INVESTMENT ADVISER LEVEL 2  SET 21
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Dear Candidate,
1. This is a Mock Examination of NISMSeriesXVIII: Financial Education Certification Examination.
2. This mock test has 50 questions of 1 marks each. Please note that the actual examination for NISM Series XVIII: Financial Education Certification Examination has 50 questions of 1 mark each.
3. There is no negative marking.
4. The passing score for the examination is 60%
5. This mock examination is only to give the candidates an experience of NISM testing system.
6. Please note that passing this mock test would not make you eligible for claiming a certificate for NISMSeriesXVIII: Financial Education Certification Examination.
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Question 1 of 25
1. Question
Where investment is by minor, KYC compliance is required from

Question 2 of 25
2. Question
Which of the following aspects affect Risk Profiling of the Investors?

Question 3 of 25
3. Question
Average Return of an investors portfolio is 10%. The risk free return for the market is 8%. The Beta of the investors
portfolio is 1.2. Calculate the Treynor Ratio. 
Question 4 of 25
4. Question
Statement A: Fundamental Analysis looks at matters like future earnings & dividends to assess intrinsic value.
Statement B : Technical Analysis involves a study of past prices and volumes to determine the direction of price movement 
Question 5 of 25
5. Question
A retail investor in a public issue is an investor

Question 6 of 25
6. Question
_____________ comprise of individuals who invest above Rs 2 Lakhs in a single transaction

Question 7 of 25
7. Question
__________ Bias means holding on to an old information that may no longer be relevant, and make their decisions based
on that 
Question 8 of 25
8. Question
Person to whom a power of attorney is given is called__________ and who gives it is called_______

Question 9 of 25
9. Question
Which of the following is a financial goal?

Question 10 of 25
10. Question
CIBIL TransUnion Score is a________

Question 11 of 25
11. Question
The Inflation at any given time is measured by computing the percentage changes in the _______ at that point of time over
the index prevailing one year previously 
Question 12 of 25
12. Question
In a debt instrument which of the following doesnot change on a daily basis?

Question 13 of 25
13. Question
For mutual fund transactions, the verification and attestation of PAN can be done by________

Question 14 of 25
14. Question
The Rolling Settlement Cycle presently is on __________basis

Question 15 of 25
15. Question
The effect of purchasing power or inflation on present value is important because _____

Question 16 of 25
16. Question
_______bias is an outcome of uncertainty and a belief that others may have better information, which leads investors to
follow the investment choices that others make. 
Question 17 of 25
17. Question
The meaning of T + 2 rolling settlement is, _______.

