Nism X A - Investment Adviser Level 1 - Last Day Revision Test 1 PDF

NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 1
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LAST DAY REVISION EXAM 1
Question 1 ____________ allows all assesses to claim deduction up to specified limits

for contributions made to charitable organizations and _____ allows
deductions for persons with disabilities.
(a) 80G : 80 U
(b) 80F : 80 U
(c) 80G : 80DDB
(d) 80G : 80E
Question 2 Amit, a retired person is depending on a monthly annuity income to

finance his expenses. The greatest risk faced by his cash flows is ________.
(a) Business risk
(b) Exchange rate risk
(c) Interest rate risk
(d) Inflation risk
Correct Answer 1 80G : 80 U
Correct Answer 2 Inflation risk
Answer Change in the inflation level, is the greatest risk as monthly annuity is to meet
Explanation expenses.
Question 3 Premium paid on health insurance policies is allowed as deduction under

_____ and deduction for education loan is allowed under_____.
(a) 80G : 80E
(b) 80D : 80E
(c) 80E : 80D
(d) 80C : 80D
Question 4 _______ is an absolute measure of the extent to which two sets of numbers
move together over time.
(a) Variance
(b) Standard Deviation
(c) Return
(d) Covariance
Correct Answer 3 80D : 80E
Correct Answer 4 Covariance
Answer Covariance is an absolute measure of the extent to which two sets of numbers
Explanation move together over time.
Question 5 A person can have a maximum of ____ PPF Account(s) in his/her name in
India.
(a) 1
(b) 2
(c) 3
(d) 5
Question 6 Which of the following insurance is mandatory?

(a) Term Insurance
(b) Medical Insurance
(c) Fire Insurance
(d) Third Party Motor Insurance
Correct Answer 5 1
Correct Answer 6 Third Party Motor Insurance
Answer Third Party Motor Insurance is mandatory for vehicles whereas other
Explanation insurance products are based on the individual‘s personal needs.
Question 7 For a regular flow of income which of the following will be selected-
(a) Systematic Investment Plan
(b) Systematic Withdrawal Plan
(c) Systematic Distribution Plan
(d) Systematic Redemption Plan
Question 8 In a Period Certain Annuity, annuitant

(a) Deposits money for a fixed period of time and receives an annuity for a fixed
period of time
(b) Deposits money to get an annuity for a fixed period of time
(c) Deposits money for a fixed period of time and receives an annuity for a
lifetime.
(d) Gets the annuity after death for a fixed period
Correct Answer 7 Systematic Withdrawal Plan
Answer A Systematic Withdrawal Plan (SWP) is a facility that allows an investor to

Explanation withdraw money from an existing mutual fund at predetermined intervals.
The money withdrawn through a systematic withdrawal plan can be reinvested
in another fund or retained by the investor in cash.
Correct Answer 8 Deposits money to get an annuity for a fixed period of time
Answer An annuitization-method option with which the annuitant selects a specific

Explanation time period for which the annuity income payments will last.
This is unlike the more commonly selected life option, with which the
annuitant receives an income payment for the rest of his or her life, regardless
of how long (or short) their retirement years end up lasting.
Question 9 Mr. B, an investor in mutual funds typically enters the fund at a certain
value, and exits at another value after a specified holding period. The
appropriate measure to assess his return is ______
(a) Absolute return
(b) Annualized return
(c) Holding Period Return
(d) IRR
Question 10 In ASBA, the amount is blocked in

(a) Trading members account
(b) Investors own account
(c) Both A and B
(d) None of the above
Correct Answer 9 Holding Period Return
Answer Holding period return is the return earned on an investment during a specific
Explanation period when it was bought and held by the investor.
HPR is a very popular method of computing portfolio returns. Mutual funds
declare the HPR on a regular basis for specific periods ending on the current
date, as a representation of their performance.
Correct Answer 10 Investors own account

Question 11 ABC Ltd. has an equity capital of Rs.5,45,59,795 with each share having a
face value of Rs.5/-. Earnings for the current year is Rs.4,50,00,000. What
is the earning per share(EPS) of ABC Ltd.?
(a) 3.35
(b) 5.54
(c) 4.12
(d) 3.75
Question 12 Indexing Strategy assumes that markets are efficient.

