NISM Series II-B Registrars and Transfer Agents (Mutual Fund)

Which of the following describes the primary difference between the primary market and the secondary market?

• ASecurities are traded only among investors in the primary market, while issuers sell dire…
• BThe primary market deals with the first-time issuance of securities by companies, whereas…
• COnly equity shares are traded in the primary market, while debt instruments are traded in…
• DThe secondary market has no regulatory oversight, whereas the primary market is regulated…

What is the primary role of a Clearing Corporation in the securities market settlement process?

• ATo act as a central counterparty, guaranteeing the settlement of all executed trades.
• BTo on-board clients and perform their KYC verification.
• CTo provide trading terminals and maintain order matching engines.
• DTo hold the physical share certificates of listed companies in safe custody.

The process of converting physical security certificates into electronic balances in an investor's depository account is known as:

• ARematerialization
• BDematerialization
• CSecuritization
• DTransmutation

Stock exchanges perform which of the following vital functions for retail and institutional investors?

• AThey guarantee that every investor will earn a profit on their equity investments.
• BThey provide a continuous, liquid, and transparent platform for price discovery and trade…
• CThey manage the individual mutual fund portfolios of retail investors.
• DThey act as the main bankers for distributing retail loan products.

Which of the following is a key right enjoyed by equity shareholders of a listed company in India?

• AThe right to receive fixed, predetermined interest payments monthly.
• BThe right to vote on key corporate resolutions and participate in the growth of the compa…
• CThe right to demand refund of capital from the company at any time before liquidation.
• DThe right of priority in payment over creditors and depositors during winding up.

What distinguishes cumulative preference shares from ordinary equity shares?

• ACumulative preference shares carry higher voting power than equity shares.
• BUnpaid dividends on cumulative preference shares accumulate and must be paid before any d…
• CPreference shares are traded continuously on stock exchanges while equity shares are not.
• DPreference shareholders have the right to claim the entire residual surplus of the compan…

A listed company announces a stock split of 1:5 (face value Rs. 10 split to Rs. 2). What is the immediate impact on a shareholder holding 100 shares?

• AThe shareholder will now hold 500 shares, and the total value of their holding will immed…
• BThe shareholder will now hold 500 shares, but the market price per share will adjust down…
• CThe shareholder's 100 shares will remain the same, but they will receive a cash payout of…
• DThe shareholder will hold 20 shares, and the company will refund the excess capital to th…

Which of the following is a primary objective for a company undertaking a share buyback?

• ATo increase the overall debt-to-equity ratio by raising fresh capital.
• BTo return surplus cash to shareholders, improve earnings per share (EPS), and support the…
• CTo dilute the ownership of existing promoters to prevent hostile takeovers.
• DTo convert equity shares into cumulative preference shares.

How does an increase in prevailing market interest rates affect the price of existing fixed-coupon bonds in the secondary market?

• AThe bond prices will increase because higher market rates make existing fixed coupons mor…
• BThe bond prices will decrease because their fixed coupon rate becomes less competitive co…
• CThe bond prices will remain unaffected because the coupon rate is fixed at the time of is…
• DThe bond prices will fluctuate randomly depending on the stock index movement.

Which money market instrument is an unsecured promissory note issued by highly rated corporates to meet short-term working capital needs?

• ATreasury Bills (T-Bills)
• BCommercial Paper (CP)
• CCertificate of Deposit (CD)
• DCollateralized Borrowing and Lending Obligation (CBLO)

What is the primary function of credit rating agencies in the debt market?

• ATo guarantee the repayment of interest and principal on all rated bonds.
• BTo assess the creditworthiness of issuers and assign ratings representing their default r…
• CTo underwrite the debt issuances of public sector banks.
• DTo fix the interest rates for corporate loans in India.

Which type of risk is most prominent for a long-term debt security with a fixed coupon when market interest rates are highly volatile?

