Investment Advisor NISM Series-X-A: Investment Adviser (Level 1) 5

Question 1

An investment adviser who provides advice on securities without SEBI registration is liable to:

Accepted Answer

Monetary penalty and imprisonment under SEBI Act

Answer

Providing unregistered investment advisory services violates the SEBI Act, 1992 and is subject to both monetary penalties and criminal prosecution.

Question 2

Duration of a bond is best described as:

Accepted Answer

The weighted average time to receive the bond's cash flows

Answer

Duration (Macaulay Duration) is the weighted average time to receive cash flows, used to measure interest rate sensitivity.

Question 3

Which investment product offers guaranteed returns and is regulated by the Insurance Regulatory and Development Authority of India (IRDAI)?

Accepted Answer

Guaranteed Return Insurance Plans

Answer

Guaranteed return insurance plans (like traditional endowment or whole life plans) fall under IRDAI regulation and promise contractually guaranteed returns.

Question 4

A client aged 60 with no liabilities and a pension income wants to grow wealth for the next 15 years. The most appropriate equity allocation would be:

Accepted Answer

50–60% given the long horizon and stable income

Answer

A 15-year horizon with stable pension income supports moderate-to-aggressive equity exposure; a balanced 50–60% allocation aligns risk capacity with growth objectives.

Question 5

The practice of an investment adviser executing large personal trades in a security just before recommending it to clients is called:

Accepted Answer

Front running

Answer

Front running involves trading on advance knowledge of client or advisory orders to profit personally before the market reacts.

Investment Advisor Practice Test

Investment Advisor Practice Test

Investment Advisor NISM Series-X-A: Investment Adviser (Level 1) 5