 Marks ]
(a) Options
Q24 (b) Futures
(c) No counter party risk in either
(d) I am not attempting the question
A trading member at NSE can choose to become a member of only the CD segment. [ 1 Mark ]
Q25 (a) FALSE

(b) TRUE
"Investments by holders of Overseas Citizen of India (OCI) Cards, in mutual fund schemes, is repatriable provided the
original investment came into India in _____ currency." [ 2 Marks ]
Q26 (a) local

(b) foreign
These invest largely in equity and equity related securities. [ 1 Mark ]
(a) Liquid Funds

Q27 (b) Gilt funds
(c) Equity funds
(d) Bond Funds
The amount of asset that has to be delivered under one contract is called as the _____. [ 1 Mark ]
(a) contract size

Q28 (b) contract weight
(c) contract amount
(d) contract quantiry
"Under the SC(R)A, contracts in derivatives, shall be legal and valid if such contracts are :" [ 1 Mark ]
(a) Traded on a recognized stock exchange

Q29 (b) Traded on foreign indices
(c) Traded on local indices
(d) Traded on floor based exchanges
Mr. A. buys a futures contract of M/s. XYZ Ltd. (Lot Size: 1000) expiring on 29-Sep-2010 for Rs. 500. The spot price of
the share is Rs. 490. The securities transaction tax (STT) thereon would be Rs. ____. (Assume STT rate is 0.017%) [ 1
Mark ]
(a) 124
Q30
(b) 85
(c) 101
(d) No STT applicable
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Riskiness of investing in ______ is more than the riskiness of investing in _______. [ 2 Marks ]
Q31 (a) debentures; equity shares

(b) equity shares; debentures
______ capital investors are long term investors who are prepared to take the risk that the entrepreneurial project
can fail. [ 1 Mark ]
(a) Mega
Q32 (b) Progress
(c) Multiple
(d) Venture
A mutual fund needs to publish its NAV daily in atleast _____ newspapers. [ 1 Mark ]
(a) 5
Q33 (b) 2
(c) 3
(d) 4
"Mr. A buys a 2600 strike price call option at a premium of Rs. 60 a call. He sells a 3010 strike price call option at a
premium of Rs. 40 a call thus creating a spread. At expiry, the underlying stock closes at Rs. 2663. What is the profit
/ loss made by Mr. A assuming the option contract has a lot size of 200?" [ 3 Marks ]
(a) 9100
Q34
(b) 8600
(c) 9600
(d) 10100
"At the year-end, any balance in the 'Deposit for mark-to-market margin account' should be shown as a deposit under
the head ________." [ 1 Mark ]
Q35 (a) ?Current Assets?

(b) Current Liabilities'
National Securities Clearing Corporation Ltd (NSCCL) handles the settlement of trades that are executed on the NSE
through _______. [ 1 Mark ]
(a) clearing members

Q36 (b) trading members
(c) broker members
(d) dealers
"A person is deemed to be a connected person if such a person is a company under the same management or group or
any subsidiary company thereof within the meaning of ________ of the Companies Act, 1956." [ 3 Marks ]
(a) sub-section (12) of section 375

Q37 (b) sub-section (12) of section 373
(c) sub-section (11) of section 374
(d) sub-section (11) of section 372
"If, in a year, the company does not have adequate profits, the dividend will not be payable in the case of ________
shares." [ 2 Marks ]
Q38 (a) non-cumulative preference

(b) cumulative preference
"For mutual fund investments through Power of Attorney, both the investor and power of attorney holder need to
comply with the KYC documentation." [ 1 Mark ]
Q39
(a) TRUE
5 of 8 13/01/2022, 8:48 pm
(b) FALSE
Suppose the NAV of a scheme went up from Rs. 10 to Rs. 13 during the period January 1 to March 31. The point to
point return of the scheme is _____ . [ 1 Mark ]
(a) 30%
Q40 (b) 31%
(c) 32%
(d) 33%
"A company has profit after tax before exceptional items of Rs. 6,255.45 crs. Its Depreciation is Rs. 1407.33 crs.
Share capital of the company is Rs. 4140.50 crs. Face value of each share is Rs. 10. How much cash earnings per
share did the company make?" [ 2 Marks ]
(a) 19.75
Q41
(b) 18.51
(c) 17.3
(d) 19.97
"According to the L. C. Gupta committee report, the members of an existing segment of the exchange would ______
become the members of derivative segment. " [ 2 Marks ]
Q42 (a) automatically

(b) not automatically
What would Rs. 5000 grow to after 2 years at an annual compunded interest rate of 10%? [ 2 Marks ]
(a) 6130
Q43 (b) 6090
(c) 6050
(d) 6170
The returns in gold sector funds will be closely aligned to the share price of gold mining and processing companies or
gold? [ 2 Marks ]
Q44 (a) gold mining and processing companies

