Nism X A - Investment Adviser Level 1 - Last Day Revision Test 3 PDF

NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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LAST DAY REVISION EXAM 3
Question 1 ___________ are a type of endowment policies that covers life and also
assures the return of a certain per cent of the sum assured as cash
payment at regular intervals.
(a) Term Insurance Policies
(b) Unit Linked Insurance Policies
(c) Money Back Insurance Policies
(d) Whole Life Insurance Policies
Question 2 A Money Back Insurance policy not only __________ but it also
__________.
(a) covers life, assures the return of a certain per cent of the sum assured as cash
payment at regular intervals
(b) covers life, gives high returns as per the investments made in equity markets
(c) is an inexpensive policy, gives very good commissions to the Insurance agent
(d) None of the above
Correct Answer 1 Money Back Insurance Policies
Answer Money Back Policies are like a savings plan with the added advantage of life
Explanation cover and
regular cash inflow.
Correct Answer 2 covers life, assures the return of a certain per cent of the sum assured as cash
payment at regular intervals
Answer Money back policy is a savings plan with the added advantage of life cover and
Explanation regular cash inflow.
Question 3 If there is a negative covariance between two securities, it means there is a

__________ of their returns.
(a) similar trend
(b) opposite trend
(c) parallel return
(d) no correlation
Question 4 Government Securities does not have any Credit Risk - State True or
False?
(a) TRUE
(b) FALSE
Correct Answer 3 opposite trend
Answer Covariance is a measure of the degree to which returns on two assets move in
Explanation tandem.
A positive covariance means that asset returns move together. A negative
covariance means returns move inversely.
Correct Answer 4 TRUE
Answer Government securities are considered to be risk-free as it is believed that a

Explanation Government will not default on its obligations towards its own citizens.
Question 5 Hybrid Mutual Fund invest in __________.

(a) Arbitrage opportunities
(b) international markets
(c) only equity
(d) both debt and equity
Question 6 Which method of calculation is used to calculate how much insurance is

required if there is a loss of life ?
(a) Need based approach
(b) Human life approach
(c) Income replacement approach
(d) Cost plus approach
Correct Answer 5 both debt and equity
Answer Hybrid funds invest in a combination of debt and equity securities. The
Explanation allocation to each of these asset classes will depend upon the investment
objective of the scheme.
Correct Answer 6 Human life approach
Answer Human life value (HLV) is the value that insurance needs to compensate for if
Explanation there is a loss to the life, or disability which results in a reduction in the ability
to generate income.
Question 7 What is the meaning of Insurance Planning ?

(a) To have the right / adequate life insurance cover
(b) To save taxes by payments of Insurance premium
(c) To determine the adequacy of insurance cover and to cover the risk associated
with medical emergencies and assets
(d) To plan on the amount a child would require for his education and other
expenses in case of death of parent
Question 8 A person requires Rs 3 lacs after 2 years to fund the education of his
daughter. This is an example of ________.
(a) Financial Planning
(b) Financial Goal
(c) Risk Management
(d) Personal Financial Planning
Correct Answer 7 To determine the adequacy of insurance cover and to cover the risk associated
with medical emergencies and assets
Correct Answer 8 Financial Goal
Answer Financial goal means identifying future needs of an individual that

Explanation require funding. It specifies the sum of money required in order to meet the
needs and when it is required.
Question 9 In which asset class should you keep your money if your primary need is
liquidity ?
(a) Arts like paintings of reputed painters
(b) Blue chip shares
(c) Cash
(d) Debentures
Question 10 ________ is not considered as a measure of risk.