• ACredit Risk
• BInterest Rate Risk
• CLiquidation Risk
• DExchange Rate Risk

What is a key feature of a 'Warrant' issued by a corporate entity?

• AIt represents immediate ownership and carries dividend rights from day one.
• BIt gives the holder the right, but not the obligation, to purchase equity shares at a pre…
• CIt is a debt instrument that pays a quarterly coupon linked to inflation.
• DIt is issued only to institutional investors and cannot be traded in the secondary market.

How do Exchange Traded Funds (ETFs) differ from traditional open-ended Mutual Funds?

• AETFs are priced once at the end of the day, whereas mutual funds are priced continuously.
• BETFs are bought and sold on a stock exchange throughout the trading day at market prices,…
• CMutual funds do not charge any management fees, whereas ETFs charge high administrative e…
• DETFs are open only to foreign portfolio investors, while mutual funds are for domestic re…

Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are structured to provide investors with which primary benefit?

• AGuaranteed double-digit returns backed by the central government.
• BAn opportunity to invest in fractional ownership of income-generating real estate or infr…
• CComplete exemption from all forms of capital gains tax in India.
• DFixed monthly salaries as part-time property managers.

What is the purpose of Indian Depository Receipts (IDRs)?

• ATo allow Indian companies to raise debt in the US market.
• BTo enable foreign companies to raise capital from Indian investors by listing their depos…
• CTo help retail investors deposit their physical gold certificates with banks.
• DTo facilitate bilateral trade settlement between India and neighboring nations.

What is the primary regulatory objective of the Securities and Exchange Board of India (SEBI)?

• ATo manage the fiscal deficit and print currency notes for the country.
• BTo protect the interests of investors in securities, promote the development of, and regu…
• CTo provide corporate loans and credit guarantees to listed companies.
• DTo act as a court of law for criminal trials of white-collar crimes.

Under the SEBI (Prohibition of Insider Trading) Regulations, who is considered an 'insider'?

• AAny retail investor who trades shares daily on the stock exchange.
• BAny person who is a connected person, or in possession of or having access to Unpublished…
• COnly the promoter or founder of the listed company.
• DA stock broker who executes trade orders on behalf of clients.

Which of the following actions constitutes a violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations?

• ASelling shares at a loss during a market downturn.
• BCreating a false or misleading appearance of active trading in a security (circular tradi…
• CSubscribing to mutual fund units via systematic investment plans (SIP).
• DVoluntarily disclosing financial results before the regulatory deadline.

What is the purpose of the Investor Protection Fund (IPF) maintained by stock exchanges?

• ATo compensate investors who suffer losses due to normal market price fluctuations.
• BTo meet the tax liabilities of retail investors on their short-term gains.
• CTo compensate investors in case of default by a registered trading member (broker) of the…
• DTo fund the promotional and marketing campaigns of listed companies.

What is the primary role of a Registrar and Transfer Agent (RTA) in the context of Mutual Funds?

• ATo select the stocks and bonds that the mutual fund scheme will buy.
• BTo maintain investor records, process transactions (subscription, redemption), and handle…
• CTo hold the security certificates in physical safe custody on behalf of the trustees.
• DTo audit the annual financial statements of the Asset Management Company.

Which of the following functions differentiates a 'Registrar to an Issue' from a 'Share Transfer Agent' in corporate capital market transactions?

• AThe Registrar to an Issue manages the allocation and dispatch of securities during an IPO…
• BOnly the Share Transfer Agent is regulated by SEBI, whereas the Registrar to an Issue is…
• CThe Registrar to an Issue is employed by stock exchanges, while the Share Transfer Agent…
• DThere is no difference; they are just different names for the same custodian entity.

During the dematerialization process of physical shares, what is the role of the Registrar and Transfer Agent (RTA)?

• AThe RTA custody team issues physical certificates to replace electronic holdings.
• BThe RTA validates the authenticity of the physical certificates sent by the investor thro…
• CThe RTA buys the physical shares from the investor at market price.
• DThe RTA registers the investor's trading account with the stockbroker.

