Certifications Mock Tests Study Material Menu Certifications Mock Tests Study Material NISM Series X-B: Investment Adviser (Level 2) Mock Test (Set 5) /50 NISM Series X-B: Investment Adviser (Level 2) Mock Test (Set 5) 1 / 50 1. How does a pure risk differ from a speculative risk ? a) A pure risk always has an environmental cause whereas a speculative risk always involves human Error. b) A pure risk can be measured in probability terms whereas a speculative risk cannot. c) A pure risk is not subject to regulatory control but a speculative risk always is. d) A pure risk only leads to the possibility of a loss, whereas a speculative risk may lead to a gain. Explanation:A pure risk only leads to the possibility of a loss, whereas a speculative risk may lead to a gain, making option (d) the correct answer. 2 / 50 2. Saurabh, aged 30, wants to retire at 45. He wants to maintain his present living standard. He spends Rs. 3,25,000 a year. He is expected to live upto 85. Inflation is to be assumed at 4% p.a and expected returns are 7% p.a. What is the retirement corpus required by Saurabh at his age 45 and what amount should he save every year end to meet his plan? His present investments are Rs 10,00,000? a) Rs. 13182815; Rs. 454805 b) Rs. 15182815; Rs. 454705 c) Rs. 14182815; Rs. 454605 d) Rs. 13182815; Rs. 454505 Explanation:Expenses at the time of retirement =FV(4%,15,0,-325000) = Rs 5,85,306.64Retirement Corpus required to live upto 85 i.e for 40 years=PV(1.07/1.04-1,40,585306.64,0,1)=Rs 1,41,82,819.49Yearly Investments=PMT(7%,15,-1000000,14182819.49,0) = Rs 4,54,605.35 3 / 50 3. What is the Maximum limit/ Government notified amount of gratuity payable as per the Act? a) Rs 3,50,000 b) Rs 10,00,000 c) Rs 5,00,000 d) Rs 20,00,000 Explanation:The Maximum limit/Government-notified amount of gratuity payable as per the Act is Rs. 20,00,000, supporting option (d). 4 / 50 4. The following is the premise of Prospect Theory: a) Choices are evaluated relative to a reference point (which is their wellbeing); b) People are risk-averse about gains (realizing it early) but risk seeking about losses (holding to them longer) c) Monetary losses hurt more than monetary gains d) All the above Explanation:Prospect Theory premises that choices are evaluated relative to a reference point, people are risk-averse about gains but risk-seeking about losses, and monetary losses hurt more than monetary gains, confirming option (d). 5 / 50 5. A person who prepares the Will is called a/an _______. a) Testator b) Deceased c) Executor Explanation:A person who prepares the will is called a Testator, confirming option (a). 6 / 50 6. Pension received from the former employer is classified under the head__________? a) Income from Salaries b) Income from other sources c) Income from capital Gain d) Gratuity Explanation:Pension received from the former employer is classified under the head Income from Salaries, aligning with option (a). 7 / 50 7. Which of the following depends on the market? a) Strategic asset allocation b) Tactical asset allocation c) Investor risk profile d) Optimal Asset Allocation Explanation:Tactical asset allocation depends on the market, making option (b) correct. 8 / 50 8. If the NPS subscriber’s grievance is not resolved within 30 days from the submission of the grievance to the NPS Trust then the subscriber can appeal to the _______________. a) CRA b) NPS Trustees c) Ombudsman d) SEBI Explanation:If the NPS subscriber’s grievance is not resolved within 30 days, the subscriber can appeal to the Ombudsman, confirming option (c). 9 / 50 9. The number alloted in NPS is: a) Personal Pension Account Number b) Personal Retirement Account Number c) Permanent Retirement Account Number d) Permanent Pension Account Number Explanation:The number allotted in NPS is Permanent Retirement Account Number (PRAN), supporting option (c). 10 / 50 10. A standard deduction of _______ is allowed from salary income. a) Rs 1,000 per month b) Rs 40,000 c) Rs 30,000 d) Rs.50,000 Explanation:A standard deduction of Rs. 50,000 is allowed from salary income, making option (d) the correct choice. 11 / 50 11. Mr. Sachin, aged 30, wants to retire at 45. He wants to maintain his present living standard. He spends Rs.500000 a year. He is expected to live upto 75. Inflation is to be assumed at 5% and expected returns are 7% p.a. What is the real rate of return? a) 1.75 b) 1.90 c) 2.05 d) 2.15 Explanation:The real rate of return in the given scenario is 1.90%, as mentioned in option (b). 12 / 50 12. An RML will become due and payable only when the last surviving borrower dies or permanently moves out of the house. a) False b) True Explanation:The maximum tenure of a Reverse Mortgage Loan (RML) is 20 years. This time frame provides seniors An RML becomes due and payable only when the last surviving borrower dies or permanently moves out of the house, confirming option (b). 