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

Mock Test: Focus on multiple-choice questions (MCQs) covering concepts, regulations, and case studies. Use mock tests for time management and reinforcing weaker areas, reviewing common question patterns.

NISM Series X-A: Mock Test 1

NISM Series X-A (Investment Advisor Level-1): Mock Test 1

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1. Which type of mutual fund is best suited for short-term investment goals?

A. Hybrid Funds

B. Liquid Funds

C. Debt Funds

D. Equity Funds

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2. A client’s risk tolerance is assessed using which of the following methods?

A. Historical market data

B. A detailed risk profiling questionnaire

C. Tax bracket analysis

D. Financial goals assessment

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3. . What is the primary goal of retirement planning?

A. Ensuring sufficient savings for post-retirement years

B. Purchasing real estate

C. Building an emergency fund

D. Investing in equities

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4. What does a client’s "risk capacity" indicate?

A. The tax implications of investments

B. The client’s preference for investing in equity

C. The client’s financial ability to absorb losses

D. The client's emotional ability to take risks

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5. Which of the following is NOT a benefit of investing in mutual funds?

A. Liquidity

B. Diversification

C. Guaranteed returns

D. Professional management

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6. A client’s total asset allocation should consider which of the following factors?

A. All of the above

B. Risk tolerance

C. Financial goals

D. Investment time horizon

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7. Which of the following is NOT a feature of Exchange-Traded Funds (ETFs)?

A. ETFs generally have lower expense ratios than mutual funds

B. ETFs have intraday liquidity

C. ETFs guarantee a fixed return on investment

D. ETFs trade like stocks on an exchange

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8. Which of the following entities regulates the mutual fund industry in India?

A. SEBI

B. AMFI

C. IRDA

D. RBI

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9. What is the minimum validity period of a financial plan recommended by SEBI?

A. 1 year

B. 3 years

C. 5 years

D. 6 months

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10. What is the primary objective of a "balanced mutual fund"?

A. To invest in real estate

B. To invest only in equities

C. To maintain a balance between equity and debt investments

D. To invest only in debt instruments

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11. Under SEBI guidelines, an Investment Adviser must act in which capacity?

A. Agent

B. Trader

C. Broker

D. Fiduciary

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12. Which of the following is a goal of "estate planning"?

A. Buying real estate for investment purposes

B. Transfer of wealth to heirs in a tax-efficient manner

C. Tax saving on salary income

D. Management of personal debt

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13. Which of the following is an example of an illiquid asset?

A. Government Bonds

B. Gold

C. Liquid Mutual Funds

D. Real Estate

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14. Which of the following is true about "interest rate risk"?

A. It primarily affects equity investments

B. It has no effect on debt mutual funds

C. It refers to the risk that bond prices will fall when interest rates rise

D. It is a type of unsystematic risk

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15. An individual seeking regular income with low risk should consider investing in:

A. Equity Shares

B. Debt Mutual Funds

C. Fixed Deposits

D. Corporate Bonds

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16. Which ratio is used to assess the risk-adjusted return of a mutual fund?

A. Sharpe Ratio

B. Current Ratio

C. Dividend Yield

D. Price-to-Earnings Ratio

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17. Which financial ratio is used to measure the ability of a company to meet its short-term obligations?

A. Current Ratio

B. Debt-to-Equity Ratio

C. Price-to-Earnings Ratio (P/E)

D. Return on Equity (ROE)

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18. In which of the following scenarios would a "term insurance policy" be most appropriate?

A. To provide financial security to dependents in case of the policyholder's death

B. To save for retirement

C. To invest in stocks

D. To create a fixed income stream for retirement

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19. A bond issued at a discount and redeemed at face value is called:

A. Convertible Bond

B. Perpetual Bond

C. Callable Bond

D. Zero-Coupon Bond

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20. Which of the following is not a category of debt mutual funds?

A. Credit Risk Fund

B. Sector Fund

C. Gilt Fund

D. Dynamic Bond Fund

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21. What does risk profiling help determine in investment advisory?

A. The type of assets a client should invest in

B. The client’s ability and willingness to take risks

C. The amount of tax a client will pay

D. The regulatory requirements applicable to a client

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22. The concept of 'asset allocation' refers to:

A. Investing in a single asset class

B. Dividing investments among different asset classes

C. Investing only in government securities

D. Minimizing investment in risky assets

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23. Which of the following is considered a "real asset"?

A. Real Estate Property

B. Stock Certificates

C. Mutual Fund Units

D. Corporate Bonds

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24. What does SEBI stand for?

A. Securities and Exchange Bureau of India

B. Securities and Economic Bureau of India

C. Securities and Equity Board of India

D. Securities and Exchange Board of India

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25. Which of the following is considered a "direct tax"?

A. Income Tax

B. Goods and Services Tax (GST)

C. Excise Duty

D. Customs Duty

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26. Which of the following investment products offers tax benefits under Section 80C of the Income Tax Act?