(a) TRUE
(b) FALSE
Correct Answer 11 4.12
Answer EPS (Earning Per Share) = Total Earnings/ Total No. of Shares
Explanation =4,50,00,000/(5,45,59,795/5) = 4.12
Correct Answer 12 TRUE
Answer Indexed investing is a strategy designed to match a market, not beat it. It does
Explanation assume that markets are efficiently priced.
Question 13 Mr. Raj goes out of India for the first time on 10th May , 2012 to meet his
daughter and comes back on 1st April, 2013. What is the residential of
Mr. Raj for the financial year 2012-13 ?
(a) Non Resident
(b) Resident
(c) Resident and ordinarily resident
(d) Resident and not ordinarily resident
Question 14 ______ are add-ons to the basic insurance policy to supplement the
insurance cover provided.
(a) Bonus
(b) Riders
(c) Sum Assured
(d) Guaranteed Cover
Correct Answer 13 Non 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.
Since Mr. Raj was in India for less than 60 days , he is a non-resident
Correct Answer 14 Riders
Answer Riders are add-ons to the basic insurance policy to supplement the insurance
Explanation cover provided. One can also combine a set of riders and append it to the main
policy.
Question 15 If the nominal rate of interest is 9% and the rate of inflation is 3%, what
is the real rate of interest?
(a) 12.27%
(b) 5.83%
(c) 7.50%
(d) 8.50%
Question 16 What is the dividend yield of ABC Co Share having a face value of Rs
100, market value of 360 and an annual dividend of Rs 10?
(a) 0.05
(b) 0.17
(c) 0.0277
(d) 0.04
Correct Answer 15 5.83%
Answer ( 1+Nominal Rate)= (1+Real Rate)*(1+Inflation Rate)

Explanation Real Rate = (1+Nominal) - 1 = (1.09/ 1.03)-1 = 5.83%
(1+inflation)
Answer Dividend Yield = Dividend/Market Price

Explanation = 10/360 = 0.0277
Question 17 FMPs achieve lower mark-to-market risk by investing in ______.

(a) shorter term securities that mature before the tenor of the fund
(b) floating rate securities with reset tenor less than six months
(c) securities whose maturity matches that of the fund
(d) none of the above
Question 18 The system of trading on margin is practiced in future market to

___________
(a) Reduce the ticket size for participation
(b) Allow people to make higher profits
(c) Reduce the risk of default on contracts
(d) Make future contracts more easily tradable
Correct Answer 17 securities whose maturity matches that of the fund
Answer Fixed maturity plans (FMPs) are closed-end funds that invest in debt securities
Explanation with maturities that match the term of the scheme. The debt securities are
redeemed on maturity and paid to investors.
FMPs are issued for various maturity periods ranging from 3 months to 5
years.
Correct Answer 18 Make future contracts more easily tradable
Answer Trading on margin was introduced to make future contracts more easily
Explanation tradable.
Question 19 After how many years, withdrawals are allowed for a PPF account?
(a) 8 years
(b) 7 years
(c) 5 years
(d) 3 years
Question 20 In a Money Back Insurance Plan,-

(a) Entire premium amount is received after a fixed period
(b) The policy holder gets periodic payments during the term of the policy and
lumpsum on surviving the term
(c) A certain part of the premium is invested in listed equities/debt funds/bonds,
and the balance is used to provide for life insurance and fund management
expenses.
(d) Lumpsum is paid after the period of survival.
Correct Answer 19 7 years
Answer One withdrawal in a financial year is permissible from seventh financial year
Explanation from the year of opening the PPF account.
Correct Answer 20 The policy holder gets periodic payments during the term of the policy and
lumpsum on surviving the term
Answer Unlike endowment plans, in money back policies, the policy holder gets
Explanation ―periodic payments" during the term of the policy and a lump sum amount on
surviving its term. In the event of death during the term of the policy, the
beneficiary gets the full sum assured, without any deductions for the amounts
paid till date, and no further premiums are required to be paid. These type of
policies are very popular, since they can be tailored to get large amounts at
specific periods as per the needs of the policy holder.
Question 21 What is the maximum amount of investment in Post Office Monthly

Income Scheme single account?
(a) 4.5 lakhs
(b) 5 lakhs
(c) 9 lakhs
(d) 10 lakhs
Question 22 Which of the following is a financial goal?

