NISM Series X A Mock Exam 2 Title

NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION - REAL FEEL MOCK EXAM 2
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duration is 2 hours.
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THIS IS A MOCK EXAM TO TEST YOUR PREPARATIONS. PLEASE SOLVE THESE 100 QUESTIONS
IN 2 HOURS. THE ANSWERS ARE PROVIDED IN THE END.
REAL FEEL MOCK EXAM 2 - UPDATED

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Question 1 The minimum amount that can be invested in National Savings

Certificate (NSC) is _____.
(a) Rs 100
(b) Rs 500
(c) Rs 1000
(d) Rs 5000
Question 2 Which of the following statements is True with respect to a Power of

Attorney ?
(a) Power of Attorney is a process of mutation
(b) Power of Attorney is executed by donee
(c) Power of Attorney is an authorization to act on behalf of a person in respect of

all matters
(d) Power of Attorney can be executed only if both the parties should have
attained majority
Question 3 ________ is an advantage of gold ETF over investment in physical gold.
(a) PAN is not required for investing in Gold ETF
(b) Even if gold prices fall the Gold ETF price can never fall
(c) There is no storage or security risk in Gold ETF
(d) One needs to have a demat account for investing in Gold ETF
Question 4 Pension Plans of Mutual Funds permit Systematic Investment Plan (SIP)
- State True or False ?
(a) TRUE
(b) FALSE
Question 5 Any property held by the assessee under trust or other legal obligations
for any public purpose of a charitable or religious nature in India shall be
included in the calculation of net wealth of the assessee -State True or
False?
(a) TRUE
(b) FALSE
Question 6 Corporate Bonds are issued for tenors ranging from 2 years to ______ .
(a) 5 years
(b) 7 years
(c) 15 years
(d) 25 years
Question 7 Which of the following is deductible from the Gross Annual Value of
house property ?
(a) Municipal taxes paid
(b) Standard deduction at the rate of 30% of the net annual value
(c) Interest on loan taken for acquisition / construction
(d) All of the above

Question 8 The sign of 'Correlation' is always the same as that of ________ .
(a) Standard Deviation
(b) Beta
(c) Variance
(d) Covariance
Question 9 _____ is an example of Indirect Tax.
(a) Income Tax
(b) Wealth Tax
(c) Both Income Tax and Wealth Tax
(d) None of the above
Question 10 Insurance is a contract between two parties - the insurer and insured -
wherein the insurer agrees to pay the insured for financial losses arising
out of any unforeseen events ______
(a) In return for a regular payment of 'commission'
(b) In return for a regular payment of 'rental'
(c) In return for a regular payment of 'premium'
(d) In return for a regular payment of 'interest'
Question 11 What is an important feature of a good retirement plan ?
(a) Investments in Provident Fund
(b) Potential to provide adequate corpus for retirement years without

compromising on standard of living
(c) Compromise between current lifestyle and accumulation for retirement needs
(d) Investing in equities to accumulate the corpus for retirement

Question 12 Under which section of Income Tax Act is the premium paid for medical
insurance allowed as deductible ?
(a) 80 A
(b) 80 B
(c) 80 C
(d) 80 D
Question 13 The current cost of a goal is converted into its future value by using the
formula : Current Value X (1 + Rate of Inflation) ^ (Years to Goal).
State True or False ?
(a) TRUE
(b) FALSE
Question 14 A person who inherits the property under is Will is called the ________ .
(a) Nominee
(b) Beneficiary
(c) Legal heir
(d) Assignee
Question 15 Calculate the Nominal Rate of Return if the Real Rate of Return is 9%
and the rate of inflation is 2% .
(a) 7%
(b) 11%
(c) 7.85%
(d) 11.18%
Question 16 Losses from the activity of owning and maintaining race horses can be set
off against _____ .
(a) Income form gambling in horse races
(b) Income from the activity of owing and maintaining race horses
(c) Income from lotteries
(d) Any head of income
Question 17 Which type of mutual fund is ideal for an investor who wishes to invest in
a portfolio which is likely to beat inflation over long period of time should
?
(a) Post office deposits
(b) Debt mutual funds
(c) Liquid mutual funds
(d) Equity mutual funds
Question 18 Which organisation has developed a centralized web based system for
lodging and tracking investor complaints which is known as SCORES ?
(a) IRDAI
(b) PFRDA
(c) SEBI
(d) AMFI
Question 19 A mutual fund scheme is created by pooling _______ .
(a) Investor’s fund with the similar investing horizon
(b) Investor’s fund with the similar amounts of money
(c) Investor’s fund with the similar risk appetite
(d) Investor’s fund with the similar investment objective

Question 20 Which of the following mutual funds are least risky ?
(a) Sector Funds
(b) Diversified Funds
(c) Small Cap Funds
(d) All are equally risky
Question 21 Equities are perpetual securities, therefore how can a person exit from
equity shares which he has purchased from the primary markets ?
(a) by selling them back to the company only

(b) by selling them in secondary market
(c) by selling them to the depository
(d) by doing a sell transaction in primary market
Question 22 Listed company have to file their shareholding pattern and financial
results on a _____ basis as per the Listing Agreement with the stock
exchanges.
(a) Monthly
(b) Quarterly
(c) Six monthly
(d) Annual
Question 23 What is the main responsibility of a Self Regulatory Organisations

(SRO) ?
(a) To make a lobby for protection of its members
(b) To regulate their own members
(c) To encourage ethical business

Question 24 The covariance between security X and market is 25 and standard

deviation of market is 4. Calculate Beta of a security.
(a) 6.25
(b) 1.5625
(c) 1.25
(d) 4.7582
Question 25 Which of the following is a Capital Asset ?
(a) Gold deposit bonds 1999
(b) Shares held by a broker as stock in trade
(c) Shares held by an investor
(d) Rural agricultural land
Question 26 Mr. Amit started with investment of Rs 6 lakhs in equity mutual funds,
Rs 7.5 lacs in bond funds and Rs 1.5 lacs in Gold ETF. In one year ,
Equity funds delivered 35% returns, debt funds delivered 6% and gold
ETF went up by 19%. How does the asset allocation between Equity,
Debt and Gold look now ?
(a) Equity 44.50 %, Debt 45.50 % and Gold 10 %

(b) Equity 45.41 %, Debt 44.58 % and Gold 10.01 %
(c) Equity 47.50 %, Debt 46 % and Gold 8.5 %
(d) Equity 41 %, Debt 44.5 % and Gold 14.5%
Question 27 Which of the below mentioned option means a contract for buying or
selling a specific underlying , on a future date, at a price specified today ,
and entered into through a formal mechanism on the exchange.
(a) Forward Contract