13 / 50 13. A will certified by court is called___________. a) Codicil b) Probate c) Holographic Will d) Oral Will Explanation:The maximum tenure of a Reverse Mortgage Loan (RML) is 20 years. This time frame provides seniors with a steady stream of income while allowing them to remain in their homes without repayment obligations during the loan tenure.A will certified by the court is called Probate, supporting option (b). 14 / 50 14. A scheme under which the company grants option (A right but not an obligation ) to an employee to apply for shares of the company at a pre determined price is known as____________. a) Employees Stock Option Scheme (ESOS) b) Equity shares c) Sweat Equity d) None of the above Explanation:A scheme under which the company grants the option to an employee to apply for shares of the company at a predetermined price is known as Employees Stock Option Scheme (ESOS), confirming option (a). 15 / 50 15. Section 80 TTB of IT act allows Senior Citizens a deduction of up to _______ from gross total income on account of interest earned on bank deposits. a) Rs. 45,000 b) Rs. 50,000 c) Rs. 75,000 d) Rs. 25,000 Explanation:Section 80TTB of the Income Tax Act allows Senior Citizens a deduction of up to Rs. 50,000 from gross total income on account of interest earned on bank deposits, making option (b) correct. 16 / 50 16. Commission received from business forms part of income from ________. a) Business and profession b) Capital Gains c) Salary d) Other sources Explanation:Commission received from business forms part of income from Business and Profession, aligning with option (a). 17 / 50 17. Withdrawl from a National Pension Scheme ? Tier I account is _____________till age of 60? a) Not Allowed at all b) 20% can be withdrawn and 80% should be converted into annuity c) Partially Allowed upto 40% d) Partially Allowed upto 60% Explanation:Withdrawal from a National Pension Scheme (NPS) Tier I account is allowed up to 20%, and 80% should be converted into annuity till the age of 60, confirming option (b). 18 / 50 18. Who can be the beneficiaries in life insurance brought under Married Woman Property act 1874 ? a) The wife alone b) The child/children alone (both natural and adopted) c) Wife and children together or any of them d) All of the above Explanation:All of the above (Wife alone, Child/children alone, Wife and children together, or any of them) can be beneficiaries in life insurance brought under the Married Woman Property Act 1874, supporting option (d). 19 / 50 19. When the assessee is a Foreign Portfolio Investor (FPI) interest on rupee denominated bonds of an Indian Company is chargeable to tax at the rate of _________. a) 5 percent b) 10 percent c) 15 percent d) 20 percent Explanation:When the assessee is a Foreign Portfolio Investor (FPI), interest on rupee-denominated bonds of an Indian Company is chargeable to tax at the rate of 5%, as mentioned in option (c). 20 / 50 20. Inflation does which of the following to retirement planning ? a) Reduces the periodic savings required b) Reduces the nominal return generated by an investment c) Increases the value of the corpus created d) Increases the retirement corpus required Explanation:Inflation increases the retirement corpus required, as mentioned in option (c). 21 / 50 21. Behavioural finance differs from the standard model of finance because Behavioural finance: a) Precludes the impact of investor psychology b) Includes the impact of investor psychology c) Accepts the Efficient Markets Hypothesis d) Rejects the idea of market anomalies Explanation:Behavioral finance differs from the standard model of finance because it includes the impact of investor psychology, supporting option (b). 22 / 50 22. If contribution to NPS is made by the employee, the maximum deduction of _______ of salary shall be allowed under section 80CCD of IT act. a) 10% b) 15% c) 20% d) 25% Explanation:If the contribution to NPS is made by the employee, the maximum deduction of 10% of salary shall be allowed under Section 80CCD of the Income Tax Act, as mentioned in option (a). 23 / 50 23. All receipts under RML shall be exempt from income tax under ________ of the IT act, 1961. a) Section 45(27) b) Section 34(16) c) Section 21(35) d) Section 10(43) Explanation:All receipts under Reverse Mortgage Loan (RML) are exempt from income tax under Section 10(43) of the Income Tax Act, 1961, making option (d) the correct answer. 24 / 50 24. Insurance helps to: a) Reduce the consequences of adverse situations b) Guarantee that assets are always productive c) Ensure that assets never breakdown d) Do all of the above Explanation:Insurance helps to reduce the consequences of adverse situations, confirming option (a). 25 / 50 25. Which among the following is an Indemnity Policy? a) Life Insurance b) Car Insurance c) Critical Illness Policy that pays a lump sum on occurrence of specified critical Illnesses d) Daily Hospital Cash benefit allowing a specified sum per day of hospitalisation Explanation:Car Insurance is an Indemnity Policy, making option (b) the correct choice. 