NISM Series-X-A: Investment Adviser (Level 1) Flashcards
7 cards from real Investment Advisor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 NISM Series-X-A: Investment Adviser (Level 1) flashcards as text
Which of the following best describes 'dollar-cost averaging' as an investment strategy?
Answer: Investing fixed amounts at regular intervals regardless of price
Dollar-cost averaging involves investing a fixed amount periodically, buying more units when prices are low and fewer when prices are high.
Under SEBI IA Regulations, investment advisers are prohibited from receiving commissions or referral fees from product manufacturers. This principle is called:
Answer: Commission ban
SEBI mandates a commission-free, fee-only model for investment advisers to eliminate distributor-linked conflicts of interest.
When assessing a client's risk capacity, which factor is most relevant?
Answer: Client's income, liabilities, and financial obligations
Risk capacity is determined by objective financial factors — income, assets, debts, and obligations — not by stated preferences.
A bond with a 5% coupon is trading at a premium. Its yield to maturity is therefore:
Answer: Less than 5%
When a bond trades at a premium (above par), its YTM is lower than the coupon rate because the investor pays more than face value.
Which SEBI regulation governs the registration and conduct of Portfolio Management Services (PMS) in India?
Answer: SEBI (Portfolio Managers) Regulations, 2020
PMS providers are governed by SEBI (Portfolio Managers) Regulations, 2020, which is separate from the IA Regulations.
A client approaches an investment adviser seeking advice only on direct equity stocks. The adviser is not registered for this and refers the client elsewhere. This action demonstrates:
Answer: Appropriate professional conduct within scope of registration
Referring clients to appropriately registered professionals for services outside one's scope is correct professional behavior.
The Capital Asset Pricing Model (CAPM) formula is: Expected Return = Rf + β × (Rm − Rf). What does 'Rm − Rf' represent?
Answer: Market risk premium
Rm − Rf is the market risk premium — the excess return investors expect for bearing market risk over the risk-free rate.