(b) Hedging Contract
(c) Futures Contract
(d) Options Contract
Question 28 Certain expenses incurred by the AMC for managing a mutual fund is
charged to ______ .
(a) the agents
(b) the unit holders
(c) SEBI
(d) AMFI
Question 29 The main disadvantage of a whole life insurance policy are ______ .
(a) premium inflexibility, and the internal rate of return in the policy may not be
competitive with other savings alternatives.
(b) premium inflexibility and no rider options
(c) higher premiums for relatively low covers
(d) higher premiums and no possibility of any riders
Question 30 ________ type of securities can be issued by Central and State

Governments to raise capital.
(a) Bonds and treasury bills

(b) Equity and preference shares
(c) Securitized paper
Question 31 Earnings Per Share (EPS) is calculated as Net Profit minus _______
divided by ________ .
(a) Dividend earned from Preference Shares , Number of Outstanding Equity

Shares
(b) Dividend earned from Preference Shares , Number of Outstanding Preference
Shares
(c) Dividend earned from Equity Shares , Number of Outstanding Equity Shares
(d) Dividend earned from Equity Shares , Number of Outstanding Preference
Shares
Question 32 An investor holds a large portfolio of shares from different companies

and industries. Her portfolio is likely to be protected from _____ .
(a) Systematic risk
(b) Unsystematic risk
Question 33 Who formulates and implements the monetary policy in India ?
(a) Finance Ministry
(b) RBI
(c) SBI
(d) SEBI
Question 34 The present value of the persons future earnings is commonly known as
______ .
(a) Economic life value
(b) Minimum value of insurance
(c) Estimated value of loss
(d) Human life value
Question 35 Mr. Fernandes wishes to retire in 10 years from now. He wants to have a
fixed stream of payments for 15 years after retirement. He wants to
liquidate his investments in risky instruments immediately . What kind of
annuity is recommended for him ?
(a) A deferred life annuity
(b) An immediate life annuity
(c) An immediate annuity certain
(d) A deferred annuity certain

Question 36 Once the New Fund Offer (NFO) ends, investors can buy the units of
close ended mutual funds at _______ .
(a) a price which is higher than NAV
(b) a price which is lower than NAV
(c) a price which can be higher or lower than NAV
(d) Units of close ended mutual funds cannot be bought after NFO
Question 37 A person has taken an educational loan for higher education of his
daughter and paid Rs 95000 as interest in the current financial year. How
much is the amount deductible under income tax act 1961 ?
(a) Rs 25000
(b) Rs 50000
(c) Rs 75000
(d) Rs 95000
Question 38 The minimum amount that can be deposited in a Post Office Monthly
Income Scheme is _______ .
(a) Rs 1500
(b) Rs 1000
(c) Rs 500
(d) Rs 200
Question 39 A Large negative covariance between two securities will means that there
is a ______ .
(a) Positive trend in movements of returns of the two securities

(b) Parallel trend in movements of returns of the two securities
(c) Declining trend in returns of the two securities
(d) Opposite trends in movements of returns of the two securities
Question 40 For a risk to be insurable, it is essential that the person insuring must be
the one who will suffer the loss - State True or False ?
(a) TRUE
(b) FALSE
Question 41 Decision to opt out from transaction charges may be taken by _______
for each ________.
(a) AMC, Distributor
(b) AMC, Scheme
(c) Distributors, Investors
(d) Distributor, Scheme
Question 42 A product costs Rs 530 today and it was Rs 480 a year ago, what is the
inflation over the year?
(a) 9.06%
(b) 10.41%
(c) 6.77%
(d) 12.58%
Question 43 The offence of money laundering is punishable with rigorous

imprisonment for a term which shall not be less than _____ but which
may extend to ______ .
(a) 2 years , 5 years
(b) 3 years , 7 years
(c) 1 years , 3 years
(d) 5 years , 10 years

Question 44 Mr. Suresh has estimated that he would need to accumulate a sum of Rs 3
crore at the time of his retirement 20 years hence. Assuming the portfolio
returning 8.3% p.a., calculate the investment he needs to make at the end
of every year for the next 20 years.
(a) Rs 679540
(b) Rs 634104
(c) Rs 510466
(d) Rs 529873
Question 45 Are all primary market issues compulsorily public issues ?
(a) Yes
(b) No
Question 46 What does a securities market comprise of ?
(a) Organised Money Market
(b) Unorganised Money Market
(c) Primary and Secondary market
Question 47 A conservative investor prefers regular income and will hold more of
income oriented asset classes. State True or False ?
(a) TRUE
(b) FALSE
Question 48 Senior citizen saving scheme account can be opened for a term of _____
years initially and is extendable by one block of ____ years.
(a) 2,3
(b) 5,3
(c) 5,5
(d) 6,5
Question 49 Total returns are always positive - State True or False ?
(a) TRUE
(b) FALSE
Question 50 With effect from January 1, 2016 payment for applications made in a
public issue must be made only using ______ .
(a) Demand Draft
(b) Cash
(c) ASBA
(d) Online method
Question 51 Is Insurance Planning an essential of Financial Planning ?
(a) Yes
(b) No
Question 52 A review of the financial plan is generally NOT required when _______ .
(a) the economic environment is stable
(b) there are changes in the interest rates in the economy
(c) the goals have changed and more resources are required
(d) there is an increase or decrease in income
Question 53 Who will bear the investment risk in case of defined contribution
retirement plans like the National Pension Scheme (NPS)?
(a) The Government
(b) The Employer
(c) The Employee
(d) The Fund Managers
Question 54 Investment planning decides __________ and asset allocation strategies

based on the ______ , risk profile and financial goals of the client.
(a) Investment-cum-insurance, long time horizon
(b) Best investment options, flexible time horizon
(c) Optimum investment, time horizon
(d) Minimum investment, maximum time horizon
Question 55 _______ is not offered to the employees by their employers as a

retirement benefit.
(a) Public Provident Fund
(b) Gratuity
(c) Employee Provident Fund
(d) Superannuation
Question 56 A person invests in a mutual fund at NAV of Rs 10.50 and the amount
was redeemed for Rs 12.50 at the end of 2 years . Calculate the
compounded rate of return.
(a) 10.22%
(b) 8.75%
(c) 9.10%
(d) 7.80%
Question 57 Which plan of a Mutual Fund permits investors to periodically transfer a

specified sum from one scheme to another scheme of the same mutual
fund ?
(a) Switch
(b) Systematic Investment Plan (SIP)
(c) Systematic Transfer Plan (STP)
(d) Systematic Withdrawal Plan (SWP)
Question 58 Government of India's small saving schemes are offered through _____ .
(a) Financial Institutions and Charitable Trusts
(b) Post Offices and Select Public Sector Banks
(c) Public Limited Companies
(d) Multinational Banks