(a) Standard Deviation
(b) Variance
(c) Alpha
(d) Beta
Correct Answer 9 Cash
Correct Answer 10 Alpha

Question 11 Loss arising from a short-term capital asset can be set off against the gains
arising from_____________.
(a) the sale of a long or short-term capital asset.
(b) the sale of a short-term capital asset only
(c) the sale of a long term capital asset only
(d) Loss arising from a short-term capital asset cannot be set off
Question 12 The process of identifying what is owed to the buyer and seller in a trading
transaction is known as __________.
(a) Clearing
(b) Settlement
(c) Arbitrage
(d) Hedging
Correct Answer 11 the sale of a long or short-term capital asset.
Answer Loss arising from a short-term capital asset can be set off against the gains
Explanation arising from the sale of a long or short-term capital asset.
Pls note - Loss arising from a long-term capital asset can be set off only against
the gains from the sale of long-term assets.
Correct Answer 12 Clearing
Answer Clearing is the process of identifying what is owed to the buyer and seller in a
Explanation trading
transaction; and settlement is the mechanism of settling the obligations of
counter parties in a trade.
Question 13 An investment portfolio consisting of Mutual Funds is created primarily

on _____.
(a) The investment objectives of the various MF's
(b) The risk appetite of the investor
(c) The views of the MF fund mangers
(d) The reputation of the MF AMC.
Question 14 The seller of a CALL Option has ______.

(a) an obligation to buy
(b) a right to buy
(c) an obligation to sell
(d) a right to sell
Correct Answer 13 The risk appetite of the investor
Answer The risk preferences of the investor are taken into account while constructing
Explanation an
investment portfolio of Mutual Funds.
Correct Answer 14 an obligation to sell
Answer A Call option BUYER has the right but not the obligation to Buy.
Explanation A Call option SELLER has the obligation but not the right to Sell.
Question 15 In the Senior Citizens Saving Scheme, the age limit is reduced to ____
years in case of an individual retiring on superannuation or otherwise, or
under VRS or special VRS, provided the account is opened within one
month of date of receipt of retirement benefits.
(a) 60
(b) 55
(c) 53
(d) 50
Question 16 Endowment Insurance Plans is a level premium plan with a _________

feature.
(a) savings
(b) equity investment
(c) moderate interest
(d) all of the above
Correct Answer 15 55
Answer The Senior Citizens’ Saving Scheme is a savings product available to only
Explanation senior citizens of age 60 years or above.
However the age limit is reduced to 55 years in case of an individual retiring
on superannuation or otherwise, or under VRS or special VRS, provided the
account
is opened within one month of date of receipt of retirement benefits.
Correct Answer 16 savings

Question 17 ________ is the person(s) in whose favor the property of a Trust is passed
on in fiduciary capacity.
(a) Nominee
(b) Beneficiary
(c) Trustee
(d) All of the Above
Question 18 Who amongst the following will be eligible for Reverse Mortgage Scheme
in India ?
(a) An owner of commercial property in New York
(b) An owner of residential property in Moscow
(c) An owner of commercial property in Bangalore
(d) An owner of residential property in Mumbai
Correct Answer 17 Trustee
Answer The trustee holds the legal title and exercises control over the trust property in
Explanation the interest of the beneficiary.
Correct Answer 18 An owner of residential property in Mumbai
Answer For an Reverse Mortgage Scheme, one should be the owner of a residential
Explanation property (house or flat) located in India,
Question 19 As per SEBI regulations, the units are allotted to investors within ____
business days of the NFO closing.
(a) 10
(b) 7
(c) 5
(d) 3
Question 20 A situation where there is a chance of either a _____ or no loss is known as

Pure Risk.
(a) Gain
(b) Loss
(c) Either Gain or Loss
Correct Answer 19 5
Answer The units are allotted to investors within 5 business days of the NFO closing
Explanation and an account statement giving details of the investment is sent to them.
Correct Answer 20 Loss
Answer Pure Risk is a situation where there is a chance of either loss or no loss, but no
Explanation chance of gain. For example either a building will burn down or it won't.
Only pure risks are insurable.
Question 21 Insurable risk does not involve any prospect of gain or profit - State True
or False ?
(a) TRUE
(b) FALSE
Question 22 Transfer of Risk is a important measure of Risk Management - State

whether True or False ?
(a) TRUE
(b) FALSE
Answer A characteristic of the insurable risk is that it does not involve any prospect of
Explanation gain
or profit.
This means that, if it was possible to insure against not making a profit from
selling
goods in a shop, there would be very little incentive to try to sell the goods if
the owner knew the insurance company would step in and pay up anyway.
Answer Risk transfer is a risk management and control strategy that involves the
Explanation contractual shifting of a pure risk from one party to another.
One example is the purchase of an insurance policy, by which a specified risk
of loss is
passed from the policyholder to the insurer.
Question 23 __________ supervises the activities of ________.

