Sample Questions

NISM-Series-5D: Mutual Fund - Specialized Investment Fund (SIF) Distributors — 5 random MCQs with answers & explanations

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

Q1 What is a potential disadvantage of Interest Rate Futures for a person who needs very specific protection?

  • A. Too many people are trading them
  • B. Low risk of default
  • C. High transparency
  • D. Standardization may lead to an "imperfect" match (basis risk) Correct Answer
Explanation:
Because futures contracts come in "fixed" sizes and dates, they might not perfectly match the exact amount or date an investor needs, which can leave a small amount of risk unprotected.

Marks: 1

Q2 What is the settlement method for 91-day bill futures? (NISM workbook)

  • A. Can be cash or physical
  • B. Cash Correct Answer
  • C. Physical
  • D. None of the above
Explanation:
91 Day T-Bills Futures contracts are settled in cash.

Marks: 1

Q3 Covered Call strategy reduces downside risk completely to zero. True or False?

  • A. False Correct Answer
  • B. True
Explanation:
Covered Call provides only limited downside cushion equal to the premium received; large stock drops still incur losses.

Marks: 1

Q4 Why do professional markets quote bond prices as "Clean Prices"?

  • A. To include the next interest payment
  • B. To hide the actual cost from buyers
  • C. To show the price without daily interest buildup, making it easier to see market trends Correct Answer
  • D. Because clean bonds are easier to trade
Explanation:
Daily interest (accrued interest) is predictable. By using the "Clean Price," traders can ignore that and focus on how the bond's value is moving due to economy and risk.

Marks: 1

Q5 In a futures market, who decides the contract size and the date of expiry?

  • A. The Clearing Corporation
  • B. The buyer and seller
  • C. The government
  • D. The Stock Exchange Correct Answer
Explanation:
The exchange sets all terms like lot size and maturity so that everyone trades the same thing.

Marks: 1

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