Question 59 Mr. Shah has Rs. 75000 in bank fixed deposits and a balance of Rs 25000
in his savings a/c . Balance is invested in equity mutual funds. He lives in
a house estimated to be worth Rs 70 lakhs. He has an outstanding loan of
Rs 40 lakhs on the house. His financial advisor told him that his networth
is Rs 35 lakhs. What is the estimated value of his mutual fund
investments ?
(a) Rs. 6.5 lakhs
(b) Rs. 4 lakhs
(c) Rs. 12 lakhs
(d) Rs. 18.5 lakhs
Question 60 A person is interested in getting returns which are similar to market

benchmark, so he should ______ .
(a) buy stocks as per the index
(b) invest in portfolio management schemes which invests in bluechip stocks
(c) invest in index fund
(d) regularly churn his portfolio to align return with the market index
Question 61 ______ are also called as issue managers , investment bankers or lead
managers , who help an entity to come out with a public issue of shares.
(a) Bankers to an issue
(b) Registrar's to an issue
(c) Asset Management Companies
(d) Merchant Bankers

Question 62 _________ determine the costs of import of funds and commodities

essential for production.
(a) Foreign exchange markets
(b) Stock Markets
(c) Interest rate markets
(d) Banking sector
Question 63 What are those investments called whose risk and return structures differ
from the traditional asset classes ?
(a) ELSS Funds
(b) Alternate investments
(c) Debentures
(d) Debt
Question 64 A PPF account can be extended _____ .
(a) in blocks of 5 years once
(b) in blocks of 5 years twice
(c) in blocks of 5 years thrice
(d) in blocks of 5 years any number of times
Question 65 Which type of system allows traders to trade electronically by connecting

to the system without being physically located at the exchange ?
(a) Ring trading system

(b) Signaling system
(c) Online system
(d) Floor trading system
Question 66 As per the Payment of Gratuity Act, 1972, for non-government

employees, any gratuity received by such employees is exempt from tax to
the extent of the least of the following :
(a) Actual Gratuity received , Rs. 10,00,000 , 15 days average salary for each
completed year of service
(b) Actual Gratuity received , Rs. 10,00,000 , 30 days average salary for each
(c) Actual Gratuity received , Rs. 7,50,000 , 30 days average salary for each
(d) Actual Gratuity received , Rs. 7,50,000 , 15 days average salary for each
Question 67 _______ are major participant in the secondary market.
(a) Stock Brokers

(b) Stock Exchanges
(c) Asset Management Companies
Question 68 Which amongst the following is NOT an appropriate parameter to

consider in a time value situation ?
(a) Opportunity cost
(b) Asset allocation
(c) Time horizon
(d) Frequency of cash flows
Question 69 An insurance company can the protection by grouping together a large number of people
_______ .
(a) Who all come from the same area (place)

(b) Who all have similar financial needs
(c) Who all pay similar premium
(d) Who all feel exposed to the same form of risk
Question 70 XYZ Co. Ltd share has a face value of Rs 10 and the market price is Rs
500 . It announces a split to split the share from Rs 10 to Rs 2 a share.
What would be price on the ex-date ?
(a) The market price will be Rs 2 per share , that is the face value
(b) The market price would have been adjusted by the same factor of the split to
Rs 100 per share
(c) The market price will remain at Rs 500 per share
(d) None of the above
Question 71 The Indian Banking system is regulated by _____ .

(a) The Finance Minister or India
(b) Commerce Ministry
(c) PFRDA
(d) RBI
Question 72 The requirements with respect to disclosure and process requirements for
capital market transactions by listed companies are laid down in the
_______ .
(a) SEBI (ICDR) REGULATIONS 2009
(b) SEBI (SAST) REGULATIONS 2011
(c) SEBI (INTERMEDIARIES) REGULATIONS 2008
(d) SEBI Act, 1992
Question 73 ________ is not a Participating policy.
(a) Unit Linked Insurance Plan (ULIP)
(b) Term Insurance
(c) Endowment Insurance
(d) Money Back Insurance

Question 74 The certificate of registration granted by SEBI to an Investment Adviser is valid for how
many years?
(a) 3 years
(b) 5 years
(c) 10 years
(d) Till it is suspended or cancelled by SEBI
Question 75 When an investor in NPS changes his job, his Permanent Retirement
Account Number (PRAN) also changes - State True or False ?
(a) TRUE
(b) FALSE
Question 76 Miss Meena bought 200 shares of face value Rs 2 of a company at Rs

12000. The company declared 300% dividend. What would be the
dividend yield on the value invested in the shares?
(a) 6%
(b) 10%
(c) 11.66%
(d) 13.74%
Question 77 Mr. Kiran goes out of India on 27th September 2015 for employment
purpose. What will be his residential status for Assessment Year 2016-17
?
(a) Resident but not ordinarily resident
(b) Non resident Indian
(c) Resident and ordinarily resident
(d) Deemed resident

Question 78 The investment strategy of Indexing tries to maximise the returns when
compared to a benchmark - State True or False ?
(a) TRUE
(b) FALSE
Question 79 Higher the variance of an expected rate of return , greater the ______ .
(a) risk
(b) return
(c) complexity
(d) risk free return
Question 80 A book built IPO issue will remain open for a period between ____ to
____ days and can be extended by 3 days in case of a price revision.
(a) 3 , 10
(b) 2,7
(c) 7 , 10
(d) 3,7
Question 81 The National Pension Scheme (NPS) is regulated by _____ .
(a) SEBI
(b) IRDAI
(c) RBI
(d) PFRDA
Question 82 Structured products are hybrid securities that combine the features of
debt and exchange traded derivatives - State True or False ?
(a) TRUE
(b) FALSE
Question 83 The maximum tenure of a Reverse Mortgage scheme is ___ years.
(a) 5
(b) 10
(c) 15
(d) 20
Question 84 M/s Dynamic International Ltd. reported a net profit of Rs 206 crore for
year ended March 2015. The company has outstanding equity shares
numbering 7,30,00,000. The current market price of the share is Rs
410.50. Find the P/E ratio of the share ?
(a) 145.46
(b) 1.456
(c) 12.85
(d) 14.54
Question 85 Which type of plans normally requires a person to pay premiums till he /
she retires ?
(a) Loan cover plans
(b) Pension plans
(c) Endowment plans
(d) Children plans

Question 86 Pension Fund Regulatory and Development Authority (PFRDA) is

responsible for registering which among the following constituents ?
(a) Fund Managers
(b) Central record keeping agency
(c) Custodians
Question 87 The returns from bonds of a company would depend on the ability to
generate enough cash to pay interest, even if the company would make
losses or a minimal profit - State True or False ?
(a) TRUE
(b) FALSE
Question 88 Who among the following is responsible for collection and payments of
funds ?
(a) Sponsors
(b) Banks
(c) Auditors
(d) Trustees
Question 89 The Net Present Value gives _______ where as the Internal Rate of
Return gives _______ .
(a) An absolute number , a number in percentage terms
(b) A number in percentage terms, An absolute number
(c) Hurdle rate , Discounted cash flows
(d) Discounted cash flows , Hurdle rate

