Sample Questions

NISM-Series-12: Securities Markets Foundation Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 What are "real" assets in the context of investment?

A. Financial assets like stocks and bonds.
B. Assets that are consumed or used in the manufacturing process, like commodities. Correct Answer
C. Only government-issued securities.
D. Assets held in electronic form.

Explanation:

Real assets are tangible assets like commodities that are consumed or used in production, contrasting with financial assets like stocks and bonds.

Marks: 1

Q2 In a book built issue, what is the "cut-off price"?

A. The minimum price set by the issuer.
B. The maximum price set by the issuer.
C. The price at which the issue gets subscribed, determined based on the bids received. Correct Answer
D. The average price of the stock in the secondary market.

Explanation:

The cut-off price is the final price at which shares are allotted in a book built issue, determined by the issuer and lead manager based on the collective bids, usually where demand meets the offer size.

Marks: 1

Q3 What is the purpose of SEBI requiring mutual funds to publish their returns along with benchmark indices?

A. To guarantee a minimum return for investors.
B. To allow investors to assess the fund's performance relative to its market or asset class. Correct Answer
C. To determine the daily NAV of the fund.
D. To calculate the total expense ratio.

Explanation:

Reporting performance against a relevant benchmark helps investors understand how well the fund manager has performed compared to the broader market or target asset class.

Marks: 1

Q4 What is the purpose of the "Listing Agreement" between a company and a stock exchange?

A. To guarantee a minimum stock price for the company.
B. To allow the company to avoid regulatory oversight.
C. To ensure the company complies with disclosure requirements and other rules for maintaining listing. Correct Answer
D. To transfer ownership of shares to the exchange.

Explanation:

The Listing Agreement is a contract that obligates the company to comply with the exchange's rules and regulations regarding disclosures, corporate governance, and investor services to remain listed and tradable.

Marks: 1

Q5 What is the relationship between yield and price of a bond?

A. Positive relationship.
B. No relationship.
C. Inverse relationship. Correct Answer
D. Directly proportional relationship.

Explanation:

As bond prices fall, the yield (return to the investor) increases, and vice versa. This inverse relationship is because the fixed coupon payment represents a larger or smaller percentage of the bond's purchase price.

Marks: 1

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