How do RTAs interface with depositories (NSDL and CDSL) for mutual fund transactions?

• AThey maintain a completely separate database and do not exchange any data with depositori…
• BThey reconcile and upload transactions daily to allow depository participants to reflect…
• CRTAs act as the parent company of both NSDL and CDSL.
• DDepositories handle all transactions, and RTAs only store physical backups in warehouses.

When a listed company declares a corporate action like a bonus issue, how does the RTA assist the company?

• AThe RTA decides the ratio of the bonus issue and determines the record date.
• BThe RTA identifies the eligible shareholders based on the record date, computes their bon…
• CThe RTA pays for the printing of new certificate booklets.
• DThe RTA lends funds to the company to pay the bonus shares.

What is the 'Register of Beneficial Owners' (Benpos) in depository operations?

• AA list of investors who are eligible to receive retail bank loans.
• BA record of shareholders holding shares in electronic (demat) form, maintained by the dep…
• CA list of company directors who own physical real estate.
• DA database of all active stockbrokers in India.

If an investor wishes to convert their electronic shares back into physical share certificates, what request form must they submit?

• ADemat Request Form (DRF)
• BRemat Request Form (RRF)
• CSecuritization Request Form (SRF)
• DAccount Opening Form (AOF)

For physical share transfers, what is the 'transfer deed' and why must the RTA verify it?

• AIt is a bank draft to transfer funds between brokers.
• BIt is a legal document (Form SH-4) signed by the transferor and transferee that registers…
• CIt is a mortgage deed for real estate backing.
• DIt is a document used to open a corporate demat account.

What is the primary customer-facing function of an Investor Service Centre (ISC) operated by a Mutual Fund RTA?

• ATo solicit clients and sell high-commission active funds.
• BTo accept transaction applications, address investor queries, update non-financial reques…
• CTo conduct background credit checks on retail loan applicants.
• DTo trade shares in the secondary market on behalf of the AMC.

When a mutual fund scheme pays a dividend (income distribution), what role does the RTA play in this operation?

• AThe RTA decides the dividend payout amount based on scheme cash reserves.
• BThe RTA identifies eligible unit holders on the record date, calculates the dividend paya…
• CThe RTA physically delivers cash envelopes to the investors' residences.
• DThe RTA guarantees that the dividend will be paid tax-free to all investors.

Under SEBI regulations, how frequently must a Consolidated Account Statement (CAS) be sent to a mutual fund investor who has transacted in that month?

• ABy the 15th of the following month.
• BDaily, after every market closing.
• COnly once at the end of the financial year.
• DNo statement is required if transactions are electronic.

Which of the following database records is maintained by a Mutual Fund RTA for each unique investor folio?

• AThe investor's political party affiliation.
• BThe investor's name, PAN, bank account details, nomination details, transaction history,…
• CThe list of all real estate properties owned by the investor.
• DThe login passwords for the investor's personal email account.

During a New Fund Offer (NFO) processing, what is the role of the Registrar and Transfer Agent (RTA) in allotment?

• AThe RTA decides which sector the NFO should invest its collected pool of funds in.
• BThe RTA aggregates all applications, matches payments with banking clearances, rejects in…
• CThe RTA acts as an underwriter, buying up any unsold units of the NFO.
• DThe RTA determines the initial NAV, setting it dynamically based on NFO demand.

Under SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, what is the classification of Category I RTAs?

• ARTAs permitted to carry on the activities of both Registrar to an Issue and Share Transfe…
• BRTAs permitted to carry on the activities of Share Transfer Agent only.
• CRTAs permitted to carry on the activities of Registrar to an Issue only.
• DRTAs that operate without any net worth or auditing requirements.