Question 90 What will be the future value of Rs 14000 investment at 20% return per
annum after 2 years ?
(a) 20300.8
(b) 19600
(c) 21250.6
(d) 20160
Question 91 Floating annuities are those in which the returns are benchmarked to
inflation or index returns or any other return as specified in the
indenture agreement at the time of buying - State True or False ?
(a) TRUE
(b) FALSE
Question 92 If the price of a security is declining in the stock market, its an indication
that the sales / profits of the company is likely to _______ .
(a) decrease
(b) increase
Question 93 Investment advisers who are individuals or partnership firms shall have
net tangible assets of value not less than ________ . ( As per SEBI
(Investment Advisers) Regulation 2013 )
(a) Rs 1 lakh
(b) Rs 5 lakh
(c) Rs 10 lakh
(d) Rs 25 lakh
Question 94 Which of these is mandatory as per Indian laws ?
(a) Air travel insurance
(b) Liability insurance
(c) Property insurance
(d) Third party motor insurance
Question 95 ______ are institutional intermediaries who are authorized to hold funds
and securities on behalf of large institutional investors.
(a) Depository Participants
(b) Clearing Corporations
(c) Trusts
(d) Custodians
Question 96 Who can perform the role of underwriter after being registered as
underwriters under SEBI’s Underwriters Regulations 1993 ?
(a) Merchant Bankers
(b) Commercial Banks
(c) Stock Brokers
Question 97 How can a company do Risk Financing ?
(a) By Retaining the risk
(b) By Transferring the risk
(c) By Sharing the risk
(d) Both 1 and 2

Question 98 An investment adviser who provides investment advisory services will

have to obtain a certificate of registration from _______ .
(a) BSE or NSE
(b) RBI
(c) SEBI
(d) IRDA
Question 99 Which of these investment instrument offers tax relief but has a 3 year
lock in period ?
(a) Diversified Equity Funds
(b) Fixed maturity Plans
(c) Close Ended Funds
(d) Equity Linked Savings Scheme
Question 100 When one invests in Government Bonds, there is no _____ .
(a) Reinvestment Risk
(b) Credit Risk
(c) Interest Rate Risk
(d) Selection Risk
================== * * * * * * * ====================
ANSWERS TO REAL FEEL MOCK EXAM QUESTIONS :
Correct Answer 1 Rs 100
Answer In NSC, the minimum investment is Rs.100 without any maximum limit.
Explanation
(Certificates are available in denominations of Rs. 100, 500, 1000, 5000,
and 10000)
Correct Answer 2 Power of Attorney can be executed only if both the parties should have
attained majority
Answer A Power of Attorney (POA) is an instrument by which a person may

Explanation formally authorize another person to act on his behalf or as his agent on
all matter or for a specific transaction or particular types of transactions.
Correct Answer 3 There is no storage or security risk in Gold ETF
Answer Gold ETF are units held in electronic form allowing people to have the
Explanation benefit of investing in gold without involving any storage, handling or
security costs.
Correct Answer 4 TRUE
Answer Pension schemes of Mutual Funds work just like other mutual fund
Explanation schemes except that withdrawals are restricted / penalised before the
retirement age.
Correct Answer 5 FALSE
Answer As per the Wealth Tax Act of India, the above mentioned properties will
Explanation not be included in the calculation of net wealth of the assessee.
Correct Answer 6 15 years
Answer Corporate bonds are debt instruments issued by private and public sector
Explanation companies and are issued to raise long-term debt. They are issued for
tenors ranging from 2 years to 15 years.
Correct Answer 7 All of the above

Answer The income from house property that is taxed will be computed as:
Explanation
Gross Annual Value of the property
Less Municipal Taxes and Unrealized rent
= Net Annual Value
Less Standard deductions and/or interest payable
Correct Answer 8 Covariance
Answer Covariance and correlation always have the same sign (positive, negative,
Explanation or 0). When the sign is positive, the variables are said to be positively
correlated; when the sign is negative, the variables are said to be
negatively correlated; and when the sign is 0, the variables are said to be
uncorrelated.
Correct Answer 9 None of the above
Answer Direct Taxes, as the name suggests, are taxes that are directly paid to the
Explanation government by the taxpayer. It is a tax applied on individuals and
organizations directly by the government e.g. income tax, corporation
tax, wealth tax etc.
Indirect taxes are applied on the manufacture or sale of goods and

services. VAT, Excise duty ( Now GST ) etc. are examples of Indirect
taxes as the tax is levied on one entity, such as a seller, and paid by
another - the buyer.
Correct Answer 10 In return for a regular payment of 'premium'
Answer Insurance enables risk transfer from the beneficiary (insured) to the
Explanation insurance company (insurer), which undertakes to indemnify the insured
for the financial loss suffered. In return, the insured pays a periodic fee,
called premium, to the insurer to receive this protection.
Correct Answer 11 Potential to provide adequate corpus for retirement years without
compromising on standard of living
Answer A good retirement plan provides an adequate corpus for the sunset years
Explanation without compromising on the standard of living of the person. It also
involves smart selection of retirement products to not only save for
retirement but also help save on taxes.
Correct Answer 12 80 D
Answer Premium paid on health insurance policies is allowed as deduction from

Explanation total income, within the limits specified by section 80D.
Answer The future value of a goal = Current Value x (1+ Rate of Inflation) ^
Explanation (Years to Goal)
Correct Answer 14 Beneficiary
Answer A Beneficiary is an individual or entity to whom a deceased benefactor

Explanation bequeaths real and personal property, cash or other assets.
The will defines the decedent's intended beneficiaries and the inheritance
they are to receive.
Correct Answer 15 11.18%
Answer The return on an investment is usually expressed as a nominal rate.

Explanation When the Nominal rate is adjusted for the effects of inflation, it is known
as the Real rate of return.
Nominal Rate = (1+Real Rate) X (1+Inflation Rate) - 1
= (1 + .09) X (1 + .02) - 1
= (1.09 X 1.02) - 1
= 0.1118 = 11.18%
Correct Answer 16 Income from the activity of owing and maintaining race horses
Answer According to provisions of Section 74A(3) of the Income Tax Act, the
Explanation losses incurred by an assessee from the activity of owning and
maintaining race horses cannot be set-off against the income from any
other source other than the activity of owning and maintaining the race
horses.
Correct Answer 17 Equity mutual funds
Answer Equity as a class of investment generally beats inflation over the long
Explanation term.
Correct Answer 18 SEBI
Answer SCORES - ‘SEBI Complaint Redress System’

Explanation
Correct Answer 19 Investor’s fund with the similar investment objective
Answer A mutual fund scheme is defined by its investment objective. The

