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 feature of "Strategic" asset allocation?

  • A. Making a long-term plan for the portfolio.
  • B. Setting a target mix of different assets.
  • C. Planning to meet the investor's specific goals.
  • D. Trying to profit from short-term market changes. Correct Answer
Explanation:
Strategic allocation is a long-term plan. Trading based on short-term market situations is called "Tactical" allocation.

Marks: 1

Q2 Which of the following activities is NOT considered a step in the financial planning process?

  • A. Developing recommendations
  • B. Monitoring the plan
  • C. Financing the investments Correct Answer
  • D. Setting financial goals
Explanation:
Financial planning is about managing existing resources to meet goals; taking out loans (financing) to invest is not a core part of the process.

Marks: 1

Q3 What is the primary characteristic of "Growth Investing"?

  • A. Investing in companies with high dividend yields.
  • B. Investing in companies expected to have above-average growth in earnings and revenue. Correct Answer
  • C. Investing only in stable, mature companies.
  • D. Investing in companies trading below intrinsic value.
Explanation:
Growth investing focuses on companies that are expected to grow at a faster rate than the overall market, even if their current stock prices are high relative to current earnings, anticipating future capital appreciation.

Marks: 1

Q4 Calculate the coupon yield for a bond with a Rs. 100 face value, a Rs. 103 market price, and a Rs. 7 annual coupon.

  • A. 5.09%
  • B. 6.79%
  • C. 7% Correct Answer
  • D. 8.55%
Explanation:
Coupon yield is simply the annual interest payment divided by the face value (7 / 100), expressed as a percentage.

Marks: 1

Q5 What is a Derivative?

  • A. A type of bank deposit.
  • B. A contract whose value is derived from the value of an underlying asset. Correct Answer
  • C. A form of insurance policy.
  • D. A direct investment in a physical asset.
Explanation:
A derivative is a financial contract between two or more parties whose value is determined by fluctuations in the price of an underlying asset, index, or security.

Marks: 1

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