26 / 50 26. Which of the following statements is/are true about Tier I accounts of NPS? a) The funds in the Tier I account can be withdrawn only on attainment of 60 years of age. b) 60% of amount withdrawn can be taken in lump sum and balance 40% of is to be used for purchase annuity from Life Insurance Company. c) In case the subscriber withdraws funds before 60 years of age, 80% of the savings must be used purchase the annuity and balance 20% can be withdrawn in lump sum. d) All of the above Explanation:All of the above statements are true about Tier I accounts of NPS, supporting option (d). 27 / 50 27. Short-term capital gains of Equity MF are taxable at 20% plus surcharge. a) True b) False Explanation:Short-term capital gains of Equity MF are NOT taxable at 20% plus surcharge, as clarified in option (b). 28 / 50 28. Which of these is NOT required in estimating the expenses in retirement under the Expense Protection method? a) Years to retirement b) Current Household expense c) Rate of return on investments d) Rate of inflation Explanation:NOT required in estimating expenses in retirement under the Expense Protection method is Current Household expense, as clarified in option (b). 29 / 50 29. Critical Illness policy eases the financial pressure of an individual by providing _______ on diagnosis of covered condition. a) Reimbursement of actual cost b) Lumpsum Payment c) Daily Cash Allowance d) Health Care Services in International Speciality Hospitals Explanation:Critical Illness policy eases the financial pressure of an individual by providing a Lumpsum Payment, as mentioned in option (b). 30 / 50 30. What is the drawback in earning a fixed return from an investment ? a) The possibility of default is high b) The returns may be different from what is expected c) The return does not go up to reflect better performance or higher rates in the market d) There is no disadvantage in earning a fixed return Explanation:The drawback in earning a fixed return from an investment is that the return does not go up to reflect better performance or higher rates in the market, confirming option (c). 31 / 50 31. Capital asset includes stock-in-trade held for the purposes of business or profession. a) True b) False Explanation:Stock-in-trade held for the purposes of business or profession is not considered a capital asset, aligning with option (b). 32 / 50 32. What is a Probate? a) It’s an Execution of Will under court order b) It’s a special type of trust c) It’s a process of registration of Will d) None of the above Explanation:A Probate is the execution of a will under court order, confirming option (a). 33 / 50 33. The long-term capital gain in excess of ______ shall be chargeable to tax if such capital gain arises from transfer of securities, being equity shares. a) Rs. 2 lakhs b) Rs. 2.5 lakhs c) Rs. 5 lakhs d) Rs. 1 lakh Explanation:The long-term capital gain in excess of Rs. 1 lakh shall be chargeable to tax if such capital gain arises from the transfer of securities, being equity shares, supporting option (d). 34 / 50 34. It would be safer to invest in __________ if it is expected that interest rates in the market would go up. a) Long term debt funds b) Short term debt funds c) Medium Term Debt Funds d) 10 Year Government Securities Fund Explanation:It would be safer to invest in Short-term debt funds if it is expected that interest rates in the market would go up, as stated in option (b). 35 / 50 35. Identify the correct statement:(i) Risk appetite of a Family increases as the number of earning members increases(ii) Risk appetite decreases as the number of dependent members increases(iii) Risk appetite is higher when life expectancy is longer(iv) Well qualified and multi skilled professionals can afford to take more risk a) (i) and (ii) are correct b) (i) and (iii) are correct c) (ii) and (iv) are correct d) (i) (ii) (iii) and (iv) are correct Explanation:The correct statement is (iv) Well-qualified and multi-skilled professionals can afford to take more risk, aligning with option (d). 36 / 50 36. A __________ policy covers losses sustained by the employer as a result of an act of forgery, fraud or dishonesty from an employee. a) Keyman Insurance b) Fidelity Insurance c) Liability Insurance Explanation:Fidelity Insurance covers losses sustained by the employer as a result of an act of forgery, fraud, or dishonesty from an employee, making option (b) correct. 37 / 50 37. The rebate under ________ is not available from income-tax payable on long-term capital gain covered under section 112A of IT act. a) Section 17D b) Section 42B c) Section 87A d) Section 23C Explanation:The rebate under Section 87A is not available from income-tax payable on long-term capital gain covered under section 112A of the IT Act, as clarified in option (c). 