Explanation investment objective will state what the scheme intends to achieve. The
asset class that the fund will invest in, the type of securities that will be
selected and the way the fund will be managed will depend upon the
investment objective.
An investor’s decision to invest in a mutual fund scheme should be

determined by the suitability of the scheme to their needs. For eg- If
investors investment objective is to have steady long term appreciation of
their money, they will invest in such funds which have similar objective
like- Diversified Large Cap Fund etc.
Correct Answer 20 Diversified Funds
Answer Diversified equity funds invest across segments, sectors and sizes of
Explanation companies. Since the portfolio takes exposure to different stocks across
sectors and market segments, there is a lower risk in such funds of poor
performance of few stocks or sectors.
Sector funds invest in companies that belong to a particular sector such

as technology or banking. The risk is higher because of lesser
diversification since such funds are concentrated in a particular sector.
Small-cap funds invest in companies with small market capitalisation

with intent of benefitting from the higher gains in the price of stocks. The
risks are also higher.
Correct Answer 21 by selling them in secondary market
Answer Equity shares once purchased from the primary market can be sold in
Explanation the secondary markets ie. the Stock Exchanges.
Correct Answer 22 Quarterly
Answer The Listing Department of the Stock Exchanges monitors the compliance
Explanation by the companies with the provisions of the Listing Agreement, especially
with regard to timely payment of annual listing fees, submission of
results, shareholding patterns and corporate governance reports on a
quarterly basis . Penal action is taken against the defaulting companies.
Correct Answer 23 To regulate their own members
Answer An SRO will seek to uphold investors’ interest by laying and maintaining
Explanation high ethical and professional standards of conduct and encouraging best
practices among its members.
In the developed world, it is common for market players to create Self

Regulatory Organizations, whose prime responsibility is to regulate their
own members.
Correct Answer 24 1.5625
Answer Beta = Co-Variance / Variance

Explanation
(Variance is square of Standatd Deviation ie square of 4 = 16)
Beta = 25 / 16
= 1.5625
Correct Answer Shares held by an investor

25
Answer Capital asset is defined under Section 2(14) of the Income Tax Act as a property of any
Explanation kind,
whether connected with the business or not, movable or immovable, tangible or intangible
except for the following, which are not capital assets:
- Any stock-in-trade
- Consumable stores or raw materials held for the purpose of business or profession
- Certain personal effects that are movable and are held for personal use
- Agricultural land in India
- Certain gold bonds
- Special bearer bonds issued in 1991
Investments in securities will classify as capital assets, as per the above definition. Gold,
jewellery, paintings, sculptures and immovable property are also classified as capital
assets.
Correct Answer 26 Equity 45.41 %, Debt 44.58 % and Gold 10.01 %
Answer Equity rose by 35% = Rs 210000 ( 35% of 6 lacs) Current Value =

Explanation 600000 + 210000 = 810000
Debt rose by 6% = Rs 45000 ( 6% of 7.5 lacs) Current Value = 750000 +

45000 = 795000
Gold rose by 19% = Rs 28500 (19% of 1.5 lacs) Current Value = 150000
+ 28500 = 178500
Total Current value of all investments = 810000 + 795000 + 178500 =

1783500
So Equity Investments will be 45.41 % ( 810000 / 1783500 x 100)
Debt investments will be 44.58 % ( 795000 / 1783500 x 100 )
Gold investment will be 10.01 % ( 178500 / 1783500 x 100 )

Correct Answer 27 Futures Contract
Answer In a futures contract, the terms of the contract are determined by the
Explanation exchange which initiates the contract. The price is determined by the
parties to the contract. A futures contract is standardized as to
quantity, quality and delivery terms.
A forward transaction is one where the terms of the transaction, such as

the quantity, quality, price and terms of delivery are customized to the
requirements of the persons involved.
Correct Answer 28 the unit holders
Answer The fees and expenses related to managing the fund such as fund
Explanation manager’s fees, charges paid to constituents, regulatory expenses
on advertisements and such are deducted to arrive at the net assets of the
scheme. So when the unit holders sell the units, the get the reduced NAV.
Correct Answer 29 premium inflexibility, and the internal rate of return in the policy may
not be competitive with other savings alternatives.
Answer Whole Life insurance provides life insurance cover for the entire life of
Explanation the insured person or up to a specified age.
The primary advantages of whole life policies are guaranteed death

benefits; guaranteed cash values, fixed and known annual premiums.
The primary disadvantages of whole life are premium inflexibility, and

the internal rate of return in the policy may not be competitive with other
savings alternatives.
Correct Answer 30 Bonds and treasury bills
Answer Central, State and Local Governments raise funds to meet their fiscal
Explanation deficits by issuing bonds called government securities (G-secs) and
treasury bills.
They are no equity issuances by the government.
Securitized papers are issued by Private Sector companies to raise funds

for less than one year.
Correct Answer 31 Dividend earned from Preference Shares , Number of Outstanding

Equity Shares
Answer Preference share dividends are removed from net income in the Earnings
Explanation Per Share calculation. This is because EPS only measures the income
available to common stockholders. Preferred dividends are set-aside for
the preferred shareholders and can't belong to the common shareholders.
Correct Answer 32 Unsystematic risk
Answer Unsystematic risk is the risk specific to individual securities or a small

Explanation class of investments. Hence it can be diversified away by including other
assets in the portfolio.
Unsystematic risk is also known as diversifiable risk. Thus, having a

portfolio of different companies will protect it from unsystematic risk.
(Systematic risk or market risk refers to those risks that are applicable to
the entire financial market or a wide range of investments. These risks
are also known as undiversifiable risks, because they cannot be
eliminated through diversification)
Correct Answer RBI

33
Answer RBI is the central bank of the country and is vested with the responsibility of
Explanation administering the monetary policy.
Correct Answer 34 Human life value

Answer Human Life Value (HLV) is the present value of the expected
Explanation income over the working life of the individual that is available for the
dependents.
HLV is calculated as the present value of the person’s future earnings.
Correct Answer 35 A deferred annuity certain
Answer Income for guaranteed period (also called period certain annuity). You
Explanation are guaranteed a specific payment amount for a set period of time (say, 5
years or 30 years). If you die before the end of the period your beneficiary
will receive the remainder of the payments for the guaranteed period.
Lifetime payments.
In the above Question , Mr. Fernandes wants the stream of payments to

start after 10 years - so its a deferred annuity. Since he wants it only for
particular period (15 years), he needs deferred annuity certain plan.
Correct Answer 36 a price which can be higher or lower than NAV
Answer As closed-end funds are traded on a public stock exchange, the price of
Explanation the shares will be determined by the market. As such, the share price at
any point in time will likely trade at either a premium or discount to the
stated NAV.
There are many times when closed-end funds will trade at a premium or
discount to NAV when there is no discernible reason for the difference to
exist. Normally, though, the differences will be based upon the
perspective of the buyers and sellers and their expectations for the future
performance of the assets.
Answer Section 80E of the Income Tax Act allows the entire interest paid on
Explanation education loan as deduction
Answer Minimum amount of investment in the Post Office Monthly Income

Explanation Scheme is Rs. 1500, and the maximum amount is Rs. 4.5 lakhs for a singly
held account and Rs. 9 lakhs if the account is held jointly.
Correct Answer 39 Opposite trends in movements of returns of the two securities
Answer Covariance is a measure of the degree to which returns on two assets

Explanation move in tandem.
A positive covariance means that asset returns move together. A negative

covariance means returns move inversely.
Answer This is based on the principle of Insurable Interest. Persons are said to
Explanation have an ‘insurable interest’ when they stand to gain or benefit from the
continued existence (safety) and well-being of the person or property
insured, and would suffer a financial loss if there is damage to the person
or property.
Correct Answer 41 Distributor, Scheme
Answer This is as per AMFI rules.

