NISM Series X-A Investment Adviser (Level 1) Cert. Mock Test

NISM Series X-A Investment Adviser (Level 1) Cert. Mock Test - 2

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NISM Series X-A Investment Adviser (Level 1) Cert. Mock Test – 2

1 / 50

A fund that provides both equity and unsecured debt financing to early-stage companies would classify as a __________.

a) Investment Fund

b) Unsecured bond fund

c) Venture capital fund

d) NBFC

2 / 50

What day count convention is used in the treasury bill markets?

a) Actual/365

b) Actual/Actual

c) Actual/360

d) 30/360

3 / 50

An investment adviser faces a dilemma when recommending portfolio management schemes (PMS) for his client. The best PMS product is offered by a company where his spouse works. How can he resolve this conflict of interest?

a) As there is a conflict of interest, this PMS product is ineligible as per SEBI regulations and should be dropped

b) He should make a full disclosure to his client of his spouse's employment in the PMS company and also why the product is best suitable to him

c) As there is a conflict of interest, this PMS product should be dropped and not recommended

d) As the PMS product is best, he should recommend it to his client without any fear

4 / 50

Mr. Santhanam received Rs 15,00,000 and deposited it in an investment with an 11% interest rate. If he withdraws Rs 2,00,000 annually, how long can he continue doing so?

a) 7.87 years

b) 8.56 years

c) 7.50 years

d) 16.70 years

5 / 50

When anticipating a decline in market prices, fund managers can minimize the loss in portfolio value by _________.

a) Using equity derivatives

b) Speculating

c) Not buying and selling shares at all for some days

d) Borrowing from banks

6 / 50

Sharpe and Treynor Ratios are measures of __________.

a) Average return

b) Beta of the portfolio

c) Risk adjusted return

d) Risk

7 / 50

Identify the unique characteristic of the interest paid on an Inflation Indexed bond.

a) The interest is re-set periodically as per the current inflation rates

b) These bonds provide negative real rate of return due to its special interest rate

c) The interest is fixed at the time of issue, as per the then prevailing interest rates in the economy

d) The interest on these bonds is tax free

8 / 50

An investor wanting to purchase units of an ETF will transact with the __________ and receive the units in __________

a) AMC, account statement

b) Distributors; Account statement

c) Distributor, demat account

d) Brokers; demat account

9 / 50

Which type of corporate action divides the existing shares of a particular face value into smaller denominations?

a) Buy Back

b) Stock Split

c) Right Issue

d) Bonus Issue

10 / 50

Lisa needs Rs.7 lakhs urgently for an emergency situation. Which investment is she most likely to liquidate or use?

a) Shares of Hindalco Ltd

b) Gold jewellery

c) 5-year bonds of a finance company

d) Bank deposit

11 / 50

The following is the requirement for granting the certificate of registration under Portfolio Managers Regulations 2020: _________.

a) The applicant is a body corporate

b) The applicant has the necessary infrastructure like adequate office space, equipment and the manpower to effectively discharge the activities of a portfolio manager

c) The applicant has appointed a compliance officer

d) All the above

12 / 50

Asset allocation is ___________.

a) The process of dividing funds into asset classes

b) Concerned with returns variability

c) Concerned with the risk associated with different assets

d) Concerned with the relationship among investments’ returns

13 / 50

_______ do not undertake leverage or borrowing other than to meet day-to-day operational requirements.

a) Category I AIF

b) Category II AIF

c) Category III AIF

d) d)

14 / 50

Which contracts are bilateral agreements in which a party can purchase or sell assets at a certain price on a specific future date ?

a) Futures

b) Swaps

c) Forwards

d) Options

15 / 50

If the return on risk free asset is 5% and the expected return on risky asset is 12%. The standard deviation of risky asset is 10%. The weight of risk free asset in the portfolio is 70% and rest of the portfolio is invested in risky asset. The expected return on the portfolio will be:

a) 7.25%

b) 8.10%

c) 6.25%

d) 7.10%

16 / 50

The risk of default on obligations arising out of trading is controlled by the exchange by ________.

a) Blocking high value trades

b) Imposing margins

c) Imposing circuit filters

d) Restricting types of investors

17 / 50

A power of attorney refers to ___________

a) Authority to act on behalf of another person

b) Authority only to borrow money on behalf of another person

c) Authority to open an account only

d) Authority to operate an account only

18 / 50

Value of a derivative security depends on that of the underlying assets. State whether True or False.

a) True

b) False

19 / 50

What is the future value of Rs. 10,000 at a interest rate of 4.5% after 3 years?

a) Rs.11411.66

b) Rs.11920.25

c) Rs.8762.97

d) Rs.4157.30

20 / 50

Scanning the macro economic scenario and then identifying industries to choose from and zeroing in on companies, is__________

a) The top-down approach

b) The bottom-up approach

c) Horizontal approach

d) Strategic Asset allocation approach

21 / 50

Which of the following is a measure of the risk in an equity index fund?

a) Portfolio’s beta

b) Sharpe ratio

c) Tracking error

d) Credit rating

22 / 50

The relationship between the bond prices and interest rates is one of the following

a) Direct & linear

b) Inverse & linear

c) Direct and curvilinear

d) No relationship

23 / 50

The group of market participants that collectively facilitate interaction between investors and issuers is known as _______.

a) Bankers

b) Regulators

c) Intermediaries

d) Custodians

24 / 50

Which of the following categories of shares have to be mandatorily listed on a stock exchange?

a) All shares issued by a company

b) All shares issued to non-promoters

c) All shares depending upon the terms of the issue.

