NISM VA Practice Test

NISM VA Practice Test

NISM VA Practice Test: A Guide for Aspiring Mutual Fund Distributors

Preparing for the NISM (National Institute of Securities Markets) Series V-A exam, which is mandatory for mutual fund distributors in India, can seem challenging at first. The exam tests your knowledge of mutual funds, their operations, and distribution practices. However, one effective way to get ready is by practicing Multiple Choice Questions (MCQs) from the exercises provided in NISM’s study materials. This article offers a comprehensive guide on how to use MCQs from the NISM VA book exercises to enhance your preparation and improve your chances of success.

Why Focus on NISM VA Practice Test?

The NISM VA exam evaluates a range of topics, including the basics of mutual funds, fund structure, financial planning, and regulatory framework. Practicing MCQs from the NISM VA book helps you:

  1. Familiarize with the Exam Format: The NISM VA exam consists entirely of MCQs, making it crucial to get comfortable with the format.
  2. Reinforce Key Concepts: The book exercises cover a wide range of topics and enable you to strengthen your understanding.
  3. Identify Weak Areas: By practicing MCQs, you can quickly identify areas that need more study or clarification.
  4. Enhance Time Management Skills: Practicing MCQs helps you learn to manage your time effectively, a crucial skill during the actual exam.

Key Sections to Focus on NISM Series-VA Exam

The NISM VA book is structured to cover all important aspects of mutual fund distribution. Here are the key sections that typically feature a lot of MCQs and that you should pay attention to:

Introduction to Mutual Funds

  • Basic concepts of mutual funds
  • Types of mutual funds (equity, debt, hybrid, etc.)
  • Open-ended and closed-ended funds

Fund Structure and Constituents

  • Key players in mutual fund operations, including Asset Management Companies (AMCs), trustees, and distributors
  • Understanding the roles of each stakeholder

Legal and Regulatory Environment

  • Key SEBI regulations
  • Code of conduct for distributors
  • AMFI (Association of Mutual Funds in India) guidelines

Fund Distribution and Sales Practices

  • Investor profiling and KYC requirements
  • Sales practices and ethical guidelines

Investor Services

  • Handling investor grievances
  • Providing accurate and relevant information

Taxation and Financial Planning

  • Tax implications of mutual funds
  • Financial planning basics and how mutual funds fit into it

Tips for Practicing MCQs from NISM Series VA Book’s Exercises

  1. Read Each Question Carefully
    • NISM MCQs are designed to test your understanding, and many questions are structured to seem similar to each other. Pay close attention to keywords in the question, as missing a single word can lead you to choose the wrong option.
  2. Understand Concepts Instead of Memorizing
    • Focus on grasping concepts rather than rote learning. Understanding the material makes it easier to handle scenario-based questions, where direct answers aren’t obvious.
  3. Review Incorrect Answers
    • After each exercise, review the answers, especially the ones you got wrong. Use this feedback to revisit areas where you may lack clarity. Learning from your mistakes is essential for mastering complex concepts.
  4. Use Flashcards for Key Terms and Definitions
    • Mutual funds have numerous technical terms, so consider using flashcards to help memorize terms like NAV (Net Asset Value), SIP (Systematic Investment Plan), and other industry-specific terms.
  5. Take Timed Practice Tests
    • Simulate exam conditions by setting a timer when practicing. This helps you adapt to the pressure of completing all questions within the allotted time.
  6. Analyze Trends in Questions
    • The NISM VA book exercises often follow a certain pattern. As you practice, look for trends in the types of questions asked and which topics are emphasized. This can guide your revision, focusing more on frequently covered topics.

Sample MCQs from NISM VA Book Exercise (Example Only)

Here are a few sample MCQs that represent the style of questions you might encounter in the NISM VA exercises:

  1. Which of the following is a characteristic of open-ended mutual funds?

a) They have a fixed maturity date.

b) Units can be bought and sold at any time.

c) They are traded only on stock exchanges.

d) They do not allow systematic investment plans.

Answer: b) Units can be bought and sold at any time.

  1. Which role is responsible for the actual management of a mutual fund’s portfolio?

a) Trustees

b) Asset Management Company (AMC)

c) Registrar and Transfer Agent

d) SEBI

Answer: b) Asset Management Company (AMC)

  1. What is the primary objective of AMFI guidelines for mutual fund distributors?

a) To maximize the sales of mutual funds

b) To protect investors’ interests and promote ethical practices

c) To increase the value of mutual funds

d) To ensure compliance with tax regulations

Answer: b) To protect investors’ interests and promote ethical practices

  1. Which of the following is true about Systematic Investment Plans (SIP)?

a) SIPs require a large initial investment.

b) SIPs allow investors to invest a fixed amount regularly.

c) SIPs are available only for debt funds.

d) SIP returns are guaranteed by the AMC.

Answer: b) SIPs allow investors to invest a fixed amount regularly.

Additional Resources for NISM VA Exam Preparation

Besides the book exercises, there are other resources that can help you prepare effectively:

  • Mock Tests: Various online platforms offer NISM mock tests. Taking these can help you get a feel for the real exam experience.
  • Video Tutorials: Many educational websites and YouTube channels provide video tutorials on NISM topics.
  • Discussion Forums: Forums and study groups can offer peer support and insights on tricky questions.

Conclusion

Mastering the NISM VA exam is essential for anyone looking to enter the field of mutual fund distribution. The MCQs from the book’s exercises are an invaluable tool for reinforcing your understanding of critical concepts and preparing for the exam format. By consistently practicing these MCQs, reviewing incorrect answers, and focusing on key areas, you’ll increase your confidence and improve your chances of passing the exam. With diligent preparation, you’ll be on your way to becoming a certified mutual fund distributor, ready to help clients make informed financial decisions.