Explanation
Answer Inflation over a period = [ ( Current Prices / Old Prices ) - 1 ] X 100

Explanation
= ( 530 /480 - 1 ) x 100
= ( 1.1041 - 1 ) x 100
= .1041 x 100
= 10.41 %
Correct Answer 43 3 years , 7 years
Answer The offence of money laundering is punishable with rigorous

Explanation imprisonment for a term which shall not be less than 3 years but which
may extend to 7 years and shall also be liable to fine, which may extend to
Rs.5 lakhs.
Answer Mr. Suresh knows that he need Rs 3 crores -so the Future Value is know.
Explanation We need to find the Periodic investments required to achieve the goal.
The formula for Future Value of an annuity is
FV = P [ (1 + r )^ n - 1 ] / r
where P = Periodic Investments = ?
r = Rate of Interest per period = 8.3% = .083
n = Number of periods = 20
Substituting the values in the formula
30000000 = P [ (1 + .083 ) ^ 20 - 1 ] / .083
30000000 x .083 = P [(1.083)^20] - 1
To calculate 1.083 ^ 20 , use the Scientific Calculator on your computer.

Input 1.083, than click on x^y, than 20 = we get 4.9268
30000000 x .083 = P (4.9268 - 1)
2490000 = P X 3.9268
P = 2490000 / 3.9268
P = 634104
Correct Answer 45 No
Answer All primary market issues need not be public issues.

Explanation
A primary issue of securities is made to promoters when a company is set
up and equity shares are issued to them; if bonds are issued to
institutions that lend to a company, that is also a primary issue, but
issued privately only to a select set of investors.
Correct Answer 46 Primary and Secondary market
Answer The market in which securities are issued, purchased by investors and
Explanation subsequently transferred among investors is called the securities market.
The securities market has two interdependent and inseparable segments,
viz., the primary market and the secondary market.
Answer Debt as an asset class represents an income-oriented asset. The major

Explanation source of return from a debt instrument is regular income.
Investors who do not want to take risks will invest in such assets.
Correct Answer 48 5,3
Answer The term for the Senior citizen saving scheme is 5 years. A one-time
Explanation extension of 3 years is allowed, if applied within one year of its maturity.
Answer Total return can be positive as well as negative.

Explanation
For example, consider an equity share of face value Rs.10, which yields a
dividend of 30%. The share is purchased for Rs. 200, but sold for Rs.190
after one year.
Dividends earned= 30% of Rs.10 = Rs.3; Loss on sale= Rs. 10
Total return = 3 – 10 = -7 on investment of 200
Rate of return % p.a. = (-7/200) x 100 = -3.5%
Correct Answer 50 ASBA
Answer With effect from January 1, 2016 payment for applications made in a
Explanation public issue must be made only using the ASBA (application supported
by blocked amount) facility. ASBA is an application for subscription to
an issue containing an authorization to the investors’ bank to block the
application money in the bank account and release funds only on
allotment.
Correct Answer 51 Yes
Correct Answer 52 the economic environment is stable
Correct Answer 53 The Employee
Answer The returns of NPS are linked to the market. An investor within the
Explanation scheme has the options to choose funds based on his level of safety and
risks in addition to choosing his own fund manager. So the employee
(investor) will bear the investment risk.
Correct Answer 54 Optimum investment, time horizon
Answer Investment planning involves estimating the ability of the household to

Explanation save, and choosing the right assets in which such saving should be
invested. Investment planning considers the purpose, or financial goals
for which money is being put aside. These goals can be short-term such
as buying a car or can be long term such as education for the children or
retirement planning etc.
Correct Answer 55 Public Provident Fund
Answer The objective of the Public Provident Fund is to provide a long term
Explanation retirement planning option to those individuals who may not be covered
by the provident funds of their employers or may be self-employed.
Answer The formula to calculate compounded interest rate is :

Explanation
Compounded Interest Rate = n [ (A/P)^1/nt - 1]
Where n = number of times compounded in a year = here its 1
A = Accrued Amount or Amount received = 12.50
P = Principal Amount or Amount Invested = 10.50
t = time in years
Substituting the values in formula
= 1 [ (12.5 / 10.5)^1/1x2] - 1
= 1 [ 1.1904 ^ 0.5 ] - 1
In the Scientific Calculator of your computer, input 1.1904, than click on

x^y, than 0.5 and we get 1.091
= 1.091 - 1 = .091 = 9.1%
Correct Answer 57 Systematic Transfer Plan (STP)
Answer A systematic transfer plan combines redemption from one scheme and an
Explanation investment to another scheme of the same mutual fund.
For eg. A investor can deposit a lumpsum amount in a Debt Fund and
systematically transfer a fixed amount every month in an Equity Scheme
of the same mutual fund.
Correct Answer Post Offices and Select Public Sector Banks

58
Answer The Indian government has instituted a number of small saving schemes to
Explanation encourage investors to save regularly. The main attraction of these schemes is the implicit
guarantee of the government, which is the borrower. These schemes are offered through
the post office and select banks.
Correct Answer 59 Rs. 4 lakhs
Answer Networth = Total Assets – Total Liabilities

Explanation
35,00,000 = ( 75000 + 25000 + 70,00,000 + Mutual Funds ) - 40,00,000
3500000 = 7100000 + Mutual Funds - 4000000
3500000 = 3100000 + Mutual Funds
Mutual Fund Investments = Rs. 400000
Correct Answer 60 invest in index fund
Answer Index funds, as the name suggests, invest in an index. These funds
Explanation purchase all the stocks in the same proportion as in a particular index.
This means the scheme will perform in tandem with the index.
So investing in Index funds is the easiest way to get returns which are
similar to the index.
Correct Answer 61 Merchant Bankers
Correct Answer Foreign exchange markets

62
Answer The foreign exchange markets determine the costs of import of funds and commodities
Explanation essential for production.
A well- developed foreign exchange market helps to hedge the risks of price movements for
companies dependent upon imports as well as the earnings of export-oriented organisation.
Correct Answer 63 Alternate investments
Answer Alternate investments refer to those investments whose risk and return
Explanation structures differ from the traditional asset classes such as equity and
debt. They could be linked to the real economy more strongly than other
financial instruments normally are.
Derivatives, structured products, real estate, gold, commodities, private

equity and art/collectibles are the most common alternate investments.
Correct Answer 64 in blocks of 5 years any number of times
Answer Public Provident Fund (PPF) account can be extended on maturity

