NISM IA XA LEVEL1 – MOCK TEST FinanceInsights has created mock tests for the NISM Investment Adviser X-A (Level 1) exam. Questions are based on NISM Investment Adviser X-A (Level 1) Workbook Version - Jul 21. The mock test is based on the actual examination. The examination consists of 90 multiple choice questions and 9 caselets/case-based questions. Total marks Multiple Choice Questions [90 questions of 1 mark each] - 90 9 Case-based Questions: [6 cases (each case with 5 questions of 1 mark each)] - 30 [3 cases (with 5 questions of 2 marks each] - 30 Total marks >>>>> 150 The examination should be completed in 3 hours. Click Next to continue. 1. The financial planning process starts with _____. allocation of funds the goal setting process budgeting 2. Prices of physical assets show a ____ correlation with inflation. positive negative 3. Rs 1,000 received after 3 years when discounted at 5 per cent is worth Rs ___today. Rs 823 Rs 864 Rs 876 4. Shyam is going to receive a sum of Rs 6,500 a year for the next 8 years at an interest rate of 7 percent. He would like to know whether he should take the cash flow or a lump sum now and what this would be worth. Rs 37,792.47 Rs 38,125,67 Rs 38,813.44 5. What is the future value of Rs 5,000 growing at 8 per cent per annum after 5 years? Rs 7219.32 Rs 7313.45 Rs 7346.64 6. Rs. 10.50 was invested in a mutual fund and redeemed for Rs. 12.25 at the end of 3 years. Calculate the CAGR. 4.86% 5.27% 5.63% 7. Suresh plans to take a loan of Rs 30 lakh to purchase a house. The current rate of interest is 6.5 per cent with a monthly reset and he is looking for a 20 year loan. Calculate the EMI. Rs 22232.21 Rs 22367.19 Rs 22673.42 8. Rakesh wants to know how long a loan of Rs 5 lakh will take to be repaid where the EMI is Rs 12,000 per month and the rate of interest is 8 per cent. 42.67 months 43.05 months 48.97 months 9. In case of an ordinary annuity the payment is made at the ___of the relevant time period. start mid end 10. A perpetual bond pays out Rs 10,000 as interest on an annual basis. The discount rate /interest rate is 8 per cent. Calculate the value of the perpetuity. Rs 120,000 Rs 125,000 Rs 128,000 11. What is Gita's savings to income ratio? 1.25 1.27 1.28 12. What is Gita's expense ratio? 42% 43% 45% 13. What is Gita's revolving credit cost? 42.45% 42.58% 43.23% 14. What is Gita's debt servicing ratio? 1.98% 2.22% 2.26% 15. What is Gita's leverage ratio? 0.72 0.76 0.79 16. What is the Modigliani-Miller Theorem (M&M)? Using loans over own funds should be avoided. Using loans over own funds may increase the return on investment. Using loans or own funds doesn't make much of a difference. 17. A credit bureau is licenced by ___ and governed by ______ . RBI, Credit Information Companies (Regulation) Act, 2005 SEBI, Credit Information Companies (Regulation) Act, 2005 RBI, Companies Act, 2013 18. Under a pledge, the asset is usually ___________ asset. a movable an immovable 19. P2P loans are secured loans. TRUE FALSE 20. What is the avalanche strategy for paying off debt? Paying off loans with the highest amounts first Paying off debt with the highest interest rates first Paying off loans with the lowest amounts first 21. Mutual funds are found in the Balance Sheet as _______. (from NISM) Capital Liabilities Investments Fixed Asset 22. Which department of the Ministry of Finance monitors the functioning of the capital market? Department of Financial Services Department of Economic Affairs Department of Investment and Public Asset Management 23. Payment banks can accept current and savings deposits not exceeding _______. Rs 50,000 Rs 1 lakh Rs 1.5 lakh 24. NBFCs do not have the benefit of deposit insurance with the Deposit Insurance and Credit Guarantee Corporation. TRUE FALSE 25. Money market is a part of the financial market where instruments with short term maturities of _____are traded. <3 months < 6 months < 1 year 26. What is the EMI? Rs 22,367 Rs 22,637 Rs 22,736 27. Satish wants to know what is the interest component in the first EMI. Rs 16,050 Rs 16,250 Rs 16,550 28. Satish wants to know the principal component in the last EMI. Rs 21,246.69 Rs 22,046.69 Rs 22,246.69 29. Satish wants to reduce the loan tenure from 20 years to 15 years. He wants to know the increase in the EMI. Rs 3,766.03 Rs 3,866.03 Rs 3,869.03 30. Satish wants to increase the EMI to Rs 25,000. What will be the loan tenure? 