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TEST DETAILS – The NISM INVESTMENT ADVISER ( LEVEL 1 ) CERTIFICATION EXAM is a 100 mark exam with 60% as
passing marks. In all 100 questions will be asked with 0.25 negative marking for Wrong Answers. The time
duration is 2 hours.
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NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION EXAM – PRACTICE TEST NO. 4
Question 2 The basic market outlook of an investor who has a long call is _______.
(a) Neutral
(b) Bullish
(c) Bearish
(d) Side Ways Market
Answer In a defined benefit plan, the pension amount or value of retirement benefit is
Explanation known before hand. Or, the formula based on which the pension amount
would be calculated, is known.
Question 3 If the real rate of interest is 5% and rate of inflation is 3%, what is the
nominal rate of return?
(a) 8.15%
(b) 7%
(c) 6%
(d) 1.95%
Question 4 The rate at which RBI lends short term money to the Bank is known
as__________ .
(a) Repo Rate
(b) Reverse Repo Rate
(c) Bank Rate
(d) CRR
Question 5 The term for the Senior Citizens Saving Scheme is 5 years but a onetime
extension of ______ years is allowed, if applied within one year of its
maturity.
(a) 2
(b) 2.5
(c) 3
(d) 5
Correct Answer 5 3
Answer The Endowment plan is a simple level plan which always gives a return on
Explanation premium paid to the insured.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION EXAM – PRACTICE TEST NO. 4
Answer As per section 10(38) Long term capital gain from sale of shares is exempt
Explanation from tax.
Answer In the developed world, it is common for market players to create Self
Explanation Regulatory Organizations, whose prime responsibility is to regulate their own
members.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION EXAM – PRACTICE TEST NO. 4
Question 11 ______ risk refers to the risk that bond prices will fall in response to
rising interest rates, and rise in response to declining interest rates.
(a) Credit
(b) Interest Rate
(c) Counterparty
(d) Default
Answer Interest rate risk refers to the risk that bond prices will fall in response to
Explanation rising interest rates, and rise in response to declining interest rates.
Question 13 What is the due date for the filing of Income tax return for an
individual?
(a) 30th September
(b) 31st July
(c) 31st May
(d) 30th April
Question 14 The premium payable on a ULIP is higher for the same sum assured as a
term policy because __________.
(a) The period of cover is shorter
(b) The pool of insured is smaller
(c) A portion of the premium is used for investment
(d) The risk is higher
Answer 31st July is the due date for filing of returns for individuals.
Explanation
Question 16 What is the maximum exemption amount for gratuity under the Income
Tax Act?
(a) 3 lakhs
(b) 5 lakhs
(c) 10 lakhs
(d) No limit
Answer The maximum amount of exemption for gratuity under the income tax act
Explanation under section 10(10) is 10 lakhs.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION EXAM – PRACTICE TEST NO. 4
Question 17 Which among the following would lead to faster depletion of retirement
surplus ?
(a) Current inflation > Projected return
(b) Current return > Current inflation
(c) Projected inflation > Projected Return
(d) Current inflation > Current return
Answer When the current inflation would be greater than the current return on
Explanation investments, the retirement surplus would be depleting faster as returns would
not be enough to protect against inflation.
Question 19 What is the right conferred upon the holder of an investment product to
appoint the person entitled to receive the monies in case of the death
known as?
(a) Execution
(b) Nomination
(c) Transfer
(d) Gift
Question 20 A Professional Indemnity Policy protects the insured from the risk
arising out of _____________.
(a) Negligence
(b) Intentional Misconduct
(c) Undisclosed conflict of interest
(d) Misrepresentation of professional competence
Answer Nomination is the right conferred upon the holder of an investment product to
Explanation appoint the person entitled to receive the monies in case of the death.
Question 22 For an individual, which of the following is the amount payable for
advance tax?
(a) 15% by 30th September
(b) 15% by 15th June
(c) 30% by 15th September
(d) 30% by 30th June
Answer An individual is liable to pay 30% of the advance tax liability by 15th
Explanation September, 60% by 15th December and 100% by 15th March .
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION EXAM – PRACTICE TEST NO. 4
Question 24 In a Post Office Monthly Income Scheme (POMIS), interest rate is –
(a) 8.4% p.a. payable monthly with no bonus on maturity.
(b) 8 % p.a. payable monthly with 10% bonus on maturity.
(c) 8.5% p.a. payable monthly with 10% bonus on maturity.
(d) 8 % p.a. payable monthly with 20% bonus on maturity.
Answer Interest rate is 8.4% p.a. payable monthly with no bonus on maturity.
Explanation
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION EXAM – PRACTICE TEST NO. 4
Answer Dynamic asset allocation (DAA) works on the basis of a pre-specified model
Explanation which does a mechanical rebalancing between asset classes.
NISM SERIES X A : INVESTMENT ADVISER (LEVEL 1)
CERTIFICATION EXAM – PRACTICE TEST NO. 4
Question 28 For a high severity risk, which of the following would be the best option?
(a) Avoid
(b) Retain
(c) Transfer
(d) Reduce
Answer Interest on NSC -National Savings Certificate, is accrued and paid towards
Explanation the end of the term.
NISM
NCFM
BSE