Question 18 of 25
18. Question
Case Study:
Kumar, aged 30, life expectancy 75, is working with a leading Indian corporate as a project manager for the last 7 years in Ahmadabad.His
wife, Swathi, aged 29, life expectancy 80, is a house wife. They have two children Rahul (aged 5 years) and Narendra (aged 2 years). Monthly
salary of Kumar 1. Basic Salary Rs. 30,200 2. D.A (forming part of Salary) 50% of basic salary 3. City Compensatory Allowance Rs. 300 4.
Children Education Allowance Rs. 200 per child 5. Transport allowance Rs. 1,000 He pays Rs. 23,900 annually as premium of his life
insurance policies, which consist of 3 endowment policies and 1 unit linked policy. The total life insurance cover under his bouquet of
policies is Rs. 12,00,000.He wants to make provision for children’s higher education expenses for both children at their age of 21 in lump
sum; presently valued at Rs. 3 lakh each. Kumars monthly expenditure is: Particulars Amount (in Rs.) Housing expenses (including
traveling, holidays and festivals) Rs 21,000, Personal loan repayments 13,200, Total 34,200. Assumptions 1) Risk Free Rate of Return = 4%
p.a. 2) Rate of return on Equity = 15% p.a. 3) Rate of return on Debt above 5 years = 9% p.a. 4) Inflation = 4% per year.
Q18) Considering that he meets an immediate unforeseen event, Kumar would like to provide his family an amount of Rs. 6
lakh p.a., inflation linked, till Swathi is alive. What approximate amount of life insurance should Kumar be covered for if the
proceeds of such a cover would be invested in long term debt and long term equity in the ratio 90:10. 
Question 19 of 25
19. Question
Case Study:
Kumar, aged 30, life expectancy 75, is working with a leading Indian corporate as a project manager for the last 7 years in Ahmadabad.His
wife, Swathi, aged 29, life expectancy 80, is a house wife. They have two children Rahul (aged 5 years) and Narendra (aged 2 years). Monthly
salary of Kumar 1. Basic Salary Rs. 30,200 2. D.A (forming part of Salary) 50% of basic salary 3. City Compensatory Allowance Rs. 300 4.
Children Education Allowance Rs. 200 per child 5. Transport allowance Rs. 1,000 He pays Rs. 23,900 annually as premium of his life
insurance policies, which consist of 3 endowment policies and 1 unit linked policy. The total life insurance cover under his bouquet of
policies is Rs. 12,00,000.He wants to make provision for children’s higher education expenses for both children at their age of 21 in lump
sum; presently valued at Rs. 3 lakh each. Kumars monthly expenditure is: Particulars Amount (in Rs.) Housing expenses (including
traveling, holidays and festivals) Rs 21,000, Personal loan repayments 13,200, Total 34,200. Assumptions 1) Risk Free Rate of Return = 4%
p.a. 2) Rate of return on Equity = 15% p.a. 3) Rate of return on Debt above 5 years = 9% p.a. 4) Inflation = 4% per year.
Q19) Mr.Dhananjay (Father of Kumar) wants to gift Rs. 5 lakh to Kumar to buy a house. Kumar wants to know how this receipt
will be treated in his hands from Income Tax perspective. 
Question 20 of 25
20. Question
Case Study:
Kumar, aged 30, life expectancy 75, is working with a leading Indian corporate as a project manager for the last 7 years in Ahmadabad.His
wife, Swathi, aged 29, life expectancy 80, is a house wife. They have two children Rahul (aged 5 years) and Narendra (aged 2 years). Monthly
salary of Kumar 1. Basic Salary Rs. 30,200 2. D.A (forming part of Salary) 50% of basic salary 3. City Compensatory Allowance Rs. 300 4.
Children Education Allowance Rs. 200 per child 5. Transport allowance Rs. 1,000 He pays Rs. 23,900 annually as premium of his life
insurance policies, which consist of 3 endowment policies and 1 unit linked policy. The total life insurance cover under his bouquet of
policies is Rs. 12,00,000.He wants to make provision for children’s higher education expenses for both children at their age of 21 in lump
sum; presently valued at Rs. 3 lakh each. Kumars monthly expenditure is: Particulars Amount (in Rs.) Housing expenses (including
traveling, holidays and festivals) Rs 21,000, Personal loan repayments 13,200, Total 34,200. Assumptions 1) Risk Free Rate of Return = 4%
p.a. 2) Rate of return on Equity = 15% p.a. 3) Rate of return on Debt above 5 years = 9% p.a. 4) Inflation = 4% per year.
Q20) Kumar wants to invest yearly to achieve his goals for his children’s higher education. For accumulation of fund you
recommend Kumar to invest in Debt and Equity in the ratio 20:80. What approximate amount should he set aside every year
to achieve his said goals. Assume Kumar maintains separate investment accounts for Rahul and Narendra and invests till
they turn 21 years of age respectively. 
Question 21 of 25
21. Question
Case Study:
Kumar, aged 30, life expectancy 75, is working with a leading Indian corporate as a project manager for the last 7 years in Ahmadabad.His
wife, Swathi, aged 29, life expectancy 80, is a house wife. They have two children Rahul (aged 5 years) and Narendra (aged 2 years). Monthly
salary of Kumar 1. Basic Salary Rs. 30,200 2. D.A (forming part of Salary) 50% of basic salary 3. City Compensatory Allowance Rs. 300 4.
Children Education Allowance Rs. 200 per child 5. Transport allowance Rs. 1,000 He pays Rs. 23,900 annually as premium of his life
insurance policies, which consist of 3 endowment policies and 1 unit linked policy. The total life insurance cover under his bouquet of
policies is Rs. 12,00,000.He wants to make provision for children’s higher education expenses for both children at their age of 21 in lump
sum; presently valued at Rs. 3 lakh each. Kumars monthly expenditure is: Particulars Amount (in Rs.) Housing expenses (including
traveling, holidays and festivals) Rs 21,000, Personal loan repayments 13,200, Total 34,200. Assumptions 1) Risk Free Rate of Return = 4%
p.a. 2) Rate of return on Equity = 15% p.a. 3) Rate of return on Debt above 5 years = 9% p.a. 4) Inflation = 4% per year.
Q21) Kumar desires to retire at his age of 55. He intends to arrange for the present housing expenses (inflation linked) after
his retirement till Swathis lifetime. For accumulation of retirement corpus Kumar intends to start annual saving with Rs.
35,000 in the first year, and increasing the savings by 8% every year till one year before his retirement. Kumar also estimates
to receive Rs 20 lakh from his employer on his retirement. What surplus/shortfall would be available with Kumar at the time of
his retirement in such a situation? Assume Kumar’s savings earns him a return of 10% p.a. throughout and investmentsduringhis post retirement are also able to fetch similar returns