(a) Sponsor , AMC
(b) Sponsor , Distributors
(c) Trustees , Distributors
(d) AMC , Sponsors
Question 24 The fine imposed for an offence of Money Laundering can extend upto Rs
_____.
(a) Rs 5 lakhs
(b) Rs 10 lakhs
(c) Rs 20 lakhs
(d) Rs 25 lakhs
Correct Answer 23 Sponsor , AMC
Answer Sponsors -- Trustees -- Asset management companies (AMC) constitute the

Explanation principal constituents of a mutual fund.
Correct Answer 24 Rs 5 lakhs
Answer The offence of money laundering is punishable with imprisonment for 3 years
Explanation but which may extend to 7 years and shall also be liable to fine, which may
extend to Rs.5 lakhs.
Question 25 Which are higher - Nominal Returns or Tax Adjusted Returns ?

(a) Nominal Returns
(b) Tax Adjusted Returns
Question 26 The main objective of imposing margin payments on trades is _______.

(a) to get money for the investor protection fund
(b) to ensure that there are less defaults by the investors / brokers
(c) to have a regular source of income for the stock exchanges
(d) to fund the operations of NSDL and CDSL
Correct Answer 25 Nominal Returns
Answer Tax adjusted returns are lower than nominal returns because tax payments
Explanation lower the nominal value of returns. Taxes actually reduce the money in the
hands for an investor.
Correct Answer 26 to ensure that there are less defaults by the investors / brokers
Answer Steps such as maintenance of adequate capital assets by members and regular
Explanation imposition of margin payments on trades ensure that damages through defaults
are minimised.
Question 27 The Inflation Indexed bonds carries a fixed interest of ______ and an
inflation rate calculated on the basis of the Consumer Price Index (CPI).
(a) 1%
(b) 1.50%
(c) 2%
(d) 3%
Question 28 The prime responsibility of a SRO - Self-Regulatory Organization is to

regulate their own members - State True or False ?
(a) FALSE
(b) TRUE
Correct Answer 27 1.50%

Question 29 Income Tax is an INDIRECT Tax - State True or False ?

(a) TRUE
(b) FALSE
Question 30 The Standard Deviation of the market is 5 and the covariance between
security X and market is 21. What is the Beta ?
(a) 4.2
(b) 0.84
(c) 0.238
(d) 1
Correct Answer 29 FALSE
Answer Income Tax is a Direct Tax. A tax that is paid directly by an individual or
Explanation organization to the imposing entity. A taxpayer pays a direct tax to a
government for different purposes, including real property tax, personal
property tax, income tax or taxes on assets.
Direct taxes are different from indirect taxes, where the tax is levied on one
entity, such as a seller, and paid by another, such a sales tax paid by the buyer
in a retail setting.
Correct Answer 30 0.84
Answer Beta = Co-Variance / Variance

Explanation (Variance is square of Standard Deviation i.e. square of 5 = 25)
Beta = 21 / 25
= 0.84
Question 31 ___________ prefer to keep their money in the bank or in safe income
yielding instruments.
(a) Moderate Investors
(b) Conservative Investors
(c) Aggressive Investors
(d) Both 2 and 3
Question 32 One of the methods to assess the retirement needs (expenses) is _______.
(a) income protection method
(b) income replacement method
(c) asset protection method
(d) income assessment method
Correct Answer 31 Conservative Investors
Answer Conservative Investors do not like to take risk with their investments and they
Explanation prefer to keep their money in the bank or in safe income yielding instruments.
Correct Answer 32 income replacement method
Answer Income replacement method looks at the retirement income as a percentage of