184.34 months 194.34 months 294.34 months 31. The money market instruments consist of ____. a. call (overnight) and short-notice (up to fourteen days) money b. commercial paper (CP) and certificates of deposit (CDs) c. money market mutual funds (MMMFs) d. commercial bills e. Treasury Bills only a, b and c only d and e all of the above 32. _______ computes and publishes the USD/INR, EURO/INR, GBP/INR and JPY/INR Reference Rates on a daily basis on all Mumbai business days. RBI SEBI FBIL SBI 33. The forward market in currency is the _____________. OTC market exchange traded futures market both of the above 34. Who are Account Aggregators? Bring together similar service providers Collate customer information Present a customer's bank accounts on one platform 35. In the stock exchange, which entity acts as a counter party and guarantee to the transaction? Clearing corporation NSDL The respective stock exchange 36. In case of a book-built IPO issue, the price band is the price range starting from floor price to ___ above it. 10% 20% 30% 37. In a book-built IPO, SEBI has prescribed the minimum application value in the range of _________. Rs.5,000 to Rs.7,000 Rs.7,000 to Rs.10,000 Rs.10,000 to Rs. 15,000 38. _______ defines the term "Securities". (from NISM) Securities Contracts (Regulation) Rules, 1957 Securities Contracts (Regulation) Act 1956 The Depositories Act, 1996 SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 39. According to Companies Act, 2013, an offer to subscribe to securities made to less than ___ persons is called private placement of securities. 25 50 100 40. The margin on equity shares is the sum of ___________. value at risk margin and extreme loss margin extreme loss margin and mark to market margin value at risk margin, extreme loss margin and mark to market margin 41. Rajesh is a Person of Indian Origin (PIO). TRUE FALSE 42. Karen is not a Person of Indian Origin (PIO). TRUE FALSE 43. Rajesh's children are not Persons of Indian Origin (PIOs). TRUE FALSE 44. Sarah is a Person of Indian Origin (PIO). TRUE FALSE 45. Samir's child is not a Person of Indian Origin (PIO). TRUE FALSE 46. Which fund is used to guarantee the settlement of trades in the stock exchange in case of a clearing member failing to honour settlement commitments? Core Trade Guarantee Fund Core Settlement Guarantee Fund Core Transaction Guarantee Fund 47. If the stock market moves up or down by 10% before 1 pm, for how long is trading halted? Also what is the duration of the pre-open call auction session post market halt? 30 mins, 15 mins 45 mins, 15 mins 60 mins, 30 mins 48. Bonds or dated securities issued by state governments are called _________. State Government bonds State Government loans State Development Loans 49. Under the Liberalised Remittance Scheme (LRS), an individual can invest upto $ _______ abroad every year. 150,000 200,000 250,000 50. The minimum portfolio size that a portfolio manager is required to accept is Rs. _____. 