Explanation after 15 years by a block period of five years with or without making
further contributions. It can be extended by a block of five years at a time
as many times as one wants as there is no limit on the number of times
one can extend his or her PPF account.
Correct Answer 65 Online system
Answer In the online system, the trading terminals of all brokers are connencted
Explanation to a central server by high speed data connectors. Brokers and their
clients can trade without any personal contact.
Correct Answer 66 Actual Gratuity received , Rs. 10,00,000 , 15 days average salary for each
Answer For non-government employees, any gratuity received by such employees

Explanation is exempt from tax to the extent of the least of the following:
a) Half month’s average salary for each completed year of service.

b) Rs. 10,00,000
c) Actual Gratuity received
For government employees, all retirement and gratuity benefits received

is exempt from tax u/s 10(10)(I).
Answer In the secondary market, the major participants are the stock exchanges,
Explanation stock brokers (who are members of the stock exchanges), the mutual
funds / asset management companies (AMCs), financial institutions,
foreign portfolio investors, investment companies, individual investors,
depository participants and banks.
Correct Answer 68 Asset allocation
Answer The money available at the present time is worth more than the same
Explanation amount in the future since it has the potential to earn returns
(opportunity cost). The value associated with the same sum of money
received at various points on the timeline is called the time value of
money.
Correct Answer 69 Who all feel exposed to the same form of risk
Answer Large group of similar units are subject to the same peril or group of
Explanation perils (risks). An insurance company is able to offer the protection it does
because it operates a common pool in which only a few will suffer loss in
any one year.
Correct Answer 70 The market price would have been adjusted by the same factor of the
split to Rs 100 per share
Answer The formula to calculate the new price per share is current stock price
Explanation divided by the split ratio.
Post Split Price = Market Price / Split Ratio
= 500 / (10/ 2)
= ( 500 X 2 ) / 10
= 1000/10
= 100
Correct Answer 71 RBI
Answer The Reserve Bank of India is the regulator of the banking system and the
Explanation monetary authority. Its functions include licensing banks and putting in
place regulations for a strong and stable banking system.
It also acts as a controller of credit in the monetary system by effecting

changes in the Statutory Liquidity Ratio (SLR), Cash Reserve Ratio
(CRR) and other selective credit controls, transact and regulate the
foreign exchange market.
Correct Answer SEBI (ICDR) REGULATIONS 2009

72
Answer The SEBI (Issuance of Capital Disclosures and Requirements - ICDR) Regulations lays
Explanation down general conditions for capital market issuances like public and rights issuances and
private placement of securities. The Regulations define the eligibility requirements,
general obligations of the issuer and intermediaries, nature and format of disclosures
required and the process of making the issue, among others.
Correct Answer 73 Term Insurance
Answer A participating policy enables a policy holder to share the profits of the
Explanation insurance company. These profits are shared in the form of bonuses or
dividends. These survival benefits are paid on maturity. It is also known
as a with-profit policy. Eg-Endowment Policies
In non-participating policies the profits are not shared and no dividends

are paid to the policyholders. This type of policy is also known as a
without-profit or non-par policy. Eg-Term Plans
Correct Answer 74 Till it is suspended or cancelled by SEBI
Answer Any person who proposes to provide investment advice as defined under
Explanation the regulations or who qualifies under the definition of ‘Investment
Adviser’ shall obtain a registration certificate from SEBI in order to
continue to do this activity.
The certificate of registration granted by SEBI shall be valid till it is

suspended or cancelled by SEBI.
Answer During the service life of an employee, only one NPS account is
Explanation maintained irrespective of change of employer.
The NPS allows the flexibility to the subscriber to transfer the retirement
account between sectors. The subscriber can move the account between
employers in the event of a change in employment from the State
government to Central government or vice versa, or to the corporate
sector or to the All Citizens model, as the case may be.
Correct Answer 76 10%
Answer Dividend is declared on the face value of the shares. Here the face value is
Explanation Rs. 2 and the dividend is 300%. So the actual dividend per share is Rs 6
(300% of Rs 2). Total dividend received = Rs 6 x 200 shares purchased =
Rs 1200
Formula for Dividend Yield= Dividend amount / Purchase amount x 100
= 1200 / 12000 x 100
= 10%
Correct Answer 77 Resident and ordinarily resident
Answer BASIC CONDITIONS TO TEST AS TO WHEN AN INDIVIDUAL IS

Explanation RESIDENT IN INDIA - Under section 6(1) an individual is said to be
resident in Ordinarily resident India in any previous year, if he satisfies
at least one of the following basic conditions—
Basic condition (a) He is in India in the previous year for a period of 182
days or more
Basic condition (b) He is in India for a period of 60 days or more during

the previous year and 365 days or more during 4 years immediately
preceding the previous year.
Although Mr. Kiran was not India for more than 182 days in the previous
year, he was in India for more than 60 days and 365 days or more during
4 years immediately preceding the previous year. So he is a Resident and
ordinarily resident
Correct FALSE
Answer 78
Answer Index funds, as the name suggests, invest in an index. These funds purchase all the stocks in
Explanation the same proportion as in a particular index. So these schemes do not try to maximise the
returns but provide returns in tandem with the index it is tracking.
Eg- Sensex fund or Nifty fund which invests in the same stocks in BSE Sensex and NSE Nifty
respectively and in the same proportion.
Correct Risk
Answer 79
Answer Standard deviation and variance are called measures of dispersion, because they measure the
Explanation extent to which observed values are scattered away from the average.
Higher is the standard deviation or variance, more is the dispersion of observed returns
around the
average. Therefore, higher standard deviations / variance are associated with higher risk.
Correct Answer 80 3,7
Answer As per Clause 8.8.1, Subscription list for public issues shall be kept open
Explanation for at least 3 working days and not more than 10 working days. In case of
Book built issues, the minimum and maximum period for which bidding
will be open is 3 - 7 working days extendable by 3 days in case of a
revision in the price band.
Correct Answer 81 PFRDA
Answer The Pension fund regulatory development authority (PFRDA) regulates

Explanation the National Pension Scheme.
Answer Structured products are hybrid securities that combine the features of
Explanation debt and exchange traded derivatives. These products are typically
privately placed and offer market linked returns on debt securities by
taking exposure to derivatives.
Correct Answer 83 20
Correct Answer 84 14.54
Answer Price-Earnings Ratio (PE) = Market price per share / Earnings per share
Explanation
Earning Per Share (EPS) = Net Profit / Outstanding Equity Shares
First calculate the EPS = 2060000000 / 73000000 = 28.219
PE Ratio = 410.50/28.219
= 14.54
Correct Answer 85 Pension plans
Answer Retirement Plans or Pension Plans are normally plans to which

Explanation contributions are made till retirement or for a specified period.
Answer The PFRDA has been assigned the responsibility of designing

Explanation the structure of funds and constituents in the National Pension System
(NPS). It is responsible for registering the various constituents such as the
fund managers, custodians, Central record keeping agency and trustee
banks and to define the parameters of their roles and responsibilities.
Answer The Net Profit or Loss of a company is calculated only after it has paid of
Explanation the interest on its borrowings. So the company has to pay interest on a
priority.
Correct Answer 88 Banks
Correct Answer 89 An absolute number , a number in percentage terms
Answer The Net Present Value (NPV) uses the idea of time value of money to
Explanation evaluate the viability of an investment option. If an investment decision
results in cash outflow at the initial stage and a series of cash inflows over
a period of time, then the net present value of the cash flows can be
calculated as the difference between the present value of the cash outflow
and the sum of the present values of the inflows that accrue over a period
of time.
The Internal Rate of Return (IRR) is an alternative way to express

compounded return from an investment. it is the discount rate at which
the present value of future cash inflows from an investment exactly
equals the value of cash outflows.
Correct Answer 90 20160
Answer Using the formula of Present Value and Future Value.