Explanation the last drawn income just before retirement.
Question 33 In case an Public Issue is over subscribed, the ___________ in consultation

with the lead manager will make the allotments and send the allotment /
rejections letters to the investors.
(a) The issuing company
(b) The Bankers to the issue
(c) The Registrar and Transfer (R&T) Agents
(d) Underwriters to the issue
Question 34 Investments made in the National Savings Certificate VIII issue and IX
issue does not enjoy tax benefits under section 80C of Income Tax Act,
1961. State True or False ?
(a) TRUE
(b) FALSE
Correct Answer 33 The Registrar and Transfer (R&T) Agents
Answer Tax benefits are available.

Explanation
Question 35 ________ refer to those investments whose risk and return structures
differ from the traditional asset classes such as equity and debt.
(a) Mutual Funds
(b) Alternate Investments
(c) Bonds
(d) Commercial Bills
Question 36 Are Government bonds issued by State Governments risk free ?

(a) Yes
(b) No
Correct Answer 35 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.
Derivatives, structured products, real estate, gold, commodities, private equity
and
art/collectibles are examples of alternate investments.
Correct Answer 36 Yes
Answer The RBI manages the Central and State Govts. bonds issues and guarantees the
Explanation payments.
Question 37 ____________ is a Corporate Action.

(a) Cash Benefits like Dividends
(b) Stock Benefits like Bonus, Rights
(c) Both 1 & 2
Question 38 A good Investment Advisor will recommend his client to invest in those
investment products which _________.
(a) which offer him risk free returns similar to PSU Banks
(b) which offer him returns equal to 5 year fixed rate of Corporate Bonds
(c) which offer him returns above the projected inflation rate
Correct Answer 37 Both 1 & 2
Answer Corporate Actions include sharing of surplus with the shareholders in the form
Explanation of dividend or bonus, changes in the capital structure through the issue of
rights shares, buy backs, mergers and acquisitions and delisting etc.
Correct Answer 38 which offer him returns above the projected inflation rate
Question 39 The small saving schemes introduced in India can be classified as

________.
(a) Corporate Obligations
(b) Government Obligations
(c) Gold Companies Obligations
(d) PSU obligations
Question 40 The risk management tool which a corporate uses to transfer risk is
_______.
(a) Blue chip Investments
(b) SIP
(c) Insurance
(d) Retirement Planning
Correct Answer 39 Government Obligations
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 40 Insurance
Answer Insurance is a risk transfer mechanism where a small premium payment can
Explanation result in payments from the insurance company to tide over risks from
unexpected events.
Question 41 Investor Services are processed by __________.

(a) Distributors
(b) Stock Brokers
(c) Registrars & Transfer Agents
(d) SEBI
Question 42 A person spends Rs 53,000 for the treatment of his father aged 65 years
and who is suffering from Cancer. What is the maximum amount of
deduction allowed under Sec 80 DDB under Indian Income Tax Act in
such circumstances ?
(a) Rs 50,000
(b) Rs 60,000
(c) Rs 70,000
(d) Rs 1 lac
Correct Answer 41 Registrars & Transfer Agents
Correct Answer 42 Rs 60,000
Answer Deductions of expenses on medical treatment for self or dependents like

Explanation parents etc of specified ailments (such as AIDS, cancer and neurological
diseases) can be claimed under Section 80DDB.
The maximum amount of deduction allowed from gross total income is
restricted to Rs 40,000 (which goes up to Rs 60,000 if the age of the person
treated is 60 years or more)
Question 43 Loss arising from a sale of equity shares which are held for more than 12
months can be set off against _____________.
(a) Short Term Capital Gains
(b) Long Term Capital Gains
(c) Cannot be set off
(d) Depreciation
Question 44 The regulator of Indian Banking system is _________.