(a) Amount required for Childs higher education
(b) 10 lakhs required for marriage
(c) Amount to be set aside for retirement
(d) 5 lakhs required after 1 year to buy a car
Correct Answer 21 4.5 lakhs
Answer Minimum amount of investment in a Post Office Monthly Income Scheme is

Explanation Rs.1500, and maximum amount in case of single account is Rs. 4.5 lakhs, and
in case of joint account is Rs. 9 lakhs.
Correct Answer 22 5 lakhs required after 1 year to buy a car
Answer A financial goal always states a specific amount in a specific period for a
Explanation specific purpose
Question 23 Laxman wants to sells his bonds on the exchange, but he is not able to find
any buyer for the same. What type of risk is he facing?
(a) Reinvestment Risk
(b) Sale Risk
(c) Liquidity Risk
(d) Business Risk
Question 24 An individual for whose benefit a trust is formed is known as ?

(a) Beneficiary
(b) Settler
(c) Legatee
(d) Testator
Correct Answer 23 Liquidity Risk
Answer Liquidity or marketability refers to the ease with which an investment can be
Explanation bought or sold in the market.
Liquidity risk refers to an absence of liquidity in an investment. Thus liquidity
risk implies that the investor may not be able to sell his investment when
desired, or it has to be sold below its intrinsic value, or there are high costs to
carrying out transactions
Correct Answer 24 Beneficiary

Question 25 What is the maximum amount which can be invested in NSC in a

financial year?
(a) 50,000
(b) 1,00,000
(c) 1,50,000
(d) No Limit
Question 26 Which of the following is not a capital asset

(a) Urban Land
(b) Paintings
(c) House Furniture
(d) Equity Shares
Correct Answer 25 No Limit
Correct Answer 26 House Furniture
Answer Personal asset like house furniture is not a capital asset . Exception are
Explanation paintings, gold, sculptures etc.
Question 27 An investor purchases equity shares of a manufacturing company.

Returns from his investment do not face ___________.
(a) Interest rate risk
(b) Credit risk
(c) Business risk
(d) Inflation risk
Question 28 Long Term Capital gains tax rate on units of a debt based mutual fund
scheme is _____________.
(a) 10% on sale value minus cost or 20% of sale value minus indexed cost which
ever is lower.
(b) 20% on indexed capital gains
(c) 10% at all times
(d) NIL
Correct Answer 27 Interest rate risk
Answer Interest rate risk refers to the risk that bond prices will fall in response to rising
Explanation interest rates, and rise in response to declining interest rates.
Hence, equity shares would not face interest rate risk.
Correct Answer 28 10% on sale value minus cost or 20% of sale value minus indexed cost which
ever is lower.
Question 29 Government Bonds do not have which of the following risks-

(a) Credit Risk
(b) Interest Rate Risk
(c) Re-investment Risk
(d) Inflation Risk
Question 30 As per section 139(1) of the Income Tax Act, the due date for filing a
return of income in case of Non Corporate Non Audit is ________.
(a) 15 Sept of the Assessment Year
(b) 30 Sept of the Assessment Year
(c) 31 July of the Assessment Year
(d) 31 July of the Previous Year
Correct Answer 29 Credit Risk
Answer The sovereign government has the highest credit worthiness in any market. It
Explanation can always meet payment obligations because it can impose taxes, raise
international loans or even print money as a last resort.
Therefore government borrowings are considered safe from credit or default
risk. In general, all borrowers other than the government are subject to credit
or default risk.
Correct Answer 30 31 July of the Assessment Year

Question 31 The future value of a goal = ________?

