NISM Certifications India Exam Questions and Answers
Question 1. A portfolio invests 25% in Asset A, which returns 10.0%, and the remainder in Asset B, which returns
5.0%. What is the portfolio return?
A. 7.50%
B. 8.75%
C. 5.00%
D. 6.25%
Correct Answer: D. 6.25%
Explanation: A portfolio return is the weighted average of the component returns using portfolio weights. The calculation is (0.25 ×
10.0%) + (0.75 × 5.0%) = 6.25%. A simple average is appropriate only when the positions have equal weights.
Question 2. An investor buys a put with strike ■125.00 for a premium of ■3.00 per unit. Ignoring transaction costs,
what is the breakeven underlying price at expiration?
A. ■125.00
B. ■3.00
C. ■122.00
D. ■128.00
Correct Answer: C. ■122.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or ■125.00 - ■3.00 = ■122.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Question 3. A pooled fund reports assets of ■200,000,000.00, liabilities of ■3,000,000.00, and 10 million units
outstanding. What is the fund's NAV per unit?
A. ■20.00
B. ■20.30
C. ■0.30
D. ■19.70
Correct Answer: D. ■19.70
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
■197,000,000.00, which produces an NAV per unit of ■19.70. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 4. A repo has cash principal of ■10,000,000.00, an annual repo rate of 5.0%, and a term of 60 days on an
assumed 360-day basis. What is the repo interest?
A. ■83,333.33
B. ■500,000.00
C. ■82,191.78
D. ■10,083,333.33
Correct Answer: A. ■83,333.33
Explanation: Simple repo interest on the stated convention is principal × annual rate × days / day-count basis. Using 60/360 gives
interest of ■83,333.33. The repurchase amount would normally include both principal and interest, but the question asks for the
interest component only.
Page 1
,Question 5. A one-period project requires an initial outlay of ■150,000.00 and is expected to pay ■90,000.00 one
year later. At a discount rate of 5.0%, what is the NPV?
A. ■-60,000.00
B. ■-55,500.00
C. ■-64,285.71
D. ■64,285.71
Correct Answer: C. ■-64,285.71
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting ■90,000.00 for one year at
5.0% and subtracting ■150,000.00 gives ■-64,285.71. The undiscounted difference ignores the time value of money and therefore
is not NPV.
Question 6. A fund earns a gross return of 8.00% for a year and incurs annual expenses equal to 1.00% of assets,
with no other adjustments. What is the approximate net return?
A. Approximately 7.00%
B. Approximately 8.00%
C. Approximately 1.00%
D. Approximately 9.00%
Correct Answer: A. Approximately 7.00%
Explanation: Under the simplified assumptions, expenses reduce the gross return approximately one-for-one. 8.00% - 1.00% =
approximately 7.00%. Actual reported performance can differ because of timing, compounding, transaction costs, taxes, and the
precise method used to accrue expenses.
Question 7. A ■10,000.00 face-value bond pays a 6.0% annual coupon in 4 equal payment(s) per year. What is each
coupon payment?
A. ■600.00
B. ■300.00
C. ■150.00
D. ■2,500.00
Correct Answer: C. ■150.00
Explanation: Annual coupon interest is face value multiplied by the annual coupon rate, which equals ■600.00. Dividing that
amount by 4 payment period(s) gives ■150.00 per payment. The bond's market price is irrelevant to the contractual coupon cash
flow unless the question specifically asks for a yield measure.
Question 8. A candidate preparing for NISM Certifications (India) encounters the following description: “A
transaction economically similar to secured borrowing in which securities are sold with an agreement to
repurchase them later.” Which term is most directly associated with this description?
A. Repo
B. Risk tolerance
C. Front running
D. Preferred share
Correct Answer: A. Repo
Explanation: Repo is best understood as a transaction economically similar to secured borrowing in which securities are sold with
an agreement to repurchase them later. This interpretation is consistent with the way the concept is applied in professional
securities and investment practice, including activity overseen by Securities and Exchange Board of India (SEBI). The other choices
describe different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Page 2
,Question 9. An investment earns a nominal return of 8.0% while inflation is 3.0%. Using the exact Fisher
relationship, what is the real return?
