INVESTMENT ADVISER LEVEL 2  SET 23
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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
Securities payin denotes _____________

Question 2 of 25
2. Question
Which of the following is a breadth indicator?

Question 3 of 25
3. Question
The present value of a sum of money________as the Discounting rate________

Question 4 of 25
4. Question
If one year interest rate is 2% in US and 10% in India. If current USDINR spot rate is 44, which of the following could be
closest to the six month future rate of USDINR? 
Question 5 of 25
5. Question
A simple moving average is formed by computing the _____ price of a security over a specified number of periods.

Question 6 of 25
6. Question
Average Return of an investors portfolio is 55%. The risk free return for the market is 8%. The Beta of the investors
portfolio is 1.2. Calculate the Treynor Ratio. 
Question 7 of 25
7. Question
Derivative contracts expire on the ___________________.

Question 8 of 25
8. Question
A Bond of face value Rs.5000 carries a coupon interest rate of 12%. It is quoted in the market at Rs.4500. What is the
current yield of the bond? 
Question 9 of 25
9. Question
What is the Present Value of Rs. 115,000 to be received after 1 year at 10%?

Question 10 of 25
10. Question
If an option is out of the money and the strike price of the option is lower than the spot price of the underlying, then we
are referring to ____________? 
Question 11 of 25
11. Question
While plotting the yield curves of selected debt securities of the same type, Sundar finds that the yields of shortterm
securities are generally higher than the yields of longer term securities. Which type of yield curve does this situation illustrate? 
Question 12 of 25
12. Question
Health Insurance and Motor Insurance supplement _________needs of an Investor

Question 13 of 25
13. Question
Which of the following does a credit score typically measure?

Question 14 of 25
14. Question
SEBI Complaints Redress System (SCORES) provides for a system for processing of investor complaints against listed
companies. 
Question 15 of 25
15. Question
The most important money supply indicator monitored by the RBI is

Question 16 of 25
16. Question
If US DollarRupee moved from 43.00 to 43.30, the US Dollar has ___________ and the Rupee has __________

Question 17 of 25
17. Question
The basic market outlook of an investor who has a long put is

Question 18 of 25
18. Question
Case Study:
Mr. A wants to avail of a loan from a bank for purchasing a car worth Rs. 7.8 Lac. The bank charges a fixed rate of interest of 10% p.a. on
monthly reducing balance basis to sanction a loan which is 80% of the cost of vehicle. Loan amount is added by 1% upfront loan processing
fees in the loan amount. The loan is taken for 4 years. You compute the following:
Q18) The amount of loan sanctioned by the bank is ______ 
Question 19 of 25
19. Question
Case Study:
Mr. A wants to avail of a loan from a bank for purchasing a car worth Rs. 7.8 Lac. The bank charges a fixed rate of interest of 10% p.a. on
monthly reducing balance basis to sanction a loan which is 80% of the cost of vehicle. Loan amount is added by 1% upfront loan processing
fees in the loan amount. The loan is taken for 4 years. You compute the following:
Q19) The Equated Monthly Instalment (EMI) of loan is ______ 
Question 20 of 25
20. Question
Case Study:
Mr. A wants to avail of a loan from a bank for purchasing a car worth Rs. 7.8 Lac. The bank charges a fixed rate of interest of 10% p.a. on
monthly reducing balance basis to sanction a loan which is 80% of the cost of vehicle. Loan amount is added by 1% upfront loan processing
fees in the loan amount. The loan is taken for 4 years. You compute the following:
Q20) Suppose if he pays Rs 2 Lakhs after 24 months, what would have been the principal outstanding then? 
Question 21 of 25
21. Question
Case Study:
Mr. A wants to avail of a loan from a bank for purchasing a car worth Rs. 7.8 Lac. The bank charges a fixed rate of interest of 10% p.a. on
monthly reducing balance basis to sanction a loan which is 80% of the cost of vehicle. Loan amount is added by 1% upfront loan processing
fees in the loan amount. The loan is taken for 4 years. You compute the following:
Q21) What would have been the EMI had the processing fee not included in the Loan amount? 
Question 22 of 25
22. Question
Case Study:
Mr. Sharukh is employed in a private firm and earns Rs 8 lakhs per year. Out of this he spends Rs 7 lakhs per year. His stock broker has
recommended an investment which promises a return of 13%. He plans to invest Rs 40,000 in this and for this he will need a leverage of 1.5
to finance the investment. He can borrow at 9% pa. He has life insurance policies of Rs 35 lakhs. He has an outstanding housing loan of Rs
30 lakhs. His other assets, excluding his residential house are worth Rs 90 lakhs. He also has investments in other sources and he expects
his investments to grow at 9% over the long term. The inflation rate is likely to be around 7.5%. Mr. Sharukh is currently of 42 years and
wishes to retire at 60 and his life expectancy is 70 years.
Q22) If Mr. Sharukh implements his plan of investments using leveraged money for the new investment, what will be his
return on equity ? 
Question 23 of 25
23. Question
Case Study:
Mr. Sharukh is employed in a private firm and earns Rs 8 lakhs per year. Out of this he spends Rs 7 lakhs per year. His stock broker has
recommended an investment which promises a return of 13%. He plans to invest Rs 40,000 in this and for this he will need a leverage of 1.5
to finance the investment. He can borrow at 9% pa. He has life insurance policies of Rs 35 lakhs. He has an outstanding housing loan of Rs
30 lakhs. His other assets, excluding his residential house are worth Rs 90 lakhs. He also has investments in other sources and he expects
his investments to grow at 9% over the long term. The inflation rate is likely to be around 7.5%. Mr. Sharukh is currently of 42 years and
wishes to retire at 60 and his life expectancy is 70 years.
Q23) The investment which his stock broker recommended is now offering only 9% return. What will be the return on Equity
now? 
Question 24 of 25
24. Question
Case Study:
Mr. Sharukh is employed in a private firm and earns Rs 8 lakhs per year. Out of this he spends Rs 7 lakhs per year. His stock broker has
recommended an investment which promises a return of 13%. He plans to invest Rs 40,000 in this and for this he will need a leverage of 1.5
to finance the investment. He can borrow at 9% pa. He has life insurance policies of Rs 35 lakhs. He has an outstanding housing loan of Rs
30 lakhs. His other assets, excluding his residential house are worth Rs 90 lakhs. He also has investments in other sources and he expects
his investments to grow at 9% over the long term. The inflation rate is likely to be around 7.5%. Mr. Sharukh is currently of 42 years and
wishes to retire at 60 and his life expectancy is 70 years.
Q24) What is the discount rate for working out Mr. Sharukh’s Insurance plan ? 
Question 25 of 25
25. Question
Case Study:
Mr. Sharukh is employed in a private firm and earns Rs 8 lakhs per year. Out of this he spends Rs 7 lakhs per year. His stock broker has
recommended an investment which promises a return of 13%. He plans to invest Rs 40,000 in this and for this he will need a leverage of 1.5
to finance the investment. He can borrow at 9% pa. He has life insurance policies of Rs 35 lakhs. He has an outstanding housing loan of Rs
30 lakhs. His other assets, excluding his residential house are worth Rs 90 lakhs. He also has investments in other sources and he expects
his investments to grow at 9% over the long term. The inflation rate is likely to be around 7.5%. Mr. Sharukh is currently of 42 years and
wishes to retire at 60 and his life expectancy is 70 years.
Q25) What is the Human Life Value of Mr.Sharukh?