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NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP 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
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
Question 4 Government Securities does not have any Credit Risk - State True or
False?
(a) TRUE
(b) FALSE
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.
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.
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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 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
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.
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
Answer The risk preferences of the investor are taken into account while constructing
Explanation an
investment portfolio of Mutual Funds.
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
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
Answer The trustee holds the legal title and exercises control over the trust property in
Explanation the interest of the beneficiary.
Answer For an Reverse Mortgage Scheme, one should be the owner of a residential
Explanation property (house or flat) located in India,
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
Question 21 Insurable risk does not involve any prospect of gain or profit - State 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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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 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
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.
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
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.
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
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
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.
Answer The RBI manages the Central and State Govts. bonds issues and guarantees the
Explanation payments.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
(d) None of the above
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
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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
Answer Loss arising from a long-term capital asset can be set off only against long-
Explanation term
capital gains.
Answer The Reserve Bank of India is the regulator of the banking system and the
Explanation monetary authority.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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 48 7%
Answer Wealth Tax has been abolished with effect from 1st April, 2016.
Explanation
Answer The central government alone issue treasury bills for different maturities such
Explanation as 91 days, 182 days and 364 days.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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 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)
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
Answer The minimum deposit amount is Rs. 200. There is no maximum limit.
Explanation
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
(d) None of the above
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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
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
Correct Answer 68 To get the best returns, regularly change the investment portfolio.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
Answer Security P is more risky to invest in as the returns are quiet volatile and
Explanation difficult to estimate.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
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.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION V.IMP LAST DAY REVISION EXAM 3
NISM
NCFM
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