A. 4.85%
B. 11.00%
C. 37.50%
D. 5.00%
Correct Answer: A. 4.85%
Explanation: The exact real return is (1 + nominal return) / (1 + inflation) - 1. Using the stated values gives 4.85%. Simply
subtracting inflation from nominal return is a useful approximation at low rates, but it is not the exact calculation requested.
Question 10. A portfolio returned 12.0%, the risk-free rate was 3.0%, and portfolio volatility was 8.0%. What was the
Sharpe ratio?
A. 1.50
B. 1.12
C. 9.00
D. 0.89
Correct Answer: B. 1.12
Explanation: The Sharpe ratio is excess return over the risk-free rate divided by return volatility. Using the figures given, (12.0% -
3.0%) / 8.0% = 1.12. It is a unitless risk-adjusted performance measure, so the volatility belongs in the denominator.
Question 11. A share trades at ■30.00 and pays annual cash dividends of ■0.50 per share. What is the dividend
yield based on the current price?
A. 60.00%
B. 1.67%
C. 98.33%
D. 0.50%
Correct Answer: B. 1.67%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. ■0.50 / ■30.00 ×
100 = 1.67%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Question 12. A leveraged account has securities worth ■80,000.00 and a debit or financing balance of ■36,000.00.
What is the account equity as a percentage of market value?
A. 45.00%
B. 122.22%
C. 55.00%
D. 181.82%
Correct Answer: C. 55.00%
Explanation: Account equity is market value minus the financing balance. Equity is ■44,000.00, and ■44,000.00 / ■80,000.00 =
55.00%. The financing percentage is the complement of the equity percentage and should not be mistaken for account equity.
Question 13. A leveraged account has securities worth ■150,000.00 and a debit or financing balance of
■37,500.00. What is the account equity as a percentage of market value?
A. 133.33%
B. 300.00%
C. 25.00%
D. 75.00%
Correct Answer: D. 75.00%
Explanation: Account equity is market value minus the financing balance. Equity is ■112,500.00, and ■112,500.00 / ■150,000.00
= 75.00%. The financing percentage is the complement of the equity percentage and should not be mistaken for account equity.
Page 3
, Question 14. A company reports net income of ■20,000,000.00, preferred dividends of ■2,000,000.00, and 15
million weighted-average common shares. What is basic EPS using these figures?
A. ■1.33
B. ■0.75
C. ■1.20
D. ■1.47
Correct Answer: C. ■1.20
Explanation: Basic EPS allocates earnings available to common shareholders across the weighted-average common shares
outstanding. Subtracting preferred dividends leaves ■18,000,000.00, and dividing by 15 million shares gives ■1.20. Using total net
income without the preferred-dividend adjustment would overstate earnings attributable to common shares.
Question 15. An investor owns a share purchased at ■80.00 and writes one call with strike ■90.00, receiving a
premium of ■5.00 per share. What is the maximum gain per share at expiration, ignoring dividends and costs?
A. ■5.00
B. ■10.00
C. ■15.00
D. ■-5.00
Correct Answer: C. ■15.00
Explanation: A covered call's upside is capped because the written call can require sale of the share at the strike price. Maximum
gain per share is strike minus stock cost plus premium: 90 - 80 + 5 = ■15.00. The premium adds income, but it does not remove the
downside risk of owning the stock.
Question 16. An investment earns a nominal return of 4.0% while inflation is 2.5%. Using the exact Fisher
relationship, what is the real return?
A. 6.50%
B. 62.50%
C. 1.50%
D. 1.46%
Correct Answer: D. 1.46%
Explanation: The exact real return is (1 + nominal return) / (1 + inflation) - 1. Using the stated values gives 1.46%. Simply
subtracting inflation from nominal return is a useful approximation at low rates, but it is not the exact calculation requested.
Question 17. A share trades at ■25.00 and pays annual cash dividends of ■4.00 per share. What is the dividend
yield based on the current price?
A. 16.00%
B. 4.00%
C. 6.25%
D. 84.00%
Correct Answer: A. 16.00%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. ■4.00 / ■25.00 ×
100 = 16.00%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Page 4
Question 1. A portfolio invests 25% in Asset A, which returns 10.0%, and the remainder in Asset B, which returns
5.0%. What is the portfolio return?