d) All shares issued in a public issue

25 / 50

What will be the effect in terms of buying power on today’s Rs.50000.00 after 15 years if inflation is 8% p.a?

a) It will be worth Rs. 14584.00

b) It will be worth Rs. 16412.00

c) It will be worth Rs. 14921.00

d) It will be worth Rs. 15762.00

26 / 50

The long term goal of a young investor is to build a corpus that is adequate to serve his income needs after retirement. The portfolio when constructed, should have a higher allocation to

a) Debt

b) Cash equivalents

c) Equity

27 / 50

Hedge funds are _________.

a) Arbitrage funds

b) Low-risk funds

c) Moderate-risk funds

d) High-risk funds

28 / 50

Mr. Gupta wants to know that if ROI is 11% p.a. compounded Quarterly, then how many Quarters it will take to double Rs.5,00,000?

a) 6.3875

b) 12.775

c) 3.193

d) 26

29 / 50

)Ms. L takes a loan against her mutual fund holdings. Only a portion of her units are required as security. How will she give effect to this?

a) Transfer the required portion to a new folio and mark a lien on it

b) Mark lien on the entire holdings, irrespective of the requirement

c) Mark lien only on the portion required in the existing folio

d) Transfer the required portion to a new folio and make the lender the joint holder

30 / 50

Calculate the beta of a security which has a correlation of 0.40 with the market. Standard deviation of the security is 2.4 and that of the market is 1.5

a) 1.024

b) 0.11

c) 0.25

d) 0.64

31 / 50

Offer for sale (OFS) is method of share sale for ___________.

a) Startups

b) Listed companies

c) Unlisted companies

d) All the above

32 / 50

What is True with respect to ‘Impact Cost’ in the equities market ?

a) Its the percentage price movement due to a particular trade

b) Less Liquid Stocks have high impact costs.

c) Its the measure of liquidity risk

d) All of the above

33 / 50

Which of the following is the primary function of the secondary markets?

a) Provide liquidity for securities issued in the Primary market

b) Provide a platform for making public issues

c) Provide information about pubic companies

d) Enable investors to trade in stocks

34 / 50

Inflation does which of the following to retirement planning?

a) Reduces the periodic savings required

b) Reduces the return generated by an investment

c) Increases the retirement corpus required

d) Increases the value of the corpus created

35 / 50

The securities that are already issued are available for subsequent purchases and sales at:

a) Office of the registrar and transfer agent

b) Follow on public offer of the issuer

c) Stock exchanges where they are listed.

d) Depositories where they are held

36 / 50

______ is defined as simultaneous purchase and sale of an asset to take advantage of difference in prices in different markets.

a) Mortgage

b) Speculation

c) Hedging

d) Arbitrage

37 / 50

Typical put ability (put option) feature of a bond __________.

a) Gives the holder the right, under certain circumstances to sell the bond back to the issuer

b) Allows the investor to redeem the bond

c) Allows the issuing firms to retire the bonds before the maturity by paying a prescribed price

d) Gives the bond holders the option to convert the bond into another security, typically the common stock of the firm issuing the convertible bonds

38 / 50

For how many years an account under senior citizen scheme can be extended?

a) 5 years

b) 3 years

c) 1 years

d) 6 years

39 / 50

Sharpe’s performance measure divides the portfolio’s risk premium by the _________.

a) Standard deviation of the rate of return

b) Variance of the rate of return

c) Slope of the fund's characteristic line

d) Risk free rate

40 / 50

___________ is a standardized measure of the relationship between two variables that range from -1.00 to +1.00

a) Covariance

b) Variance

c) Correlation coefficient

d) Standard deviation

41 / 50

Which type of Mutual Funds relies heavily on the fund manager’s role?

a) Actively Managed Funds

b) Passive Funds

c) Bond Index Funds

d) Gold ETF

42 / 50

Is it TRUE or FALSE that the Securities Appellate Tribunal (SAT) follows the procedure outlined in the Code of Civil Procedure?

a) True

b) False

43 / 50

If a portfolio consists of fifty securities, determine the number of covariance terms needed to calculate the portfolio’s risk.

a) 1125

b) 1225

c) 2500

d) 1500

44 / 50

The investment adviser must prioritize whose interests when providing advice?

a) His own interest

b) The product provider

c) The client

d) His team

45 / 50

Strategic asset allocation does not include which of the following?

a) It is meant to meet the goals of the investor

b) It is a long term asset allocation decision

c) It provides target allocation to different assets

d) It is meant to take advantage of the situation in the financial markets

46 / 50

When an investor’s allocation in stocks and bonds shifts from 70:30 to 40:60 because the portfolio manager anticipates a downturn in the equity markets, what is this strategy called?

a) Sector rotation

b) Security selection

c) Investment style

d) Market timing

47 / 50

Which statement is accurate regarding Category-III alternative investment funds?

a) Undertakes leverage or borrowing

b) Includes SME funds and Venture capital funds

c) Employs diverse or complex trading strategies

d) Both 1 and 2

48 / 50

What is the potential maximum loss for an options contract seller?

a) Premium Paid

b) Unlimited

c) Depends on the type of the option like CALL or PUT

d) Depends on the Strike Price

49 / 50

_______ is the risk associated with the possibility that the value of an investment may fluctuate due to changes in interest rates.

a) Political risk

b) Foreign Exchange Risk

c) Country risk

d) Interest rate risk

50 / 50

A person can have a maximum of ______________ Public Provident Fund (PPF) accounts in their name at various locations in India.

a) 1

b) 2

c) 5

d) 3

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NISM Series X-A Investment Adviser (Level 1) Cert. Mock Test - 2

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