(a) Current Value x (1+ Rate of Inflation) ^ (Estimated Years to Death)
(b) Current Value x (1+ Return on Investment) ^ (Years to Goal)
(c) Current Value x (1+ Rate of Inflation) ^ (Years to Goal)
(d) Present Value x (1+ Return on Investment) ^ (Years to Goal)
Question 32 Security A has returns of 10%, 12%,9% and 7% in four years. What is
the standard deviation?
(a) 2.08
(b) 1.8
(c) 5
(d) 6
Correct Answer 31 Current Value x (1+ Rate of Inflation) ^ (Years to Goal)
Correct Answer 1.8
Answer In Excel use the function ―=STDEVP(10,12,9,7)‖, answer is 1.80. ( Note : Do

Explanation not use the function =STDEV for this exam)
Other Method –
Standard Deviation = Square Root [Summation(Return- Average)2 / n]
Return Return - Average (Return - Average)2

10 0.5 0.25
12 2.5 6.25
9 -0.5 0.25
7 -2.5 6.25
Sum 38 13
Average 9.5 3.25
Square Root 1.8
Question 33 For the financial year 2013-14, the last date for filing of a belated return is
?
(a) 31st July 2014
(b) 31st March 2015
(c) 30th September 2015
(d) 31st March 2016
Question 34 Credit Risk is __________.

(a) your creditors will reduce your credit ratings
(b) your creditors will not repay your loan on time
(c) your borrowers will pay you before time as interest rates have fallen
(d) all of the above
Correct Answer 33 31st March 2016
Answer In case the return is not filed within due date, a belated return can be filed at
Explanation any time before the expiry of 1 year from the end of the relevant assessment
year.
So , in the given case return for A.Y. 2014-15 can be filed till 31st March
2016.
Correct Answer 34 your creditors will not repay your loan on time
Question 35 The return on equity stock for a year is 23%. The rate of inflation during
the year is 5%. The real total return is-
(a) 17%
(b) 20%
(c) 19.52%
(d) 17.14%
Question 36 Mr. A has an annual income of Rs.11 lakhs. He invests for the first time in
equity an amount of Rs.50,000. What would be the deduction under
section 80CCG(Rajiv Gandhi Equity Savings Scheme) ?
(a) 50,000
(b) 25,000
(c) 1,00,000
(d) Nil
Answer (1+Real Return) = (1+Nominal)/(1+Inflation)-1

Explanation 0.171428571
0.1714
0.1714
Correct Answer 36 25000
Answer The Rajiv Gandhi Equity Savings Scheme (RGESS) offers a rebate to first
Explanation time retail investors with annual income below Rs. 12 lakhs. 50% of the
amount invested can be claimed as a deduction from taxable income.
So 50% of Rs 50000 = Rs 25000

Question 37 Which of the following is - are derivative contracts ?

(a) Gold Futures Contract
(b) Options Contract
(c) Currency Futures Contract
(d) All of the above
Question 38 Which is the investment mode wherein an employed as well as a self-

employed person can contribute funds?
(a) Recognized Provident Fund
(b) Public Provident Fund
(c) Unrecognized Provident Fund
(d) Statutory Provident Fund
Correct Answer 37 All of the above
Correct Answer 38 Public Provident Fund

Question 39 A trade in a derivative not supported by an underlying position in cash,

but simply implements a view on the future prices of the underlying, at a
lower cost is known as _________.
(a) Arbitrage
(b) Speculation
(c) Hedging
(d) Risk Management
Question 40 Raj bought an equity share of face value Rs.5 for Rs.78, earned 100%
dividend during the year and sold it off at the end of the year at Rs.80.
What is the holding period return for his investment?
(a) 2.50%
(b) 5%
(c) 7.75%
(d) 8.97%
Correct Answer 39 Speculation
Answer Holding Period Return=

Explanation
Cash Inflows during the period+Capital gains during the period Divided
by Beginning Value of investment
=(5+2)/78 *100
=8.97%
Question 41 Financial risk tolerance can be split into two parts-