A. 7.50%
B. 8.75%
C. 5.00%
D. 6.25%
Correct Answer: D. 6.25%
Explanation: A portfolio return is the weighted average of the component returns using portfolio weights. The calculation is (0.25 ×
10.0%) + (0.75 × 5.0%) = 6.25%. A simple average is appropriate only when the positions have equal weights.
Question 2. An investor buys a put with strike ■125.00 for a premium of ■3.00 per unit. Ignoring transaction costs,
what is the breakeven underlying price at expiration?
A. ■125.00
B. ■3.00
C. ■122.00
D. ■128.00
Correct Answer: C. ■122.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or ■125.00 - ■3.00 = ■122.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Question 3. A pooled fund reports assets of ■200,000,000.00, liabilities of ■3,000,000.00, and 10 million units
outstanding. What is the fund's NAV per unit?
A. ■20.00
B. ■20.30
C. ■0.30
D. ■19.70
Correct Answer: D. ■19.70
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
■197,000,000.00, which produces an NAV per unit of ■19.70. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Question 4. A repo has cash principal of ■10,000,000.00, an annual repo rate of 5.0%, and a term of 60 days on an
assumed 360-day basis. What is the repo interest?
A. ■83,333.33
B. ■500,000.00
C. ■82,191.78
D. ■10,083,333.33
Correct Answer: A. ■83,333.33
Explanation: Simple repo interest on the stated convention is principal × annual rate × days / day-count basis. Using 60/360 gives
interest of ■83,333.33. The repurchase amount would normally include both principal and interest, but the question asks for the
interest component only.
Page 1
,Question 5. A one-period project requires an initial outlay of ■150,000.00 and is expected to pay ■90,000.00 one
year later. At a discount rate of 5.0%, what is the NPV?
A. ■-60,000.00
B. ■-55,500.00
C. ■-64,285.71
D. ■64,285.71
Correct Answer: C. ■-64,285.71
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting ■90,000.00 for one year at
5.0% and subtracting ■150,000.00 gives ■-64,285.71. The undiscounted difference ignores the time value of money and therefore
is not NPV.
Question 6. A fund earns a gross return of 8.00% for a year and incurs annual expenses equal to 1.00% of assets,
with no other adjustments. What is the approximate net return?
A. Approximately 7.00%
B. Approximately 8.00%
C. Approximately 1.00%
D. Approximately 9.00%
Correct Answer: A. Approximately 7.00%
Explanation: Under the simplified assumptions, expenses reduce the gross return approximately one-for-one. 8.00% - 1.00% =
approximately 7.00%. Actual reported performance can differ because of timing, compounding, transaction costs, taxes, and the
precise method used to accrue expenses.
Question 7. A ■10,000.00 face-value bond pays a 6.0% annual coupon in 4 equal payment(s) per year. What is each
coupon payment?
A. ■600.00
B. ■300.00
C. ■150.00
D. ■2,500.00
Correct Answer: C. ■150.00
Explanation: Annual coupon interest is face value multiplied by the annual coupon rate, which equals ■600.00. Dividing that
amount by 4 payment period(s) gives ■150.00 per payment. The bond's market price is irrelevant to the contractual coupon cash
flow unless the question specifically asks for a yield measure.
Question 8. A candidate preparing for NISM Certifications (India) encounters the following description: “A
transaction economically similar to secured borrowing in which securities are sold with an agreement to
repurchase them later.” Which term is most directly associated with this description?
A. Repo
B. Risk tolerance
C. Front running
D. Preferred share
Correct Answer: A. Repo
Explanation: Repo is best understood as a transaction economically similar to secured borrowing in which securities are sold with
an agreement to repurchase them later. This interpretation is consistent with the way the concept is applied in professional
securities and investment practice, including activity overseen by Securities and Exchange Board of India (SEBI). The other choices
describe different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Page 2
,Question 9. An investment earns a nominal return of 8.0% while inflation is 3.0%. Using the exact Fisher
relationship, what is the real return?