Explanation
PV = FV / (1 + i)^t --- ( i is interest rate or inflation and t is time )
So FV = (1 + i)^t x PV
FV = ( 1 + 0.2)^2 x 14000
= (1.2) ^2 x 14000
On scientific calculator of your computer press 1.2 then press x^y, then 2
= 1.44
= 1.44 x 14000 = 20160
Correct Answer TRUE

91
Answer An annuity is a sum of money paid at regular periods, such as monthly, quarterly, annually
Explanation - for eg - Pensions.
In Fixed Annuity, fixed returns are received at regular periods.
In Floating annuties, the annuities paid are not fixed, but change in line with the chosen
benchmark.
Correct Answer 92 Decrease
Answer Among other factors, stock prices react negatively to fall in the sales /
Explanation profits of a company.
Correct Answer 93 Rs 1 lakh
Answer Investment advisers who are individuals or partnership firms shall have
Explanation net tangible assets of value not less than Rupees One Lakh.
For investment advisers which are body corporate, net worth of not less
than Rupees Twenty Five Lakhs has been stipulated.
Correct Answer 94 Third party motor insurance
Answer The insurance of third party liability arising out of the use of motor
Explanation vehicles in public places is made compulsory. No motor vehicle can be
used in a public place without such insurance.
Correct Answer 95 Custodians
Answer Custodians typically work with institutional investors, holding securities

Explanation and bank accounts on their behalf. They manage the transactions
pertaining to delivery of securities and money after a trade is made
through the broker, and also keeps the accounts of securities and money.
Custodians are usually large banks.
Correct Answer Both 1 and 2

97
Answer Risk Financing : The determination of how an organization will pay for loss events in the
Explanation most effective and least costly way possible. Risk financing involves the identification of
risks, determining how to finance the risk, and monitoring the effectiveness of the financing
technique that is chosen.
Companies have a variety of options when it comes to protecting themselves from risk.
Commercial insurance policies (ie. transferring the risk to insurance companies by paying
the premium), captive insurance (Retaining the risk as its more cost effective) , self-
insurance, and other alternative risk transfer schemes are available.
Correct Answer 98 SEBI
Answer Any person who proposes to provide investment advice as defined under
Explanation the regulations or who qualifies under the definition of “Investment
Adviser” shall be required to obtain a registration certificate from SEBI
in order to continue to do this activity.
Correct Answer 99 Equity Linked Savings Scheme
Answer Equity Linked Savings Scheme (ELSS) is a special type of equity fund
Explanation investment which gives the investor tax deduction benefits under section
80C of the Income Tax Act.
The investment made by the investor is locked-in for a period of three

years during which it cannot be redeemed, transferred or pledged.
Correct Answer Credit Risk

100
Answer Credit risk refers to the probability that borrowers will not be able to
Explanation meet their commitment on paying interest and/or principal as scheduled.
Government securities are considered to be risk-free as it is believed that

a Government will not default on its obligations towards its citizens.
Practice Question Banks also available for :
NISM
NISM Series I: Currency Derivatives Certification Exam

NISM Series V A: Mutual Fund Distributors Certification Exam
NISM Series VI: NISM Series VI - Depository Operations Certification Exam
NISM Series VII: Securities Operations and Risk Management
NISM Series VII: Equity Derivatives Certification Exam
NISM Series III A: Securities Intermediaries Compliance certification Exam
NISM Series X A : Investment Adviser (Level 1) Certification Exam
NISM Series X B: Investment Adviser (Level 2) Certification Exam
NCFM
NCFM Financial Markets: A Beginners Module

NCFM Capital Market (Dealers) Module
NCFM Derivative Market (Dealers) Module
BSE
Certificate on Security Market (BCSM)


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NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)

CERTIFICATION - REAL FEEL MOCK EXAM 2

REAL FEEL MOCK EXAM 2 - UPDATED

Question 1 The minimum amount that can be invested in National Savings

Question 2 Which of the following statements is True with respect to a Power of

(a) Power of Attorney is a process of mutation

(b) Power of Attorney is executed by donee

(c) Power of Attorney is an authorization to act on behalf of a person in respect of

Question 3 ________ is an advantage of gold ETF over investment in physical gold.

(a) PAN is not required for investing in Gold ETF

(c) There is no storage or security risk in Gold ETF

(a) Municipal taxes paid

(c) Interest on loan taken for acquisition / construction

(d) All of the above

Question 8 The sign of 'Correlation' is always the same as that of ________ .

(a) Standard Deviation

Question 9 _____ is an example of Indirect Tax.

(a) Income Tax

(b) Wealth Tax

(c) Both Income Tax and Wealth Tax

(d) None of the above

(a) In return for a regular payment of 'commission'

(b) In return for a regular payment of 'rental'

(c) In return for a regular payment of 'premium'

(d) In return for a regular payment of 'interest'

Question 11 What is an important feature of a good retirement plan ?

(a) Investments in Provident Fund

(b) Potential to provide adequate corpus for retirement years without

(d) Investing in equities to accumulate the corpus for retirement

State True or False ?

(c) Legal heir

(a) Income form gambling in horse races

(c) Income from lotteries

(d) Any head of income

(a) Post office deposits

(b) Debt mutual funds

(c) Liquid mutual funds

(d) Equity mutual funds

Question 19 A mutual fund scheme is created by pooling _______ .

(a) Investor’s fund with the similar investing horizon

(b) Investor’s fund with the similar amounts of money

(c) Investor’s fund with the similar risk appetite

(d) Investor’s fund with the similar investment objective

Question 20 Which of the following mutual funds are least risky ?

(a) Sector Funds

(b) Diversified Funds

(c) Small Cap Funds

(d) All are equally risky

(a) by selling them back to the company only

(c) Six monthly

Question 23 What is the main responsibility of a Self Regulatory Organisations

(a) To make a lobby for protection of its members

(b) To regulate their own members

(c) To encourage ethical business

(d) All of the above

Question 24 The covariance between security X and market is 25 and standard

Question 25 Which of the following is a Capital Asset ?

(a) Gold deposit bonds 1999

(b) Shares held by a broker as stock in trade

(c) Shares held by an investor

(d) Rural agricultural land

(a) Equity 44.50 %, Debt 45.50 % and Gold 10 %

(a) Forward Contract