A. Fixed Deposit

B. Corporate Bonds

C. Treasury Bills

D. Equity-Linked Savings Scheme (ELSS)

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27. Which of the following is not considered a fixed-income security?

A. Corporate Bonds

B. Government Securities

C. Equity Shares

D. Debentures

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28. Which of the following is true regarding systematic risk?

A. It has no impact on equity markets

B. It affects the entire market

C. It is specific to individual assets

D. It can be eliminated through diversification

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29. Which of the following is an example of an actively managed fund?

A. Exchange-Traded Fund (ETF)

B. Index Fund

C. Large Cap Mutual Fund

D. Liquid Fund

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30. What does "liquidity risk" refer to?

A. The risk of fluctuating interest rates

B. The risk of capital loss due to inflation

C. The risk that an investment will not generate returns

D. The risk that an asset cannot be sold quickly without incurring a loss

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31. What is the lock-in period for an Equity-Linked Savings Scheme (ELSS)?

A. 7 years

B. 3 years

C. 1 year

D. 5 years

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32. What does the term "systematic investment plan" (SIP) refer to?

A. A method of withdrawing funds periodically from a mutual fund

B. Periodic investment of a fixed amount in mutual funds

C. A fixed-term deposit in banks

D. An insurance policy with fixed returns

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33. The maximum tax deduction available under Section 80C is:

A. ₹1,00,000

B. ₹2,00,000

C. ₹1,50,000

D. ₹2,50,000

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34. Which of the following is true regarding "inflation risk"?

A. It refers to the risk of capital loss in equities

B. It refers to the risk that inflation will reduce purchasing power

C. It refers to the default risk in corporate bonds

D. It refers to the volatility in bond prices

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35. The "expense ratio" in a mutual fund refers to:

A. The annual fee charged by the fund for managing the portfolio

B. The percentage of total assets invested in equities

C. The annual returns generated by the fund

D. The total sales charges applicable on the purchase of units

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36. The process of balancing the risk-reward profile of a portfolio by periodically adjusting the weight of asset classes is known as:

A. Compounding

B. Hedging

C. Averaging

D. Rebalancing

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37. Under which section of the Income Tax Act is interest earned on savings bank accounts exempt up to ₹10,000?

A. Section 80C

B. Section 24

C. Section 87A

D. Section 80TTA

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38. Which of the following is a key role of an Investment Adviser?

A. Acting as a mutual fund distributor

B. Offering personalized financial advice based on client’s risk profile

C. Providing legal advice on all matters

D. Market trading on behalf of the client

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39. Which of the following is considered a high-risk, high-return investment?

A. Bonds

B. Fixed Deposits

C. Debt Mutual Funds

D. Equity Shares

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40. Which financial statement summarizes a company’s revenues and expenses over a period of time?

A. Balance Sheet

B. Asset Allocation Statement

C. Cash Flow Statement

D. Profit and Loss Statement

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41. Which of the following can help reduce credit risk in a bond portfolio?

A. Holding all investments in one company

B. Investing only in equity

C. Investing only in long-term bonds

D. Diversifying across multiple issuers

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42. What does the term "alpha" refer to in portfolio performance evaluation?

A. A measure of portfolio volatility

B. The return on the portfolio compared to the market

C. The difference between expected and actual returns

D. The excess return of a portfolio over its benchmark

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43. What is a key feature of "tax-free bonds"?

A. They are issued only by private companies

B. They can be traded on stock exchanges daily

C. They offer high liquidity

D. The interest income from the bonds is exempt from tax

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44. What is the primary objective of diversification in a portfolio?

A. Increasing liquidity

B. Maximizing returns

C. None of the above

D. Reducing overall risk

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45. Which of the following statements is true about diversification?

A. Diversification eliminates all types of risk

B. Diversification reduces regulatory risk

C. Diversification guarantees higher returns

D. Diversification helps reduce unsystematic risk

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46. Which of the following instruments is issued by the Government of India and has a maturity of more than one year?

A. G-Sec (Government Security)

B. Certificate of Deposit

C. Treasury Bill

D. Commercial Paper

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47. Which of the following is an example of an equity-related product?

A. Government Bonds

B. Index Funds

C. Public Provident Fund (PPF)

D. Fixed Deposits

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48. Which of the following is NOT a tax-free income in India?

A. Income from fixed deposits

B. Agricultural Income

C. Dividend Income from Equity Mutual Funds

D. Interest on Public Provident Fund (PPF)

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49. Which type of mutual fund primarily invests in debt instruments?

A. Equity Fund

B. Sector Fund

C. Balanced Fund

D. Debt Fund

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50. Which of the following is an example of a derivative product?

A. Savings Account

B. Fixed Deposit

C. Mutual Fund

D. Futures Contract

Your score is

The average score is 57%

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