25 lakhs 50 lakhs 1 crore 51. Market risk is measured by ____. Alpha Beta Gamma 52. G-Secs typically have ______ coupon or interest payments. quarterly semi-annual annual 53. Treasury Bills are always issued at a discount to the Par value. TRUE FALSE 54. A bond is paying an annual coupon of Rs 10 on half-yearly basis. Face value is Rs 100. The market interest rate is 8%. Calculate the value of the bond. 108.11 108.32 108.96 55. The coupon of a bond is 7.07% with half-yearly payment frequency; Date of issue is 08-Jan-18; Date of maturity is 08-Jan-28; Settlement date is 23-Mar-20; Face value and Price is Rs.100.00; Yield is 7.07%. What is the duration of the bond? 5.234 years 5.987 years 6.036 years 56. What will be the cost of the car after 2 years after considering inflation @6%? FV of car = Rs 11,23,600 FV of car = Rs 11,23,700 FV of car = Rs 11,24,600 57. If they decide to pay down payment of 25% of cost of car, how much down payment will they need to pay considering 6% inflation? FV of down payment = Rs 280,200 FV of down payment = Rs 280,600 FV of down payment = Rs 280,900 58. After paying down payment of 25% on car cost, how much EMI will they need to pay assuming 11% interest on loan and considering 6% inflation for a loan tenure of 5 years? EMI = Rs 18302.34 EMI = Rs 18322.34 EMI = Rs 18362.34 59. What is the interest component of the EMI for the first year? Interest in EMI in 1st year = Rs 7,704.75 Interest in EMI in 1st year = Rs 7,724.75 Interest in EMI in 1st year = Rs 7,824.75 60. If they decide to purchase a car after a year instead of after 2 years, how much down payment @25% will they need to make? How much EMI will they need to pay @6% inflation and 11% interest on loan? Down payment = Rs 265,000 EMI = Rs 15,285.23 Down payment = Rs 245,000 EMI = Rs 17,285.23 Down payment = Rs 265,000 EMI = Rs 17,285.23 61. The Dirty price of a bond is ______. clean price - accrued interest clean price + accrued interest 62. Calculate the value of a perpetual bond whose parameters are: Coupon is 8%; Face Value is Rs 100 and the investor would like to have an annual yield of 6%. Rs 133.13 Rs 133.33 Rs 133.63 63. Calculate the YTM of a bond whose tenure is 10 years, maturity date is 1-Jan-2032, settlement date is 1-Jan-2022, coupon is 8%, Market price is Rs 102, FV is Rs 100 and coupon frequency is semi annual. 7.34% 7.52% 7.71% 64. Calculate the effective yield of a bond paying annual coupon of 8% if the coupon is paid semi-annually. 8.16% 8.25% 8.45% 65. What is the duration and minimum market order of term money? 5 days - 6 months, Rs 1 lakh 7 days - 1 year, Rs 1 lakh 15 days - 1 year, Rs 1 lakh 66. In case of repo, funds are borrowed ________. via pledge of securities via sale of securities 67. Corporate Bond Repo (CBR) can be traded on __________. OTC Stock Exchanges Both of the above None of the above 68. One of the features of art is that there are no _________. (from NISM) Art funds Sellers Art experts Standard products 69. Measurement of credit risk is undertaken through -- credit rating and credit spreads credit rating and debit spreads debit rating and credit spreads 70. What is the real rate of return? - (from NISM) Return that the investor gets after payment of all expenses Return that the investor gets after taxes Return that the investor gets after adjusting the risks Return that the investor gets after adjusting inflation 71. What will be the cost of education for Siya when she turns 18 @inflation of 6%? FV = Rs 2,836,038 FV = Rs 2,837,038 FV = Rs 2,847,038 72. What will be the cost of education for Rohit when he turns 18 @ inflation of 6%? FV = Rs 3,481,695 FV = Rs 3,571,695 FV = Rs 3,581,695 73. How much will the couple need to save each month @investment return of 8.5% per annum to accumulate the target amount for Siya's education assuming inflation @6% when she turns 18? Monthly inv = Rs 30,342 Monthly inv = Rs 31,342 Monthly inv = Rs 33,563 74. How much will the couple need to save each month @investment return of 8.5% per annum to accumulate the target amount for Rohit's education assuming inflation @6% when she turns 18? Monthly inv = Rs 18,038 Monthly inv = Rs 19,000 Monthly inv = Rs 19,038 75. If the couple take an education loan for a tenure of 8 years for the future value amount for Siya at 11%, how much EMI will they need to pay? EMI = Rs 42,565 EMI = Rs 44,565 EMI = Rs 47,500 76. In case of interval funds, the maximum duration of the interval period is -- 5 days 10 days 15 days 77. In case of ETFs, there could be a gap between the market price of the ETF and its NAV. TRUE FALSE 78. As per SEBI regulations, mid cap companies are defined as -- 101st -350th company in terms of full market capitalization 101st -200th company in terms of floating stock market capitalization 101st -250th company in terms of full market capitalization 79. The maximum number of stocks a focussed fund can invest in is -- 20 stocks 30 stocks 40 stocks 80. As per SEBI regulations, the minimum investment in equity and equity related instruments by sectoral funds and thematic funds shall be -- 60 percent of total assets 70 percent of total assets 80 percent of total assets 81. As per SEBI regulations, short duration funds can invest in debt and money market securities with Macaulay duration of -- between 1 year and 3 years between 2 years and 4 years between 3 year and 6 years 82. Which debt scheme can invest in debt securities across all durations? Flexi bond fund Dynamic bond fund Short-to-long duration funds 83. What is a credit risk fund? A debt fund that invests in AA rated corporate bonds A debt fund that invests in below highest rated corporate bonds A debt fund that invests in only A rated corporate bonds 84. Which fund needs to have minimum investment in G-secs of 80 percent of total assets such that the Macaulay duration of the portfolio is equal to 10 years? Gilt funds Gilt Fund with 10-year constant duration Gilt Fund with at least 10-year constant duration 85. In this fund, investment in equity/debt is managed dynamically. a. Dynamic asset allocation fund b. Balanced advantage fund Both of the above None of the above 86. How much will the couple's monthly expenses be at the start of retirement? Monthly expenses at start of retirement = Rs 223,000 Monthly expenses at start of retirement = Rs 228,000 Monthly expenses at start of retirement = Rs 238,000 87. How much retirement corpus will the couple need to accumulate? Retirement corpus - Rs 39,902,000 Retirement corpus - Rs 40,902,000 Retirement corpus - Rs 40,722,000 88. How much should they save per month to accumulate the required retirement amount assuming return on investment of 9% per annum? Per month investment - Rs 22,000 Per month investment - Rs 32,000 Per month investment - Rs 44,000 89. If the couple wants to accumulate Rs 10 lakh (at today's value; consider inflation at 6%) for their grandchildren on their demise, how much will they need to invest each month assuming return on investment of 9.5% per annum? Per month investment = Rs 243,820 Per month investment = Rs 255,820 Per month investment = Rs 265,820 90. If the couple will be receiving monthly annuity of Rs 5,000 (future value) for 20 years after retirement, how much will be present value of the annuity be at the start of retirement? Assume inflation at 6% PV of annuity at start of retirement = Rs 84,937.10 PV of annuity at start of retirement = Rs 92,937.10 PV of annuity at start of retirement = Rs 94,937.10 91. A retirement solution-oriented scheme has a lock-in of -- 4 years or till retirement age (whichever is earlier). 5 years or till retirement age (whichever is earlier). 6 years or till retirement age (whichever is earlier). 