(b) gold
"Suppose an investor earned 14% return from a scheme, whose standard deviation is 0.5. Let us say that a risk-free
return of 8% would have been possible, if the same money was invested with the government. if Beta of the scheme
was 1.75, then Treynor Ratio would be ______." [ 3 Marks ]
(a) 6.55%
Q45
(b) 4.47%
(c) 5.51%
(d) 3.43%
"The operating profit before interest and depreciation of a company is Rs. 11,210.05 crs. Net sales are Rs. 45,540.10
crs. What is the Operating Profit Margin of the company?" [ 2 Marks ]
(a) 23.41
Q46 (b) 25.86
(c) 24.62
(d) 26.08
"Suppose Party A agrees to buy USD6,000 from Party B, 1 month down the line, at Rs. 46 = 1USD (US Dollar). This is
a(n) _______ contract." [ 1 Mark ]
Q47 (a) Options

(b) Futures
(c) Forward
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(d) Swap
An investor Mr. A buys 1000 XYZ Ltd.'s shares at a price of Rs. 668 each. XYZ Ltd. has a beta of 1.5. Mr. A wishes to
hedge this portfolio. He would do the following (Assume Nifty futures are trading at Rs. 5000 and Nifty futures' lot
size = 50): [ 2 Marks ]
(a) Buy 3 Nifty Futures contracts

Q48
(b) Sell 2 Nifty Futures contracts
(c) Sell 4 Nifty Futures contracts
(d) Buy 1 Nifty Futures contract
"A mutual fund scheme has a Unit Capital of Rs. 15 crores, reserves of Rs. 1 crs. Number of unit holders are 1 cr.
What is the NAV of the fund?" [ 2 Marks ]
(a) 18
Q49 (b) 17
(c) 16
(d) 19
Suppose the NAV of a scheme went up from Rs. 10 to Rs. 13 during the period April 1 to August 31. The annualised
return of the scheme is _____ . [ 1 Mark ]
(a) 73%
Q50 (b) 72%
(c) 74%
(d) 75%
_______ perform the role of selling mutual funds. [ 2 Marks ]
(a) Independent Financial Advisors (IFAs)

Q51 (b) Personal Financial Advisors (PFAs)
(c) Registered Financial Advisors (RFAs)
(d) Mutual fund Financial Advisos (MFAs)
"Suppose a company bought 1 mill. USD-INR currency futures at USD 1 = INR 49.0265. If the spot rate on expiry date
of the contract is USD 1 = INR 50, then the currency futures contracts would gain Rs. ______." [ 2 Marks ]
(a) 1073500
Q52 (b) 1023500
(c) 973500
(d) 1123500
"Suppose a company sold 1 mill. USD-INR currency futures at USD 1 = INR 49.0265. If the spot rate on expiry date of
the contract is USD 1 = INR 45, then the currency futures contracts would gain Rs. ______." [ 2 Marks ]
(a) 4026500
Q53 (b) 4076500
(c) 4126500
(d) 4176500
______ schemes are seen as riskier than ______ schemes. [ 1 Mark ]
Q54 (a) "Debt, equity"

(b) "Equity, debt"
"Some equity schemes take opposite positions in different market segments, such that a return is earned while
remaining risk neutral. They are called :" [ 2 Marks ]
Q55
(a) Positional funds
(b) Arbitrage funds
7 of 8 13/01/2022, 8:48 pm
(c) Directional funds

(d) Speculative funds
______ is an intermediary defined under the SEBI Act. [ 1 Mark ]
(a) Hedge fund

Q56 (b) Trustee of a trust deed
(c) Soverign fund
(d) Private equity
"The Expenditure in a company's P&L a/c is Rs. 47,389.23 crs. Current liabilities are Rs. 8687.73 crs. What is the
company's Average Payment Period?" [ 2 Marks ]
(a) 66.91
Q57 (b) 68.15
(c) 65.7
(d) 68.37
"In a mutual fund, the trust acts through ______, who are appointed by the sponsor. " [ 1 Mark ]
(a) lawyers
Q58 (b) investors
(c) trustees
(d) auditors
A trading member of NSE wishing to surrender the membership must get a _____ certificate from SEBI. [ 2 Marks ]
(a) No Defaults
Q59 (b) No Claims
(c) No Dues
(d) No Complaints
The difference between the selling price (of sale in the stock exchange or as re-purchase of units by the scheme) and
buying price of an investment is treated as a ______ (or loss) [ 1 Mark ]
(a) book gain

Q60 (b) notional gain
(c) real gain
(d) capital gain
Done
8 of 8 13/01/2022, 8:48 pm

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NSE - National Stock Exchange of India Ltd. https://www1.nseindia.com/education/dynaContent/smame_paper.

NCFM Model Test Paper

(a) stock index

Q10 (a) financial

Q12 (a) same as

(a) Advertising and sales promotion expenses

(a) Cheapest to Deliver

(a) fixed deposits

Q25 (a) FALSE

Q26 (a) local

(a) Liquid Funds

(a) contract size

(a) Traded on a recognized stock exchange

Q31 (a) debentures; equity shares

Q35 (a) ?Current Assets?

(a) clearing members

(a) sub-section (12) of section 375

Q38 (a) non-cumulative preference

Q42 (a) automatically

Q44 (a) gold mining and processing companies

Q47 (a) Options

(a) Buy 3 Nifty Futures contracts

(a) Independent Financial Advisors (IFAs)

Q54 (a) "Debt, equity"

(c) Directional funds

(a) Hedge fund

(a) book gain

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