(a) SEBI
(b) Finance Ministry
(c) RBI
(d) IRDA
Correct Answer 43 Long Term Capital Gains
Answer Loss arising from a long-term capital asset can be set off only against long-
Explanation term
capital gains.
Correct Answer 44 RBI
Answer The Reserve Bank of India is the regulator of the banking system and the
Explanation monetary authority.
Question 45 ___________ exercises control over matters relating to direct and indirect
taxes of the Central Government.
(a) Department of Taxes
(b) Department of Finance
(c) Department of Commerce
(d) Department of Revenue
Question 46 ______________ does not provide any death benefit.

(a) ULIP - Unit Linked Plans
(b) Term Insurance
(c) Critical Illness Plans
(d) Endowment Insurance Plans
Correct Answer 45 Department of Revenue
Answer Department of Revenue exercises control over matters relating to direct and
Explanation indirect
taxes of the Central Government, through two statutory boards, viz., the
Central Board of Direct Taxes and Central Board of Excise and Customs.
Correct Answer 46 Critical Illness Plans
Answer Critical Illness policy provides for a lump sum benefit to be paid if the named
Explanation insured contracts certain specified diseases such as cancer, heart attack, stroke
etc.
It differs from life insurance in that there is no payment on death.
Question 47 To calculate the Market Capitalisation of a company, we have to multiply

the number of shares outstanding by _________.
(a) the book value of the share
(b) the face value of the share
(c) the market value of the share
(d) the PE Ratio
Question 48 An investor earns 10% on his investments. He falls in the marginal Tax
rate slab of 30%. What is his after tax rate of return ?
(a) 10%
(b) 8.65%
(c) 7%
(d) 9.22%
Correct Answer 47 the market value of the share
Correct Answer 48 7%
Answer 30% of 10 is 3. So his after tax rate of return will be 10 - 3 = 7%

Explanation
Question 49 A _____________ is covered under Wealth Tax Act 1957.

(a) Social Club
(b) SRO
(c) Company
Question 50 Treasury Bills can be issued only by _________.

(a) Central Government
(b) State Government
(c) SEBI
(d) Local State Bodies
Correct Answer 49 None of the above
Answer Wealth Tax has been abolished with effect from 1st April, 2016.
Explanation
Correct Answer 50 Central Government
Answer The central government alone issue treasury bills for different maturities such
Explanation as 91 days, 182 days and 364 days.
Question 51 Mr. Santosh bought 100 shares of face value Rs 10 of XYZ company at Rs.
25000. The company declared 200% dividend. What is the dividend yield
on the value invested in shares ?
(a) 200%
(b) 20%
(c) 8%
(d) 33.33%
Question 52 A person had invested Rs 5 lacs in Equity, Rs 3 lacs in Debt and Rs 2 lacs
in Gold. During the year, Equity gave 10% return, Debt gave 7% return
and Gold gave 16% return. How will his asset allocation look like
considering the returns he has received on his investments.
(a) Equity 45.50 %, Debt 27.63 % and Gold 26.87 %
(b) Equity 50 %, Debt 25 % and Gold 25 %
(c) Equity 49.86 %, Debt 29.10 % and Gold 21.04 %
(d) Equity 48.50 %, Debt 28.50 % and Gold 23 %
Correct Answer 51 8%
Answer Dividend Yield is always in relation to the cost of purchase.

Explanation (Purchase price is 25000 / 100 = Rs. 250)
(200% dividend on Rs 10 face value = Rs. 20)
Dividend Yield = Annual Dividend / Purchase Price
= 20 / 250
= 8%
Correct Answer 52 Equity 49.86 %, Debt 29.10 % and Gold 21.04 %
Answer Equity rose by 10% = Rs 50000 (10% of Rs 5 lacs). Current Value Rs 5,50,000
Explanation Debt rose by 7% = Rs 21000 (7% of Rs 3 lacs) Current Value Rs 3,21,000
Gold rose by 16% = Rs 32000 (16% of Rs 2 lacs) Current Value Rs 2,32,000
Total Current Value of Investments = Rs 550000+321000+232000 = Rs
11,03,000
So Equity Investments will be 49.86% ( 550000 of 1103000)
Debt investments will be 29.10 % ( 321000 of 1103000)
Gold investment will be 21.04 % ( 232000 of 1103000)
Question 53 Systematic Investments and Withdrawals is a feature of __________.