92. A Fund of Funds must have minimum investment in the underlying fund of -- 75 percent of total assets 85 percent of total assets 95 percent of total assets 93. Infrastructure Debt Funds can be set up as -- a company a trust both neither 94. As per SEBI regulations, the minimum investment in physical assets by real estate funds is -- 35 percent 40 percent 45 percent 95. Smart beta funds are similar to -- Large cap funds AIFs Index funds and ETFs 96. What is SEBI's web-based centralized grievance redress system called? AGNI SCORES 97. Calculate the Net Asset Value of the scheme based on the following: Unit Capital (20 crore units of Rs 10 each) - Rs 200 crore; Profits {Rs 8 crore (interest and dividend received) minus Rs 4 crore (expensespaid) minus Rs 1 crore (expenses payable)} - Rs 3 crore; Capital Appreciation on Investments held (10 percent of Rs 140 crore) - Rs 14 crore; Expenses payable - Rs 1 crore; Market value of Investments (Rs 140 crore + 10 percent) - Rs 154 crore; Bank Deposits {Rs 60 crore (original) plus Rs 8 crore (interest and dividend received) minus Rs 4 crore (expenses paid)} - Rs 64 crore. This example is from NISM Rs 10.80 per unit Rs 10.82 per unit Rs 10.85 per unit 98. Short term capital gains in case of equity-oriented funds are taxed at -- 10 percent 15 percent 20 percent 30 percent 99. Income tax at the rate of 10 percent (without indexation benefit) on long-term capital gains are charged on long term capital gains exceeding Rs.____ provided transfer of such units is subject to STT. 50,000 1 lakh 1.5 lakh 2 lakh 100. An investor invested Rs. 1,00,000 in a debt fund in 2015 and sold the same after 3 years. He got Rs. 1,25,000 as the redemption proceeds. How much capital gains tax does he have to pay? The cost inflation index values for the years 2015-16 and 2018-19 are 254 and 280 respectively. Rs. 2,043.15 Rs. 2,952.76 Rs. 3,015.45 101. What will be the cost of the foreign holiday when the family is ready (at 6% inflation)? Future cost of foreign holiday = Rs 12,71,000 Future cost of foreign holiday = Rs 12,72,000 Future cost of foreign holiday = Rs 12,82,000 102. How much should Sudesh invest each month to accumulate the necessary amount (assuming investment return of 8.5%)? Monthly investment = Rs 101,217 Monthly investment = Rs 101,317 Monthly investment = Rs 102,217 103. Sudesh received a bonus from his company and decided invest the amount on a one-time basis for the holiday. How much would he need to invest at one time to accumulate the necessary amount? Assume inflation at 6% and return on investment at 8.5% One time investment = Rs 11,60,701 One time investment = Rs 11,68,701 One time investment = Rs 11,70,701 104. Assuming a higher inflation rate of 6.5%, how much would Sudesh need to accumulate for the foreign holiday? Future cost of foreign holiday = Rs 12,48,000 Future cost of foreign holiday = Rs 12,58,000 Future cost of foreign holiday = Rs 12,78,000 105. Sudesh decided to take a personal loan for the foreign holiday when it was due (at the actual amount required). Interest on the personal loan was 18% and tenure was 3 years. Loan repayment was to be done in EMI. How much is the EMI amount? Assume inflation at 6%. EMI = Rs 42,986 EMI = Rs 45,986 EMI = Rs 46,986 106. Long term capital loss can be set off ____________ . only against long term capital gain against long term capital gain or short term capital gain any income head 107. For purchases and switch ins in liquid funds the cut off time is ____. 1:00 PM 1.30 PM 3.30 PM 108. “Segregated portfolio” means a portfolio, comprising of _____ affected by a credit event, that has been segregated in a mutual fund scheme. equity debt or money market instrument any security 109. Which amongst the following is a measure of risk-adjusted returns of mutual fund scheme? (from NISM) Standard deviation Beta Variance Sharpe ratio 110. Calculate the weekly and annualized standard deviation. Weekly standard deviation = 0.61%; annual standard deviation = 4.1% (rounded) Weekly standard deviation = 0.62%; annual standard deviation = 4.3% (rounded) Weekly standard deviation = 0.65%; annual standard deviation = 4.70% (rounded) 111. A portfolio manager shall act in a ______ capacity with regard to the client's funds. advisory discretionary fiduciary 112. Which category of AIFs employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives? Category 1 AIF Category II AIF Category III AIF 113. As per