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

A. Price-to-Earnings Ratio

B. Current Ratio

C. Dividend Yield

D. Sharpe Ratio

2 / 50

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

A. Providing legal advice on all matters

B. Acting as a mutual fund distributor

C. Market trading on behalf of the client

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

3 / 50

3. 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

4 / 50

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

A. Interest on Public Provident Fund (PPF)

B. Income from fixed deposits

C. Agricultural Income

D. Dividend Income from Equity Mutual Funds

5 / 50

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

A. The amount of tax a client will pay

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

C. The type of assets a client should invest in

D. The regulatory requirements applicable to a client

6 / 50

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

A. A measure of portfolio volatility

B. The excess return of a portfolio over its benchmark

C. The return on the portfolio compared to the market

D. The difference between expected and actual returns

7 / 50

7. 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

8 / 50

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

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

B. Current Ratio

C. Return on Equity (ROE)

D. Debt-to-Equity Ratio

9 / 50

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

A. They offer high liquidity

B. They can be traded on stock exchanges daily

C. They are issued only by private companies

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

10 / 50

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

A. To create a fixed income stream for retirement

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

C. To save for retirement

D. To invest in stocks

11 / 50

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

A. Risk tolerance

B. All of the above

C. Investment time horizon

D. Financial goals

12 / 50

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

A. It can be eliminated through diversification

B. It is specific to individual assets

C. It has no impact on equity markets

D. It affects the entire market

13 / 50

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

A. Liquid Funds

B. Equity Funds

C. Debt Funds

D. Hybrid Funds

14 / 50

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

A. Equity Fund

B. Balanced Fund

C. Sector Fund

D. Debt Fund

15 / 50

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

A. 3 years

B. 5 years

C. 1 year

D. 7 years

16 / 50

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

A. To invest in real estate

B. To maintain a balance between equity and debt investments

C. To invest only in debt instruments

D. To invest only in equities

17 / 50

17. 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

18 / 50

18. 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

19 / 50

19. 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 equity

D. Investing only in long-term bonds

20 / 50

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

A. 6 months

B. 5 years

C. 3 years

D. 1 year

21 / 50

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

A. ₹2,50,000

B. ₹1,50,000

C. ₹2,00,000

D. ₹1,00,000

22 / 50

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

A. Stock Certificates

B. Real Estate Property

C. Corporate Bonds

D. Mutual Fund Units

23 / 50

23. What does SEBI stand for?

A. Securities and Equity Board of India

B. Securities and Exchange Bureau of India

C. Securities and Economic Bureau of India

D. Securities and Exchange Board of India

24 / 50

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

A. Equity Shares

B. Bonds

C. Debt Mutual Funds

D. Fixed Deposits

25 / 50

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

A. Financial goals assessment

B. A detailed risk profiling questionnaire

C. Historical market data

D. Tax bracket analysis

26 / 50

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

A. Zero-Coupon Bond

B. Callable Bond

C. Convertible Bond

D. Perpetual Bond

27 / 50

27. 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)

28 / 50

28. 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. Compounding

C. Hedging

D. Rebalancing

29 / 50

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

A. Equity Shares

B. Fixed Deposits

C. Debt Mutual Funds

D. Corporate Bonds

30 / 50

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

A. It refers to the volatility in bond prices

B. It refers to the default risk in corporate bonds

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

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

31 / 50

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

A. Building an emergency fund

B. Investing in equities

C. Ensuring sufficient savings for post-retirement years

D. Purchasing real estate

32 / 50

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

A. Exchange-Traded Fund (ETF)

B. Index Fund

C. Liquid Fund

D. Large Cap Mutual Fund

33 / 50

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

A. Section 87A

B. Section 80C

C. Section 24

D. Section 80TTA

34 / 50

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

A. Liquid Mutual Funds

B. Gold

C. Real Estate

D. Government Bonds

35 / 50

35. 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)

36 / 50

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

A. Fiduciary

B. Trader

C. Agent

D. Broker

37 / 50

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

A. The annual returns generated by the fund

B. The percentage of total assets invested in equities

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

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

38 / 50

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

A. ETFs trade like stocks on an exchange

B. ETFs guarantee a fixed return on investment

C. ETFs have intraday liquidity

D. ETFs generally have lower expense ratios than mutual funds

39 / 50

39. 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)

40 / 50

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

A. Investing in a single asset class

B. Minimizing investment in risky assets

C. Dividing investments among different asset classes

D. Investing only in government securities

41 / 50

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

A. Liquidity

B. Professional management

C. Guaranteed returns

D. Diversification

42 / 50

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

A. The tax implications of investments

B. The client’s financial ability to absorb losses

C. The client’s preference for investing in equity

D. The client's emotional ability to take risks

43 / 50

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

A. Equity Shares

B. Debentures

C. Government Securities

D. Corporate Bonds

44 / 50

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

A. Customs Duty

B. Income Tax

C. Goods and Services Tax (GST)

D. Excise Duty

45 / 50

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

A. Savings Account

B. Mutual Fund

C. Fixed Deposit

D. Futures Contract

46 / 50

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

A. Tax saving on salary income

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

C. Management of personal debt

D. Buying real estate for investment purposes

47 / 50

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

A. Gilt Fund

B. Sector Fund

C. Dynamic Bond Fund

D. Credit Risk Fund

48 / 50

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

A. IRDA

B. SEBI

C. RBI

D. AMFI

49 / 50

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

A. Profit and Loss Statement

B. Balance Sheet

C. Cash Flow Statement

D. Asset Allocation Statement

50 / 50

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

A. Diversification eliminates all types of risk

B. Diversification helps reduce unsystematic risk

C. Diversification guarantees higher returns

D. Diversification reduces regulatory risk

Your score is

The average score is 73%

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