(a) Mutual Funds
(b) Direct Equity Investments
(c) Portfolio Management
(d) Debentures
Question 54 Which amongst the following is not a type of fixed annuity ?

(a) Rent of a flat payable by the tenant
(b) Interest received on recurring post office scheme of a bank
(c) Equated monthly installment for borrower in a mortgage
(d) Equated monthly installment for the owner in a reverse mortgage
Correct Answer 53 Mutual Funds
Correct Answer 54 Rent of a flat payable by the tenant
Answer The rent payable by the tenant is not fixed through out the term. It may get
Explanation revised after a period - usually after a year.
Question 55 Premium paid on health insurance policies is allowed as deduction from

total income, within the limits specified by section _____.
(a) 80 A
(b) 80 B
(c) 80 C
(d) 80 D
Question 56 What is the minimum deposit amount under the Post Office Time Deposit
scheme ?
(a) Rs 100
(b) Rs 200
(c) Rs 1000
(d) Rs 1500
Correct Answer 55 80 D
Correct Answer 56 Rs 200
Answer The minimum deposit amount is Rs. 200. There is no maximum limit.
Explanation
Question 57 Which SEBI regulation lays down the requirements of disclosure and
process regarding capital market transactions by listed companies ?
(a) SEBI (PIT) Regulations
(b) SEBI (SAST) Regulations
(c) SEBI (ICDR) Regulations
Question 58 In an Immediate Annuity, the investor needs to pay _______.

(a) A lump-sum amount
(b) Installments over a period of time
(c) No amount is paid in Immediate Annuity
Correct Answer 57 SEBI (ICDR) Regulations
Answer SEBI (Issuance of Capital Disclosures and Requirements- ICDR) Regulations,

Explanation 2009 lays down general conditions for capital market issuances like public and
rights issuances and private placement of securities.
The listing agreement that companies
enter into with the stock exchange has clauses for continuous and timely flow
of relevant information to the investors, corporate governance and investor
protection.
SEBI (SAST -Substantial Acquisition of Shares and Takeovers) and SEBI (
PIT - Prohibition of Insider Trading) Regulations are not about this.
Correct Answer 58 A lump-sum amount
Answer An annuity contract that is purchased with a single lump-sum payment and in
Explanation exchange, pays a guaranteed income that starts almost immediately.
An immediate payment annuity is especially suitable for retirees who are
concerned about outliving their savings.
Question 59 A forward contract can be traded on the exchange in the derivatives

segment. State True or False ?
(a) TRUE
(b) FALSE
Question 60 The primary objective of SEBI is ________.

(a) curbing insider trading
(b) regulating the market participants like brokers, sub brokers etc.
(c) Promoting investor education in a big way
(d) protecting the interest of investors and promoting the development and
regulating the securities market.
Answer A forward transaction is one where the terms of the transaction, such as the
Explanation quantity, quality, price and terms of delivery are customized to the
requirements of the persons involved
In a futures contract, the terms of the contract are determined by the exchange
which initiates the contract. The price is determined by the parties to the
contract. Such contracts are traded on a exchange.
Correct Answer 60 protecting the interest of investors and promoting the development and
regulating the securities market.
Question 61 Physical assets are tangible assets and include ________.

(a) Cash
(b) Gold
(c) Real Estate
(d) All of the above
Question 62 The market in which securities are issued, bought, sold and transferred
among investors is known as _______ .
(a) Money Market
(b) Securities Market
(c) Financial Markets
(d) Equity Markets
Correct Answer 61 All of the above
Correct Answer 62 Securities Market

Question 63 ____________ lays down general conditions for capital market issuances
like public and rights issuances and private placement of securities.
(a) SEBI (ICDR) Regulations
(b) SEBI (ITML) Regulations
(c) SEBI Act 1992
(d) Indian Contract Act
Question 64 Who are / is the provider of surplus funds to intermediaries such as banks,
financial institutions & mutual funds ?
(a) Governments
(b) Households
(c) Businesses
(d) All of the above
Correct Answer 63 SEBI (ICDR) Regulations
Answer SEBI (Issuance of Capital Disclosures and Requirements - ICDR) Regulations,

Explanation 2009 lays down general conditions for capital market issuances like public and
rights issuances and private placement of securities.
Correct Answer 64 All of the above

Question 65 A correlation coefficient of -1 (negative 1) indicates __________.

