Test Your NISM-Series-21A: Portfolio Management Services (PMS) Distributors Mock Tests Knowledge in 5 Minutes

1. What is a Derivative?

A. A contract whose value is derived from the value of some other underlying asset. B. A contract with a fixed value. C. A type of bond with embedded options. D. A direct ownership stake in a company.

2. If there is an uncertainty with respect to the future payment, the investor would require return more than the nominal required rate of return. The additional component is called ________. (NISM workbook)

A. Alpha B. Risk premium C. Risk free rate of return D. Both A & C

3. Future value of the investment is influenced by __________. (NISM workbook)

A. None of the above B. Time period C. Rate of return D. Both B & C

4. ____________________ represent ownership in a company that entitles its holders to participate in its profits and the right to vote on the company’s affairs. (NISM workbook)

A. Equity Shares B. Bonds C. Commercial Papers D. All the above

5. Which of the following statements about Speculation is FALSE? (NISM workbook)

A. Speculation always leads to higher returns B. Speculation is based on some conjectures without evidence C. It is investment without any significant analysis or thought D. Profit is the strongest motivation for Speculation

6. When a listed company issues shares to a select group of persons, which is neither a rights nor a public issue, then it is known as _______________. (NISM workbook)

A. Preferential issue B. Private placement C. Private equity D. None of the above

7. Which of the following is essential for the public issue of a debt security? (NISM workbook)

A. The debt issuer must stand as guarantor for the payment of principal and interest. B. The debt instruments should have a minimum coupon specified. C. The debt issue size should be greater than Rest. 5000 Crs D. The debt instruments must be credit rated

8. Which of the following is the function of the secondary markets? (NISM workbook)

A. Provide liquidity for securities issued B. Provide a platform for making public issues C. Provide information about public companies D. All the above

9. __________ industries rise and fall closely with the overall level of economic activity and business cycles. (NISM Workbook)

A. Growth industries B. Sunrise industries C. Defensive industries D. Cyclical industries

10. Government securities issued by Central Government carry practically no risk of________ and, hence are called risk-free or gilt-edged instruments. (NISM workbook)

A. negotiability B. liquidity C. Tradability D. default