Sample Questions

NISM-Series-10A: Investment Advisor (Level 1) 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 Which of the following is not a part of the financial planning process? (NISM workbook)

A. Setting goals
B. Monitoring
C. Develop financial planning recommendations
D. Financing the investments Correct Answer

Explanation:

The financial planning process includes establishing the relationship, gathering data/goals, analysing status, developing recommendations, implementing the plan, and monitoring. Financing investments is part of execution, not the core planning process itself.

Marks: 1

Q2 Which of the following is a primary objective of Financial Planning?

A. Finding products that guarantee the highest possible return
B. Efficiently selecting products that meet the investor's specific needs Correct Answer
C. Picking products with the shortest possible maturity
D. Investing only in products with "best-in-class" features

Explanation:

Financial planning is the process of managing resources to meet current and future needs efficiently, ensuring the household has enough income for expenses.

Marks: 1

Q3 What is the main difference between "Gross Return" and "Net Return"?

A. Gross return is after tax; Net return is before tax
B. Gross return is the total profit; Net return is what's left after subtracting all fees and expenses Correct Answer
C. There is no difference between them
D. Gross return is only for companies; Net return is for individuals

Explanation:

Don't be fooled by big numbers. If a fund makes 12% but charges 2% in fees, your "Net" return is only 10%. Always look at the net amount because that's what actually stays in your pocket.

Marks: 1

Q4 Under which circumstance can a consumer approach the Insurance Ombudsman?

A. If the insurance company fails to resolve a complaint within 7 days
B. If there is a dispute regarding the premium paid or payable on a policy Correct Answer
C. If the SEBI SCORES system does not solve the insurance issue
D. All of the above

Explanation:

A complaint can be made to the Ombudsman for premium disputes. Note that insurance is NOT regulated by SEBI, so SCORES does not apply.

Marks: 1

Q5 What is a "Passive Fund"?

A. A fund where the manager works very hard every day to pick stocks
B. A fund that simply copies a market index (like the Sensex) and doesn't try to beat it Correct Answer
C. A fund that is not allowed to trade
D. A fund that only invests in very old companies

Explanation:

Passive funds (like Index Funds or ETFs) are "automated." Because there is no expensive fund manager making daily decisions, the fees (expense ratio) are very low for the investor.

Marks: 1

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