(a) Risk Capacity and Risk Attitude
(b) Risk Evasion and Risk Capacity
(c) Risk Diversion and Risk Attitude
(d) Risk Transfer and Risk Diversion
Question 42 PFRDA regulates which of the following

(a) BSE
(b) NPS
(c) SRO
(d) LIC
Correct Answer 41 Risk Capacity and Risk Attitude
Answer Risk Capacity and Risk Attitude are two parts of financial Risk tolerance
Explanation
Correct Answer 42 NPS
Answer Pension Funds Regulation and Development Authority - PFRDA regulates the
Explanation New Pension Scheme.
Question 43 Which of the following is least important when evaluating an equity

security?
(a) Face Value
(b) Earnings
(c) Dividend Yield
(d) Company Management
Question 44 Interest on NSC _________.

(a) is compounded and paid out quarterly
(b) is paid out annually
(c) is compounded half yearly but paid yearly
(d) is accumulated and paid at the end of the term
Correct Answer 43 Face Value
Answer A company‘s earnings, dividend yield and corporate management are

Explanation important things to consider when evaluating a company.
Correct Answer 44 is accumulated and paid at the end of the term

Question 45 Which of the following is concerned with, among other things, the
administration of various financial rules and regulations including service
conditions of all Central Government employees?
(a) Department of Economic Affairs
(b) Department of Expenditure
(c) Department of Revenue
(d) Department of Financial Services
Question 46 If interest rate rises, reinvestment risk also rises - True or False ?
(a) FALSE
(b) TRUE
Correct Answer 45 Department of Expenditure
Answer Department of Expenditure is concerned with, among other things, the

Explanation administration of various financial rules and regulations including service
conditions of all Central Government employees. The department is also
involved with matters such as financial assistance to states and borrowings by
states
Correct Answer 46 FALSE
Answer Re-investment risk arises from the probability that income flows received
Explanation from an investment may not be able to earn the same interest as the original
interest rate.
If Interest rate rises , reinvestment risk reduces, or is eliminated .
Question 47 If the variance of a security is 25, what is the standard deviation?

(a) 625
(b) 5
(c) 50
(d) 20
Question 48 What is the maximum amount which can be claimed per child per month
as Children Education allowance?
(a) Rs 100
(b) Rs 200
(c) Rs 500
(d) Rs 1000
Correct Answer 47 5
Answer Standard Deviation is the square root of Variance,

Explanation Sq. root of 25 = 5.
It can be solved in Excel using the formula ―=SQRT()‖. =SQRT(25) -> 5
Correct Answer 48 Rs 100
Answer Children Education Allowance Rs 100 per month per child up to a maximum
Explanation of two children is exempted.
Question 49 A person must have stayed outside India for a minimum period of _____
days in a previous financial year to be qualified as a NRI.
(a) 365
(b) 280
(c) 182
(d) 150
Question 50 Which of the following does not have Life cover ?

(a) Money Back Plan
(b) Critical Illness Plan
(c) Term Insurance
(d) Endowment Plan
Answer An Indian citizen or a person of Indian origin who is residing outside India is
Explanation called an NRI (Non-Resident Indian). A resident is an Indian citizen, who has
stayed in India for at least 182 days in a financial year.
Correct Answer 50 Critical Illness Plan
Answer Critical plan does not provide life cover. In case of any serious covered
Explanation illness, the insured is entitled to a lumpsum payment, as per the terms and
conditions of the plan.
Question 51 Earning Per share (EPS) equals-

(a) (Net Profit Equity Dividend)/No. of outstanding preference shares
(b) (Net Profit Equity Dividend-Preference Dividend)/No. of outstanding equity
shares
(c) (Net Profit Preference Dividend)/No. of outstanding equity shares
(d) (Net Profit Equity Dividend)/No. of shares
Question 52 NSC(IX issue) is not eligible for 80C deduction.

