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

1 / 50

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

A. Futures Contract

B. Mutual Fund

C. Fixed Deposit

D. Savings Account

2 / 50

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

A. Investing only in government securities

B. Dividing investments among different asset classes

C. Minimizing investment in risky assets

D. Investing in a single asset class

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

A. Agent

B. Trader

C. Fiduciary

D. Broker

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5. 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

6 / 50

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

A. Rebalancing

B. Compounding

C. Hedging

D. Averaging

7 / 50

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

A. Agricultural Income

B. Income from fixed deposits

C. Dividend Income from Equity Mutual Funds

D. Interest on Public Provident Fund (PPF)

8 / 50

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

A. Equity Fund

B. Balanced Fund

C. Debt Fund

D. Sector Fund

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

A. It affects the entire market

B. It has no impact on equity markets

C. It is specific to individual assets

D. It can be eliminated through diversification

10 / 50

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

A. Fixed Deposit

B. Treasury Bills

C. Corporate Bonds

D. Equity-Linked Savings Scheme (ELSS)

11 / 50

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

A. Stock Certificates

B. Real Estate Property

C. Corporate Bonds

D. Mutual Fund Units

12 / 50

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

A. Equity Shares

B. Government Securities

C. Debentures

D. Corporate Bonds

13 / 50

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

A. 5 years

B. 1 year

C. 7 years

D. 3 years

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

A. The tax implications of investments

B. The client's emotional ability to take risks

C. The client’s preference for investing in equity

D. The client’s financial ability to absorb losses

15 / 50

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

A. It refers to the default risk in corporate bonds

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

C. It refers to the volatility in bond prices

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

16 / 50

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

A. Increasing liquidity

B. Reducing overall risk

C. None of the above

D. Maximizing returns

17 / 50

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

A. Purchasing real estate

B. Ensuring sufficient savings for post-retirement years

C. Investing in equities

D. Building an emergency fund

18 / 50

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

A. Acting as a mutual fund distributor

B. Market trading on behalf of the client

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

D. Providing legal advice on all matters

19 / 50

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

A. The excess return of a portfolio over its benchmark

B. The return on the portfolio compared to the market

C. A measure of portfolio volatility

D. The difference between expected and actual returns

20 / 50

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

A. They are issued only by private companies

B. They offer high liquidity

C. They can be traded on stock exchanges daily

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

21 / 50

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

A. Balance Sheet

B. Asset Allocation Statement

C. Profit and Loss Statement

D. Cash Flow Statement

22 / 50

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

A. Index Fund

B. Large Cap Mutual Fund

C. Liquid Fund

D. Exchange-Traded Fund (ETF)

23 / 50

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

A. Equity Shares

B. Bonds

C. Debt Mutual Funds

D. Fixed Deposits

24 / 50

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

A. Index Funds

B. Public Provident Fund (PPF)

C. Government Bonds

D. Fixed Deposits

25 / 50

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

A. To invest only in debt instruments

B. To invest only in equities

C. To maintain a balance between equity and debt investments

D. To invest in real estate

26 / 50

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

A. A detailed risk profiling questionnaire

B. Financial goals assessment

C. Historical market data

D. Tax bracket analysis

27 / 50

27. What does SEBI stand for?

A. Securities and Economic Bureau of India

B. Securities and Equity Board of India

C. Securities and Exchange Board of India

D. Securities and Exchange Bureau of India

28 / 50

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

A. ETFs have intraday liquidity

B. ETFs trade like stocks on an exchange

C. ETFs generally have lower expense ratios than mutual funds

D. ETFs guarantee a fixed return on investment

29 / 50

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

A. The type of assets a client should invest in

B. The regulatory requirements applicable to a client

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

D. The amount of tax a client will pay

30 / 50

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

A. Corporate Bonds

B. Fixed Deposits

C. Debt Mutual Funds

D. Equity Shares

31 / 50

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

A. To invest in stocks

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

C. To save for retirement

D. To create a fixed income stream for retirement

32 / 50

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

A. Management of personal debt

B. Tax saving on salary income

C. Buying real estate for investment purposes

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

33 / 50

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

A. Equity Funds

B. Liquid Funds

C. Hybrid Funds

D. Debt Funds

34 / 50

34. 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)

35 / 50

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

A. 3 years

B. 6 months

C. 5 years

D. 1 year

36 / 50

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

A. It is a type of unsystematic risk

B. It primarily affects equity investments

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

D. It has no effect on debt mutual funds

37 / 50

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

A. Gold

B. Real Estate

C. Liquid Mutual Funds

D. Government Bonds

38 / 50

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

A. Investing only in equity

B. Diversifying across multiple issuers

C. Investing only in long-term bonds

D. Holding all investments in one company

39 / 50

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

A. Section 24

B. Section 87A

C. Section 80TTA

D. Section 80C

40 / 50

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

A. Sector Fund

B. Dynamic Bond Fund

C. Gilt Fund

D. Credit Risk Fund

41 / 50

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

A. Sharpe Ratio

B. Price-to-Earnings Ratio

C. Dividend Yield

D. Current Ratio

42 / 50

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

A. AMFI

B. SEBI

C. RBI

D. IRDA

43 / 50

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

A. ₹1,50,000

B. ₹2,50,000

C. ₹1,00,000

D. ₹2,00,000

44 / 50

44. What does "liquidity risk" refer to?

A. The risk that an investment will not generate returns

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

C. The risk of capital loss due to inflation

D. The risk of fluctuating interest rates

45 / 50

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

A. A fixed-term deposit in banks

B. An insurance policy with fixed returns

C. Periodic investment of a fixed amount in mutual funds

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

46 / 50

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

A. Customs Duty

B. Excise Duty

C. Income Tax

D. Goods and Services Tax (GST)

47 / 50

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

A. Diversification eliminates all types of risk

B. Diversification reduces regulatory risk

C. Diversification helps reduce unsystematic risk

D. Diversification guarantees higher returns

48 / 50

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

A. Perpetual Bond

B. Zero-Coupon Bond

C. Callable Bond

D. Convertible Bond

49 / 50

49. 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 total sales charges applicable on the purchase of units

D. The annual returns generated by the fund

50 / 50

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

A. Guaranteed returns

B. Liquidity

C. Professional management

D. Diversification

Your score is

The average score is 72%

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