The SEBI Code of Conduct for Registrars and Transfer Agents mandates that they must:

• AProvide high-risk trading advice to their corporate clients to boost stock prices.
• BMaintain high standards of integrity, dignity, and professional conduct, and avoid confli…
• CCharge high, arbitrary processing fees to investors to maximize profit margins.
• DShare confidential investor details with unregistered third-party marketing firms.

As per SEBI guidelines, how often must a registered RTA undergo a mandatory systems audit of its IT systems and security database?

• AEvery calendar month.
• BOnce in every financial year (annually).
• COnly once in five years.
• DThere is no requirement for a systems audit for RTAs.

Under the SEBI Cyber Security and Cyber Resilience Framework for RTAs, what is 'Recovery Point Objective' (RPO)?

• AThe maximum age of files that must be recovered from backup storage for normal operations…
• BThe time taken to hire a new database administrator.
• CThe total profit recovered from a cyber-fraud event.
• DThe amount of insurance premium paid to cover cyber risks.

How frequently are RTAs required to test their Business Continuity Plan (BCP) and Disaster Recovery (DR) setups?

• AAt least once in every half-year (semi-annually).
• BOnly when a real system crash occurs.
• CDaily during normal market hours.
• DOnce every three years.

For how long must a registered RTA preserve records, registers, and other documents related to transactions as per SEBI regulations?

• AFor a minimum period of 3 years.
• BFor a minimum period of 8 years.
• CFor a minimum period of 1 year.
• DPermanently, without any exception.

What is the liability of a Registrar and Transfer Agent (RTA) in case of processing a fraudulent transfer of shares due to negligence?

• AThe RTA has no liability because the investor is responsible for their own certificate sa…
• BThe RTA can be held legally and financially liable to compensate the rightful owner for t…
• CThe stock exchange will absorb the entire loss, and no action is taken against the RTA.
• DThe RTA only has to pay a small nominal fine of Rs. 100.

SEBI reserves the right to inspect the books and records of a registered RTA. What is a primary purpose of such inspections?

• ATo assist the RTA in marketing their services to corporate clients.
• BTo ensure compliance with SEBI acts, rules, regulations, and to check if investor grievan…
• CTo calculate the corporate income tax of the RTA company.
• DTo check if the RTA is charging high interest rates on bank loans.

Every registered RTA must appoint a Compliance Officer. What is the role of this officer?

• ATo manage the sales team and maximize corporate profit.
• BTo be responsible for monitoring compliance with SEBI regulations and reporting any viola…
• CTo handle the physical security of the office premises.
• DTo execute stock trades on behalf of the company's directors.

In case of investor complaints received via the SEBI SCORES portal, what is the maximum time allowed for the RTA/listed company to submit an Action Taken Report (ATR)?

• AWithin 21 calendar days.
• BWithin 90 calendar days.
• CWithin 24 hours.
• DThere is no timeline; ATR can be submitted at convenience.

What is the minimum net worth requirement prescribed by SEBI for a Category I Registrar to an Issue and Share Transfer Agent?

• ARs. 50 lakhs
• BRs. 50 crores
• CRs. 5 lakhs
• DRs. 2 crores

To whom must an RTA submit periodic reports regarding compliance, system audits, and share holding patterns?

• AOnly to the local police department.
• BTo the capital market regulator (SEBI), stock exchanges, and depositories, as applicable.
• COnly to the corporate registrar under the Ministry of Corporate Affairs.
• DRTAs do not have any periodic reporting obligations.

Which of the following is a primary characteristic of a Mutual Fund?

• AIt offers individual customized stock advice to each investor.
• BIt pools money from multiple investors to invest in a diversified portfolio of securities…
• CIt guarantees a fixed interest rate on all types of equity investments.
• DIt provides interest-free loans to its investors.

How does diversification benefit a mutual fund investor?

• AIt completely eliminates all market risk and guarantees a profit.
• BIt spreads investment capital across various sectors and companies, thereby reducing the…
• CIt increases the transaction costs and taxes for the investor.
• DIt makes the portfolio easier to manage by the investor personally.