(a) TRUE
(b) FALSE
Correct Answer 51 (Net Profit Equity Dividend-Preference Dividend)/No. of outstanding equity

shares
Correct Answer 52 FALSE
Answer NSC VIII and IX issues are eligible for 80C deduction.
Explanation
Question 53 Securities A,B,C and D have a beta of 1.5,2,1.75 and 0.9 respectively. A
portfolio contains securities A, B, C and D with weights 20%,30%,15%
and 35% respectively. What is the beta of the portfolio?
(a) 1.48
(b) 1.5
(c) 1.9
(d) 1.75
Question 54 Mr. Rohan has invested his money in a PPF account which matures after
3 years. For his short term goals, what type of risks does he face ?
(a) Reinvestment Risk
(b) Liquidity Risk
(c) Interest Rate Risk
(d) Credit Risk
Answer Beta of a portfolio is the weighted average beta of the securities within the
Explanation portfolio.
Beta of portfolio = 20%*1.5+30%*2+15%*1.75+35%*0.9
= 0.3 + 0.60 + 0.26 + 0.32 = 1.48
Correct Answer 54 Liquidity Risk

Question 55 _____ is a sum of money paid at regular periods, such as monthly,

quarterly, annually.
(a) Annuity
(b) Cash flow
(c) Return
(d) Future Value
Question 56 What is the maximum amount of withdrawal from a PPF account after 7
years till the maturity date?
(a) 40% of balance at the end of immediate preceding year of withdrawal
(b) 30% of balance at the end of immediate preceding year of withdrawal
(c) 50% of balance at the end of immediate preceding year of withdrawal
(d) 60% of balance at the end of immediate preceding year of withdrawal
Correct Answer 55 Annuity
Answer An annuity is a sum of money paid at regular periods, such as monthly,

Explanation quarterly, annually.
A common example of an annuity is pension. Annuities can be of two types
(1) Fixed annuity and (2) Flexible annuity.
Correct Answer 56 50% of balance at the end of immediate preceding year of withdrawal
Answer For a PPF account, maximum withdrawal can be 50% of balance at the end of
Explanation immediate preceding year of withdrawal.
Question 57 Mr. Mohammad has a portfolio of which 70% is invested in equity and
30% is invested in gold, considering market situations and based on his
expectations on gold he changes his asset allocation to 70% in gold and
30% in equity. What kind of asset allocation is this-
(a) Tactical Asset Allocation
(b) Dynamic Asset Allocation
(c) Strategic Asset Allocation
(d) Distinct Asset Allocation
Question 58 Maximum limit in case of Senior Citizen Saving Scheme is Rs _____

lakhs.
(a) 10
(b) 12
(c) 15
(d) 20
Correct Answer 57 Tactical Asset Allocation
Answer Tactical asset allocation involves active portfolio management with the aim of
Explanation adding value through short term adjustments in asset allocation based on the
view for relative asset class performance
Question 59 Compared to an Endowment Plan, an Unit Linked Pension Plan has

returns which are-
(a) High
(b) Very Low
(c) Fixed
(d) Variable
Question 60 An investment adviser needs to apply for renewal of his registration

certificate within?
(a) 6 months before expiry
(b) 3 months before expiry
(c) 9 months before expiry
(d) 12 months before expiry
Correct Answer 59 Variable
Answer Endowment Plans offer a fixed rate of return. Returns on Unit Linked Pension
Explanation Plans are variable owing to the debt-equity mix of the assets
Correct Answer 60 3 months before expiry
Answer An investment adviser needs to apply for renewal of his registration

Explanation certificate, three months before expiry of the original certificate of registration.
Question 61 If a HUF distributes the post tax profits to its members, it is not taxable
for the members.
(a) TRUE
(b) FALSE
Question 62 Who among the following are exempted from SEBI (Investment Advisers)
Regulation 2013 ?
(a) Pension Advisors offering investment advice only on pension products
(b) A person providing investment advice only to clients based out of India, not
being Non Resident Indians or Person of Indian Origin
(c) Mutual Fund distributor who provides investment advise incidental to
distribution of Mutual Fund products.
(d) All of the above
Correct Answer 61 TRUE
Answer For purposes of taxation, an HUF is treated like an individual investor,