(a) perfect negative correlation
(b) perfect positive correlation
(c) Slightly negative correlation
(d) No relationship
Question 66 _______________ is the nodal agency of the Central Government to

formulate and monitor India’s macroeconomic policies
(a) Department of Economic Affairs
(b) Finance Ministry
(c) Ministry of Commerce
(d) Planning Commission
Correct Answer 65 perfect negative correlation
Answer The correlation coefficient will vary from -1 to +1.

Explanation -1 indicates perfect negative correlation, and +1 indicates perfect positive
correlation.
Correct Answer 66 Department of Economic Affairs
Answer Department of Economic Affairs is the nodal agency of the Central

Explanation Government to
formulate and monitor India’s macroeconomic policies, covering monetary and
fiscal
policy as well as the functioning of the Capital Market including stock
exchanges.
Question 67 An individual investor who invests more than _____ lakhs in a single issue
is known as an HNI - High Net worth Individual Investor.
(a) Rs 1 lakh
(b) Rs 2 lakhs
(c) Rs 5 lakhs
(d) Rs 10 lakhs
Question 68 With reference to Personal Financial Planning, which of the following

options is NOT a part of the financial planning process ?
(a) To get the best returns, regularly change the investment portfolio.
(b) Do a risk profiling of the client
(c) Proper monitoring of the plan
(d) Asset Allocation
Correct Answer 67 Rs 2 lakhs
Correct Answer 68 To get the best returns, regularly change the investment portfolio.
Question 69 A person making a pension plan with the help of Mutual Funds
investments should opt for ___________ in the distribution phase.
(a) Systematic Investment Plan
(b) Systematic Transfer Plan
(c) Systematic Switch Plan
(d) Systematic Withdrawal Plan
Question 70 Which of the two securities is more risky to invest in considering the
returns they have given in the last four years : Security P - 7.3%, 1.5%, -
3.9%, 12.9% Security Q - 7%, 8.6%, 5.2%, 9.2%
(a) Security P
(b) Security Q
(c) Both carry equal risk
(d) Insufficient Data
Correct Answer 69 Systematic Withdrawal Plan
Answer The distribution phase of retirement is when the corpus created in the
Explanation accumulation stage is employed to generate the income required to meet
expenses in retirement. A systematic withdrawal plan (SWP) enables recurring
redemptions from a scheme over
a period of time at the applicable NAV on the date of redemption.
Correct Answer 70 Security P
Answer Security P is more risky to invest in as the returns are quiet volatile and
Explanation difficult to estimate.
Question 71 The primary issue of government securities is governed by the ________.

(a) Government Securities Act, 2000
(b) SEBI Act 1992
(c) Indian Contract Act 1872
Question 72 As per the regulations for Investment Advisers, any person who proposes
to provide investment advice shall be required to obtain a registration
certificate from ________ in order to continue to do this activity.
(a) RBI
(b) IRDA
(c) AMFI
(d) SEBI
Correct Answer 71 Government Securities Act, 2000
Correct Answer 72 SEBI
Answer Any person who proposes to provide investment advice as defined under the
Explanation 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.
Question 73 In a Defined Contribution plan, the pension amount is _______