A. 4.85%
B. 11.00%
C. 37.50%
D. 5.00%
Correct Answer: A. 4.85%
Explanation: The exact real return is (1 + nominal return) / (1 + inflation) - 1. Using the stated values gives 4.85%. Simply
subtracting inflation from nominal return is a useful approximation at low rates, but it is not the exact calculation requested.
Question 10. A portfolio returned 12.0%, the risk-free rate was 3.0%, and portfolio volatility was 8.0%. What was the
Sharpe ratio?
A. 1.50
B. 1.12
C. 9.00
D. 0.89
Correct Answer: B. 1.12
Explanation: The Sharpe ratio is excess return over the risk-free rate divided by return volatility. Using the figures given, (12.0% -
3.0%) / 8.0% = 1.12. It is a unitless risk-adjusted performance measure, so the volatility belongs in the denominator.
Question 11. A share trades at ■30.00 and pays annual cash dividends of ■0.50 per share. What is the dividend
yield based on the current price?
A. 60.00%
B. 1.67%
C. 98.33%
D. 0.50%
Correct Answer: B. 1.67%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. ■0.50 / ■30.00 ×
100 = 1.67%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Question 12. A leveraged account has securities worth ■80,000.00 and a debit or financing balance of ■36,000.00.
What is the account equity as a percentage of market value?
A. 45.00%
B. 122.22%
C. 55.00%
D. 181.82%
Correct Answer: C. 55.00%
Explanation: Account equity is market value minus the financing balance. Equity is ■44,000.00, and ■44,000.00 / ■80,000.00 =
55.00%. The financing percentage is the complement of the equity percentage and should not be mistaken for account equity.
Question 13. A leveraged account has securities worth ■150,000.00 and a debit or financing balance of
■37,500.00. What is the account equity as a percentage of market value?
A. 133.33%
B. 300.00%
C. 25.00%
D. 75.00%
Correct Answer: D. 75.00%
Explanation: Account equity is market value minus the financing balance. Equity is ■112,500.00, and ■112,500.00 / ■150,000.00
= 75.00%. The financing percentage is the complement of the equity percentage and should not be mistaken for account equity.
Page 3
, Question 14. A company reports net income of ■20,000,000.00, preferred dividends of ■2,000,000.00, and 15
million weighted-average common shares. What is basic EPS using these figures?
A. ■1.33
B. ■0.75
C. ■1.20
D. ■1.47
Correct Answer: C. ■1.20
Explanation: Basic EPS allocates earnings available to common shareholders across the weighted-average common shares
outstanding. Subtracting preferred dividends leaves ■18,000,000.00, and dividing by 15 million shares gives ■1.20. Using total net
income without the preferred-dividend adjustment would overstate earnings attributable to common shares.
Question 15. An investor owns a share purchased at ■80.00 and writes one call with strike ■90.00, receiving a
premium of ■5.00 per share. What is the maximum gain per share at expiration, ignoring dividends and costs?
A. ■5.00
B. ■10.00
C. ■15.00
D. ■-5.00
Correct Answer: C. ■15.00
Explanation: A covered call's upside is capped because the written call can require sale of the share at the strike price. Maximum
gain per share is strike minus stock cost plus premium: 90 - 80 + 5 = ■15.00. The premium adds income, but it does not remove the
downside risk of owning the stock.
Question 16. An investment earns a nominal return of 4.0% while inflation is 2.5%. Using the exact Fisher
relationship, what is the real return?
A. 6.50%
B. 62.50%
C. 1.50%
D. 1.46%
Correct Answer: D. 1.46%
Explanation: The exact real return is (1 + nominal return) / (1 + inflation) - 1. Using the stated values gives 1.46%. Simply
subtracting inflation from nominal return is a useful approximation at low rates, but it is not the exact calculation requested.
Question 17. A share trades at ■25.00 and pays annual cash dividends of ■4.00 per share. What is the dividend
yield based on the current price?
A. 16.00%
B. 4.00%
C. 6.25%
D. 84.00%
Correct Answer: A. 16.00%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. ■4.00 / ■25.00 ×
100 = 16.00%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Page 4