Explanation provided it has at least three co-parceners. The income of the HUF should
accrue from its own assets.
Any income arising from assets transferred by a member or co-parcener will
be clubbed to their respective incomes and taxed as such. They will not be
treated as the income of the HUF.
Correct Answer 62 All of the above

Question 63 A fund manager picks up stocks based on low P/E ratios, what kind of
stocks is he looking at?
(a) Value stocks
(b) Growth stocks
(c) High Dividend Stocks
(d) Low Earnings Stock
Question 64 Deduction under section 80G is allowed to-

(a) Any assessee
(b) Individuals
(c) Individuals and HUF
(d) HUF
Correct Answer 63 Value stocks
Answer Value stocks are stocks which have higher earnings and comparatively low
Explanation stock prices i.e. low P/E ratios.
Correct Answer 64 Any assessee
Answer Deduction under section 80G is allowed to any assessee.

Explanation
Question 65 Short term debt funds carry _________.

(a) Low mark-to-market risk
(b) High mark to market risk
(c) No mark-to-market risk
Question 66 A correlation coefficient of ___ means that there is no linear relationship

between the two securities returns.
(a) 1
(b) -1
(c) 0
(d) 0.5
Correct Answer 65 Low mark-to-market risk
Answer Short term funds would always carry low mark-to-market risk.
Explanation
Correct Answer 66 0
Answer A correlation coefficient of 0 means that there is no linear relationship

Explanation between the two securities‘ returns i.e., they are uncorrelated.
Question 67 What will be the effect in terms of buying power on today’s terms Rs
50,000.00 after 15 years if inflation is 8% p.a.?
(a) 15762
(b) 15892
(c) 16500
(d) 15276
Question 68 KYC Registration Agency is a company regulated by-

(a) SEBI
(b) IRDA
(c) AMFI
(d) CDSL
Answer The question is indirectly asking us to find the Present Value of 50,000 to be
Explanation received after 15 years .
This question has to be solved using the =PV function in excel.
‗=PV(8%,15,0,-50000)‘ = 15762
Correct Answer 68 SEBI

Question 69 Who amongst the following is not exempted from the requirement of
registration as an investment adviser?
(a) Mutual Fund Managers
(b) Tax Practitioner
(c) Chartered Accountants
(d) Stock Brokers
Question 70 Securities Transaction Tax (STT) is applicable on _______.

(a) Only Debt Schemes
(b) Only Equity Schemes
(c) Both Debt and Equity Schemes
(d) Debt and Equity Schemes other than Balance Schemes
Correct Answer 69 Tax Practitioner
Answer Other than tax practitioners, all other mentioned above are exempt from
Explanation registration
Correct Answer 70 Only Equity Schemes

Question 71 Which of the following is mainly concerned with the administration of the
Companies Act, 1956 and other allied acts, rules and regulations
pertaining to the corporate sector?
(a) Department of Economic Affairs
(b) Ministry of Company Affairs
(c) Department of Revenue
(d) Ministry of Corporate Affairs
Question 72 Long Term Loss from an Equity Scheme can be __________.

(a) set off against Long Term gain only
(b) set off against any Short Term or Long Term gain
(c) cannot be set off against any other gain
(d) set off against gains from Non Equity schemes
Correct Answer 71 Ministry of Corporate Affairs
Answer The Ministry of Corporate Affairs is mainly concerned with the administration
Explanation of the Companies Act, 1956 and other allied acts, rules and regulations
pertaining to the corporate sector.
Correct Answer 72 set off against Long Term gain only
Answer Loss arising from a long-term capital asset can be set off only against the gains
Explanation from the sale of long-term assets.
Question 73 For a portfolio of two securities to achieve diversification, the __________.