beforehand.
(a) known
(b) Not known
(c) fixed
Question 74 Once a New Fund Offer of a Open Ended Mutual Fund closes, the units
are ______.
(a) not open for purchase or sale
(b) open for purchase for existing investors only
(c) open for purchase or sale only on stock exchanges
(d) open for purchase for existing and new investors
Correct Answer 73 Not known
Answer In the Defined Contribution Plan the pension depends upon the returns made
Explanation on the investment, the contributing individual usually gets some say in the way
the amount is invested.
This is done by providing multiple options in the way the funds may be
invested – like equity focused (high risk, high returns), debt focused (low risk,
low returns) or anything in-between (medium risk, medium returns).
(In a Defined Benefit plan, the pension amount or value of retirement benefit is
known beforehand)
Correct Answer 74 open for purchase for existing and new investors
Answer Once a Open Ended NFO closes, after some specified days, its units are
Explanation available for purchase for existing as well as new investors as per the NAV.
Question 75 Short term price fluctuations are ignored by 'Buy and Hold' policy. State
True or False ?
(a) FALSE
(b) TRUE
Answer An investor who employs a buy-and-hold strategy actively selects stocks, but
Explanation once in a position, is not concerned with short-term price movements and
technical indicators.
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 3

LAST DAY REVISION EXAM 3

Correct Answer 1 Money Back Insurance Policies

Question 3 If there is a negative covariance between two securities, it means there is a

Correct Answer 3 opposite trend

Correct Answer 4 TRUE

Answer Government securities are considered to be risk-free as it is believed that a

Question 5 Hybrid Mutual Fund invest in __________.

Question 6 Which method of calculation is used to calculate how much insurance is

Correct Answer 5 both debt and equity

Correct Answer 6 Human life approach

Question 7 What is the meaning of Insurance Planning ?

Correct Answer 8 Financial Goal

Answer Financial goal means identifying future needs of an individual that

Question 10 ________ is not considered as a measure of risk.

Correct Answer 9 Cash

Correct Answer 10 Alpha

Correct Answer 11 the sale of a long or short-term capital asset.

Correct Answer 12 Clearing

Question 13 An investment portfolio consisting of Mutual Funds is created primarily

Question 14 The seller of a CALL Option has ______.

Correct Answer 13 The risk appetite of the investor

Correct Answer 14 an obligation to sell

Question 16 Endowment Insurance Plans is a level premium plan with a _________

Correct Answer 16 savings

Correct Answer 17 Trustee

Correct Answer 18 An owner of residential property in Mumbai

Question 20 A situation where there is a chance of either a _____ or no loss is known as

Correct Answer 20 Loss

Question 22 Transfer of Risk is a important measure of Risk Management - State

Correct Answer 21 TRUE

Correct Answer 22 TRUE

Question 23 __________ supervises the activities of ________.

Correct Answer 23 Sponsor , AMC

Answer Sponsors -- Trustees -- Asset management companies (AMC) constitute the

Correct Answer 24 Rs 5 lakhs

Question 25 Which are higher - Nominal Returns or Tax Adjusted Returns ?

Question 26 The main objective of imposing margin payments on trades is _______.

Correct Answer 25 Nominal Returns

Question 28 The prime responsibility of a SRO - Self-Regulatory Organization is to

Correct Answer 27 1.50%

Correct Answer 28 TRUE

Question 29 Income Tax is an INDIRECT Tax - State True or False ?

Correct Answer 29 FALSE

Correct Answer 30 0.84

Answer Beta = Co-Variance / Variance

Correct Answer 31 Conservative Investors

Correct Answer 32 income replacement method

Answer Income replacement method looks at the retirement income as a percentage of

Question 33 In case an Public Issue is over subscribed, the ___________ in consultation

Correct Answer 33 The Registrar and Transfer (R&T) Agents

Correct Answer 34 FALSE

Answer Tax benefits are available.

Question 36 Are Government bonds issued by State Governments risk free ?

Correct Answer 35 Alternate Investments

Correct Answer 36 Yes

Question 37 ____________ is a Corporate Action.

Correct Answer 37 Both 1 & 2

Question 39 The small saving schemes introduced in India can be classified as

Correct Answer 39 Government Obligations

Correct Answer 40 Insurance

Question 41 Investor Services are processed by __________.

Question 23 __ supervises the activities of .