Question 22 of 25
22. Question
Case Study:
Mr. Y, aged 40, has the following goals ahead of him. (1) Son postgraduate education due in Year 6. Current cost Rs 15,00,000 p.a. to be
incurred each year for 2 years. Likely Inflation 15% p.a. (2) Daughter’s marriage: Scheduled in end of Year 7. Current cost Rs 1,00,00,000.
Inflation is assumed to be at 10% p.a. Mr. Y has provided a corpus of Rs 2,00,00,000 towards these two needs. The corpus is invested in a
mix of debt and equity yielding 8% p.a. Ignore taxation.
Q22) What is the likely outflow on account of daughter’s marriage in the year it is planned? 
Question 23 of 25
23. Question
Case Study:
Mr. Y, aged 40, has the following goals ahead of him. (1) Son postgraduate education due in Year 6. Current cost Rs 15,00,000 p.a. to be
incurred each year for 2 years. Likely Inflation 15% p.a. (2) Daughter’s marriage: Scheduled in end of Year 7. Current cost Rs 1,00,00,000.
Inflation is assumed to be at 10% p.a. Mr. Y has provided a corpus of Rs 2,00,00,000 towards these two needs. The corpus is invested in a
mix of debt and equity yielding 8% p.a. Ignore taxation.
Q23) Calculate the amount required for Post Graduate education in Year 6 and Year 7 respectively? 
Question 24 of 25
24. Question
Case Study:
Mr. Y, aged 40, has the following goals ahead of him. (1) Son postgraduate education due in Year 6. Current cost Rs 15,00,000 p.a. to be
incurred each year for 2 years. Likely Inflation 15% p.a. (2) Daughter’s marriage: Scheduled in end of Year 7. Current cost Rs 1,00,00,000.
Inflation is assumed to be at 10% p.a. Mr. Y has provided a corpus of Rs 2,00,00,000 towards these two needs. The corpus is invested in a
mix of debt and equity yielding 8% p.a. Ignore taxation.
Q24) How much will be left in the corpus after both goals are fulfilled? 
Question 25 of 25
25. Question
Case Study:
Mr. Y, aged 40, has the following goals ahead of him. (1) Son postgraduate education due in Year 6. Current cost Rs 15,00,000 p.a. to be
incurred each year for 2 years. Likely Inflation 15% p.a. (2) Daughter’s marriage: Scheduled in end of Year 7. Current cost Rs 1,00,00,000.
Inflation is assumed to be at 10% p.a. Mr. Y has provided a corpus of Rs 2,00,00,000 towards these two needs. The corpus is invested in a mix
of debt and equity yielding 8% p.a. Ignore taxation.
Q25) How would you describe the investment policy Mr. Y is using for the corpus?