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NISM VA MCQs from Book
NISM Series V-A Mutual Fund Distributors Questions from Book

1 / 50

1.

In what form do mutual fund distributors earn revenue?

2 / 50

2. Whose job is it to track the various corporate actions like a bonus, dividend, or rights issues in companies where the mutual fund scheme has invested?

3 / 50

3.

Which amongst the following asset categories can also be purchased for consumption purposes apart from an investment?

4 / 50

4. As per the fair valuation principles laid out by SEBI, it is mandatory to disclose the valuation policy in.

5 / 50

5. Which amongst the following categories of mutual funds have a fixed maturity date?

6 / 50

6.

Which of the following type of analysis tracks the price and volume data related to trading in the security?

7 / 50

7. Redemption from which of the following mutual fund schemes would attract Securities Transaction Tax (STT) for an investor?

8 / 50

8.

Government securities can be considered to be completely risk-free. State whether True or False.

9 / 50

9. _________ indicates how much money can be generated per unit of mutual fund in case the scheme is liquidated.

10 / 50

10. Please read the scheme related documents carefully” – which documents does this line refer to?

11 / 50

11.

The Income Tax Act allows setting-off of the short-term capital loss against long term capital gains. State whether True or False.

12 / 50

12.

Each mutual fund scheme must have a stated investment objective. State whether True or False.

13 / 50

13.

Which of the following is an advantage of mutual funds?

14 / 50

14.

Which of the following is a measure of fluctuation in periodic returns in an equity mutual fund scheme?

15 / 50

15.

Who handles the day-to-day management of the mutual fund?

16 / 50

16. As per the SEBI guidelines, how often should the mutual fund scheme’s portfolio be published?

17 / 50

17.

In the non-equity-oriented funds, the rate of long-term capital gains tax is .

18 / 50

18. What minimum percentage of the mutual fund scheme corpus must be invested in equity and related instruments in the case of Equity Linked Savings Schemes (ELSS)?

19 / 50

19.

Which among the following investment avenues does not offer income on a regular basis?

20 / 50

20.

___________ takes into account all dividends generated from the basket of constituents that make up the index in addition to the capital gains.

21 / 50

21. In case of capital gains from mutual fund investments, Tax Deduction at Source (TDS) is applicable for:

22 / 50

22. Which among the following is not a statutory document?

23 / 50

23.

The purchasing power of currency changes on account of which of the following?

24 / 50

24.

How often should the Key Information Memorandum (KIM) be updated?

25 / 50

25. The transparency levels in mutual funds are very low. State whether True or False.

26 / 50

26.

Mutual funds are constituted as ‘Trusts’ in India. Who are the beneficiaries of the trust?

27 / 50

27. Which amongst the following categories of mutual funds have a fixed maturity date?

28 / 50

28. What term is used to describe the Net Asset Value (NAV) of the scheme after the dividend is paid out (Remember the NAV would have dropped to the extent of the dividend paid)?

29 / 50

29.

Mutual fund distributors can only earn upfront commission from the mutual funds. State whether True or False.

30 / 50

30.

Unsystematic risk can be reduced through diversification. State whether True or False

31 / 50

31. Registrar and Transfer Agency function must be independent of the Asset Management Company, and it cannot be retained in-house. State whether this statement is True or False.

32 / 50

32.

Investors have the right to specify up to nominees for their mutual fund investment folios.

33 / 50

33.

At what price are the bonus units issued to the unitholder?

34 / 50

34.

How many (maximum) bank accounts can a resident individual investor register with a mutual fund folio?

35 / 50

35. Mutual funds are allowed to charge differential exit loads based on the amount of investment.

36 / 50

36. For an investor to get a quick sense of the level of risk involved in a mutual fund scheme, SEBI suggested a simplified framework known as .

37 / 50

37. Mutual fund distributors earn no commission when the investor chooses to invest in “direct” plans. State whether True or False.

38 / 50

38.

Whose KYC needs to be completed in case of an application by a minor?

39 / 50

39. Mutual funds can buy and sell securities only on delivery basis. State whether this statement is True or False.

40 / 50

40. What is the maximum Total Expense Ratio chargeable in case of index funds?

41 / 50

41.

With which agency are the mutual fund distributors registered?

42 / 50

42.

Which amongst the following is a measure of risk-adjusted returns of mutual fund scheme?

43 / 50

43.

Which of the following statements is True?

44 / 50

44.

When the interest rate in the economy increases, the price of existing bonds.

45 / 50

45.

In case of mutual fund schemes, dividends can be paid only out of.

46 / 50

46. Only individuals are allowed to distribute mutual funds in India. State whether True or False.

47 / 50

47.

Mutual funds are constituted as ‘Trusts’ in India. Who are the beneficiaries of the trust?

48 / 50

48.

What is the real rate of return?

49 / 50

49.

Mutual Fund Distributors Certification Examination offered by is required for becoming a mutual fund distributor.

50 / 50

50.

Which of the following regulates mutual funds in India?

Your score is

The average score is 71%

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Mock Test 1  |  Mock Test 2  |  Mock Test 3  |  Mock Test 4  |  Mock Test 5  |  Mock Test 6  |  Mock Test 7  |  Mock Test 8  |  Mock Test 9  |  Mock Test 10

For the latest and accurate information, please visit the NISM website at https://certifications.nism.ac.in/nismaol/.