Modern Portfolio Theory (MPT), a prospect that has a ____ risk premium is called a fair game. zero 50% 100% 114. The above returns are forecasted for stocks A and B in three possible scenarios: Calculate the expected returns of these two stocks. Stock A: 9.3%, Stock B: 12.7% Stock A: 9.9%, Stock B: 17.7% Stock A: 10.9%, Stock B: 18.05% 115. Calculate the expected rate of return of the portfolio: 0.099 0.12 0.152 116. How much is the EMI Sudesh has to pay? EMI = Rs 86,582 EMI = Rs 86,782 EMI = Rs 87,782 117. Sudesh is eligible for tax deduction on home loan repayment and interest payment under section 80C. TRUE FALSE 118. Sudesh wanted to prepay a part of the home loan. The lender stated it would charge Sudesh prepayment penalty of 0.25%. Is that permitted? Permitted Not permitted 119. What is the interest component of the home loan in the 25th month? Interest in 25th month = Rs 67,889.23 Interest in 25th month = Rs 68,889.23 Interest in 25th month = Rs 67,989.23 120. Sudesh found another lender offering home loan for a lower interest rate. Can he transfer his outstanding loan to this lender? Yes No 121. See the image 0.0433 0.04766 0.04838 122. The ________ represents a set of portfolios that provide maximum rate of return for a given level of risk or the minimum risk for every level of return. efficient frontier efficient market theory portfolio theory 123. The first step in the process of portfolio management is development of _________ for the portfolio. forecast of future trends investor's risk appetite policy statement 124. For psychographic analysis, who classifies investor personalities by focusing on two aspects: the level of confidence and the method of action? Richard Thaler Bailard, Biehl & Kaiser Daniel Kahneman and Amos Tversky 125. What is the MWRR (Money Weighted rate of return) generated by the portfolio? 12.90% 13.90% 14.90% 126. Calculate the time weighted rate of return. 6.02% 7.02% 8.02% 127. Two portfolios have given the following returns: 1. HPR of 12% in first year and 9% in second year; 2. HPR of -5% in first year and 25% in second year. Calculate the Geometric Mean Return of each portfolio. 10%; 9% 10.5%; 9.5% 11%; 10% 128. Calculate the gross and net return of the following portfolio: 1. Size of sample portfolio: Rs. 200 lacs 2. Investment Period: 1 year 3. Profit made during the year: 15% on the capital contribution 4. Hurdle Rate: 10% of amount invested 5. Other Expenses such as Brokerages, DP charges etc., charged on gross value of portfolio (0.60%) 6. Upfront fee – Nil 7. Setup fee-Nil 8. Fixed Management fee charged on average of capital contribution and gross value of portfolio (e.g. 1.6%) 9. Performance fee (e.g. 15% of profits over hurdle rate without catch-up) 10. The frequency of calculating all fees is annual. 11. Exit load IS 2% Gross return: 15%; Net return: 9.98% Gross return: 15%; Net return: 9.96% Gross return: 15%; Net return: 10.12% 129. Calculate the CAGR of this investment. 6% 6.02% 6.12% 130. See the image 14% 14.10% 14.30% 131. What is the value of bond 1? Value of bond 1 = Rs 110.47 Value of bond 1 = Rs 112.47 Value of bond 1 = Rs 113.47 132. What is the duration of bond 2? Duration of bond 2 = 6.10 years Duration of bond 2 = 6.12 years Duration of bond 2 = 6.19 years 133. What is the value of bond 3? Value of bond 3 - Rs 90.28 Value of bond 3 - Rs 92.28 Value of bond 3 - Rs 93.32 134. What is the YTM of bond 4? YTM of bond 4 = 7.26% YTM of bond 4 = 8.26% YTM of bond 4 = 8.62% 135. What is the value of bond 5? Value of bond 5 = Rs 100.36 Value of bond 5 = Rs 101.36 Value of bond 5 = Rs 108.36 Please fill in the comment box below. Share on FacebookTweet Related By Sharmila I am a finance professional; I educate people on how to manage their finances and invest to grow wealth and fulfil their financial goals. View all of Sharmila's posts.

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