(a) Correlation between the two should be positive.
(b) Correlation between the two should be zero.
(c) Correlation between the two should be negative.
Question 74 Mr. Raj incurs expenditure worth Rs.95,000 relating to diseases specified
diseases under section 80DDB. What is the amount of deduction under
section 80DDB?
(a) 40000
(b) 60000
(c) 75000
(d) 50000
Correct Answer 73 Correlation between the two should be negative.
Answer Negative correlation means if price of one security goes up, the price of the
Explanation other will go down. This helps in diversification and safety of the portfolio.
Answer Section 80DDB allows deduction of the expenditure on medical treatment for
Explanation specified diseases such as Parkinson, up to a limit of Rs.60,000 for senior
citizens and Rs.40,000 for others.
Question 75 Section____ provides deduction for persons with disabilities and section
____ provides deduction to an assessee not receiving HRA for rent paid
by him. a. b. c. d. Exp -
(a) 80G : 80E
(b) 80U : 80D
(c) 80GG : 80U
(d) 80U : 80GG
Correct Answer 75 80U : 80GG
Answer Section 80U provides deduction for persons with disabilities and Section
Explanation 80GG provides deduction to an assessee not receiving HRA for rent paid by
him.
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 V.IMP LAST DAY REVISION EXAM 1

LAST DAY REVISION EXAM 1

Question 1 ____________ allows all assesses to claim deduction up to specified limits

Question 2 Amit, a retired person is depending on a monthly annuity income to

Correct Answer 1 80G : 80 U

Correct Answer 2 Inflation risk

Question 3 Premium paid on health insurance policies is allowed as deduction under

Correct Answer 3 80D : 80E

Correct Answer 4 Covariance

Question 6 Which of the following insurance is mandatory?

Correct Answer 6 Third Party Motor Insurance

Question 8 In a Period Certain Annuity, annuitant

Correct Answer 7 Systematic Withdrawal Plan

Answer A Systematic Withdrawal Plan (SWP) is a facility that allows an investor to

Answer An annuitization-method option with which the annuitant selects a specific

Question 10 In ASBA, the amount is blocked in

Correct Answer 9 Holding Period Return

Correct Answer 10 Investors own account

Question 12 Indexing Strategy assumes that markets are efficient.

Correct Answer 11 4.12

Correct Answer 12 TRUE

Correct Answer 13 Non Resident

Answer BASIC CONDITIONS TO TEST AS TO WHEN AN INDIVIDUAL IS

Correct Answer 14 Riders

Correct Answer 15 5.83%

Answer ( 1+Nominal Rate)= (1+Real Rate)*(1+Inflation Rate)

Correct Answer 16 0.0277

Answer Dividend Yield = Dividend/Market Price

Question 17 FMPs achieve lower mark-to-market risk by investing in ______.

Question 18 The system of trading on margin is practiced in future market to

Correct Answer 17 securities whose maturity matches that of the fund

Correct Answer 18 Make future contracts more easily tradable

Question 20 In a Money Back Insurance Plan,-

Correct Answer 19 7 years

Question 21 What is the maximum amount of investment in Post Office Monthly

Question 22 Which of the following is a financial goal?

Correct Answer 21 4.5 lakhs

Answer Minimum amount of investment in a Post Office Monthly Income Scheme is

Correct Answer 22 5 lakhs required after 1 year to buy a car

Question 24 An individual for whose benefit a trust is formed is known as ?

Correct Answer 23 Liquidity Risk

Correct Answer 24 Beneficiary

Question 25 What is the maximum amount which can be invested in NSC in a

Question 26 Which of the following is not a capital asset

Correct Answer 25 No Limit

Correct Answer 26 House Furniture

Question 27 An investor purchases equity shares of a manufacturing company.

Correct Answer 27 Interest rate risk

Question 29 Government Bonds do not have which of the following risks-

Correct Answer 29 Credit Risk

Correct Answer 30 31 July of the Assessment Year

Question 31 The future value of a goal = ________?

Correct Answer 31 Current Value x (1+ Rate of Inflation) ^ (Years to Goal)

Correct Answer 1.8

Answer In Excel use the function ―=STDEVP(10,12,9,7)‖, answer is 1.80. ( Note : Do

Return Return - Average (Return - Average)2

Question 34 Credit Risk is __________.

Correct Answer 33 31st March 2016

Correct Answer 35 17.14%

Answer (1+Real Return) = (1+Nominal)/(1+Inflation)-1

Correct Answer 36 25000