38 / 50 38. Which of the following statements is incorrect about expense protection method? a) In this method, monthly/annual expenses of the person (just before retirement) are estimated b) This method does not account for inflation c) The concluding amount indicates the corpus required by the person upon retirement which should be able to generate regular income equal to the expenses so arrived at d) In many cases, the monthly/annual expenses required by the person on retirement is taken as a percentage of the monthly/annual expenses of that person just before retirement Explanation:The Expense Protection method is incorrect as it does not account for inflation, confirming option (b). 39 / 50 39. A reverse mortgage loan can be availed against commercial property. a) True b) False Explanation:A reverse mortgage loan cannot be availed against commercial property, as stated in option (b). 40 / 50 40. Unrealized rent has to be deducted while determining the Net Annual value of a property? a) True b) False Explanation:Unrealized rent has to be deducted while determining the Net Annual value of a property, supporting option (a). 41 / 50 41. Which of the following is the minimum stipulated investor contribution in an AIF scheme? a) Rs. 20 crore b) Rs. 1 crore c) Rs. 10 crore d) Rs. 2 crore Explanation:The Alternative Investment Fund shall not accept from an investor, an investment of value less than Rs. 1 crore. Provided that in case of investors who are employees or directors of the Alternative Investment Fund or employees or directors of the Manager, the minimum value of investment shall be Rs. 25 lakh. 42 / 50 42. In which of the following situations will the insured not have insurance cover? a) Surrendered policy b) Paid-up policy c) Term policy d) Both A and B Explanation:The insured will not have insurance cover in the case of a Surrendered policy, as mentioned in option (a). 43 / 50 43. Under _______ of IT act, the inter-corporate dividend shall be reduced from total income of the company if it is further distributed to shareholders on or before the due date. a) Section 72D b) Section 63C c) Section 45A d) Section 80M Explanation:Inter-corporate dividend reduction is under Section 80M of the Income Tax Act, aligning with option (d). 44 / 50 44. What maximum amount can an individual save in various investment instruments under Section 80C to claim deduction from taxable income in an Assessment Year? a) Rs. 1,15,000 b) Rs. 1,50,000 c) Rs. 1,25,000 d) Rs. 2,50,000 Explanation:Individuals can save up to Rs. 1,50,000 in various investment instruments under Section 80C for deduction from taxable income, confirming option (b) as correct. 45 / 50 45. The deduction from Gross Total Income available u/s 80E for Principal paid on Educational Loan is ____________. a) 40,000 b) 45,000 c) 50,000 d) No Deduction Available Explanation:No deduction is available under section 80E for the principal paid on an educational loan, as mentioned in option (d). 46 / 50 46. If an investment provides tax benefit at the time of deposit and withdrawal but return on such investment is chargeable to tax then it will fall under the category of _______. a) TTE b) ETE c) EET d) EEE Explanation:An investment providing tax benefits at deposit and withdrawal but taxable returns falls under ETE (Exempt, Taxable, Exempt) category, making option (b) the correct choice. 47 / 50 47. Which among the following is a Defined Benefit Policy ? a) Property Insurance to pay for losses caused due to fire, earthquake, flood, etc. b) Car Insurance c) Health Insurance policy for reimbursement of expenditure incurred in hospitalisation d) Daily Hospital Cash benefit allowing a specified sum per day of hospitalisation Explanation:Daily Hospital Cash benefit allowing a specified sum per day of hospitalization is a Defined Benefit Policy, making option (d) the correct answer. 48 / 50 48. What does it mean by Risk Appetite? a) Its the level of risk the investor is comfortable with b) Its the level of risk the investor should take to achieve his financial goals c) Its the level of risk the investor should take based on his age d) Its the proportion of the investors portfolio in risk instruments like shares Explanation:Risk Appetite refers to the level of risk the investor is comfortable with, aligning with option (a). 49 / 50 49. _____________ is the decision that comes out of calls on the likely behaviour of the market. a) Strategic Asset Allocation b) Fixed Asset Allocation c) Risk Profiling d) Tactical Asset Allocation Explanation:Tactical Asset Allocation is the decision that comes out of calls on the likely behavior of the market, making option (d) the correct choice. 50 / 50 50. Which one of the following is true with respect to set off of losses ? a) Capital loss, short term or long term, cannot be set off against any other head of income b) Short term capital loss can be set off against short term or long term capital gain c) Long term capital loss can only be set off against long term capital gain d) All of the above Explanation:All of the above options are correct. Short-term capital loss can be set off against short-term or long-term capital gain, and the same applies to long-term capital loss against long-term capital gain. Your score is 0% Restart quiz Exit
