NISM Series X-A - TheMFCentral

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

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

A. Reducing overall risk

B. None of the above

C. Increasing liquidity

D. Maximizing returns

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

A. Equity-Linked Savings Scheme (ELSS)

B. Treasury Bills

C. Fixed Deposit

D. Corporate Bonds

3 / 50

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

A. Fiduciary

B. Broker

C. Agent

D. Trader

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4. 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 80TTA

C. Section 80C

D. Section 87A

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

A. Tax bracket analysis

B. A detailed risk profiling questionnaire

C. Historical market data

D. Financial goals assessment

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

A. Diversification eliminates all types of risk

B. Diversification guarantees higher returns

C. Diversification helps reduce unsystematic risk

D. Diversification reduces regulatory risk

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

A. To invest only in equities

B. To maintain a balance between equity and debt investments

C. To invest only in debt instruments

D. To invest in real estate

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

A. Dynamic Bond Fund

B. Gilt Fund

C. Credit Risk Fund

D. Sector Fund

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

A. Current Ratio

B. Return on Equity (ROE)

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

D. Debt-to-Equity Ratio

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

A. Equity Funds

B. Debt Funds

C. Hybrid Funds

D. Liquid Funds

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

A. Investing in a single asset class

B. Investing only in government securities

C. Dividing investments among different asset classes

D. Minimizing investment in risky assets

12 / 50

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

A. Agricultural Income

B. Interest on Public Provident Fund (PPF)

C. Dividend Income from Equity Mutual Funds

D. Income from fixed deposits

13 / 50

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

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

B. Management of personal debt

C. Tax saving on salary income

D. Buying real estate for investment purposes

14 / 50

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

A. ETFs guarantee a fixed return on investment

B. ETFs generally have lower expense ratios than mutual funds

C. ETFs have intraday liquidity

D. ETFs trade like stocks on an exchange

15 / 50

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

A. The return on the portfolio compared to the market

B. The difference between expected and actual returns

C. The excess return of a portfolio over its benchmark

D. A measure of portfolio volatility

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

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

B. The annual returns generated by the fund

C. The percentage of total assets invested in equities

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

17 / 50

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

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

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 default risk in corporate bonds

18 / 50

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

A. It is specific to individual assets

B. It can be eliminated through diversification

C. It affects the entire market

D. It has no impact on equity markets

19 / 50

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

A. 1 year

B. 6 months

C. 5 years

D. 3 years

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20. 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 invest in stocks

C. To save for retirement

D. To create a fixed income stream for retirement

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

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

B. A fixed-term deposit in banks

C. An insurance policy with fixed returns

D. Periodic investment of a fixed amount in mutual funds

22 / 50

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

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

B. It is a type of unsystematic risk

C. It has no effect on debt mutual funds

D. It primarily affects equity investments

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

A. 7 years

B. 5 years

C. 1 year

D. 3 years

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

A. Averaging

B. Rebalancing

C. Compounding

D. Hedging

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

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

B. They offer high liquidity

C. They can be traded on stock exchanges daily

D. They are issued only by private companies

26 / 50

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

A. Fixed Deposits

B. Debt Mutual Funds

C. Equity Shares

D. Bonds

27 / 50

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

A. Price-to-Earnings Ratio

B. Current Ratio

C. Sharpe Ratio

D. Dividend Yield

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28. 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 regulatory requirements applicable to a client

D. The amount of tax a client will pay

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

A. Holding all investments in one company

B. Diversifying across multiple issuers

C. Investing only in long-term bonds

D. Investing only in equity

30 / 50

30. 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

31 / 50

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

A. Mutual Fund

B. Futures Contract

C. Fixed Deposit

D. Savings Account

32 / 50

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

A. All of the above

B. Investment time horizon

C. Financial goals

D. Risk tolerance

33 / 50

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

A. Ensuring sufficient savings for post-retirement years

B. Investing in equities

C. Purchasing real estate

D. Building an emergency fund

34 / 50

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

A. Equity Shares

B. Debentures

C. Government Securities

D. Corporate Bonds

35 / 50

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

A. Goods and Services Tax (GST)

B. Customs Duty

C. Income Tax

D. Excise Duty

36 / 50

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

A. Convertible Bond

B. Perpetual Bond

C. Zero-Coupon Bond

D. Callable Bond

37 / 50

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

A. Government Bonds

B. Gold

C. Real Estate

D. Liquid Mutual Funds

38 / 50

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. Market trading on behalf of the client

D. Providing legal advice on all matters

39 / 50

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

A. The client’s preference for investing in equity

B. The client’s financial ability to absorb losses

C. The tax implications of investments

D. The client's emotional ability to take risks

40 / 50

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

A. Real Estate Property

B. Stock Certificates

C. Corporate Bonds

D. Mutual Fund Units

41 / 50

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

A. Equity Shares

B. Fixed Deposits

C. Corporate Bonds

D. Debt Mutual Funds

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

A. AMFI

B. SEBI

C. IRDA

D. RBI

43 / 50

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

A. Guaranteed returns

B. Diversification

C. Professional management

D. Liquidity

44 / 50

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

A. Fixed Deposits

B. Index Funds

C. Government Bonds

D. Public Provident Fund (PPF)

45 / 50

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

A. ₹1,50,000

B. ₹1,00,000

C. ₹2,00,000

D. ₹2,50,000

46 / 50

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

A. Balanced Fund

B. Sector Fund

C. Debt Fund

D. Equity Fund

47 / 50

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

A. Balance Sheet

B. Cash Flow Statement

C. Asset Allocation Statement

D. Profit and Loss Statement

48 / 50

48. What does SEBI stand for?

A. Securities and Exchange Bureau of India

B. Securities and Exchange Board of India

C. Securities and Equity Board of India

D. Securities and Economic Bureau of India

49 / 50

49. What does "liquidity risk" refer to?

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

B. The risk that an investment will not generate returns

C. The risk of fluctuating interest rates

D. The risk of capital loss due to inflation

50 / 50

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

A. Commercial Paper

B. Certificate of Deposit

C. Treasury Bill

D. G-Sec (Government Security)

Your score is

The average score is 72%

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