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Key Facts: NCFM Capital Market (Dealers) Exam

60 questions

The NCFM Capital Market (Dealers) exam contains 60 multiple-choice questions

NSE Academy syllabus

105 minutes

Candidates are given 105 minutes to complete the online exam

NSE Academy assessment structure

50% pass

The passing score required to obtain the NCFM certificate is 50%

NSE Academy curriculum

25% negative

Each wrong answer carries a penalty of 25% (0.25 marks deducted)

NSE Academy rules

Rs. 2,596

The registration fee for the NCFM Capital Market (Dealers) exam is Rupees two thousand five hundred ninety-six (inclusive of GST)

NSE Academy fee structure

5 years

The NCFM Capital Market (Dealers) certification is valid for five years

NSE Academy validity rules

6 chapters

The curriculum is divided into six distinct, weighted chapters

NSE Academy syllabus

100

Free original practice questions are provided here

OpenExamPrep

The NCFM Capital Market (Dealers) Module is an intermediate certification by NSE Academy for finance professionals, equity dealers, and operators. The exam consists of 60 multiple-choice questions to be completed in 105 minutes. Passing requires a score of 50%, with a negative marking of 25% (0.25 marks deducted per incorrect answer). The registration fee is Rs. 2,596 and the certification is valid for 5 years. This 100-question practice bank provides comprehensive coverage of all syllabus chapters including trading membership, the NEAT system, margins, T+1 settlement, and fundamental valuation with detailed explanations.

Sample NCFM Capital Market (Dealers) Practice Questions

Try these sample questions to test your NCFM Capital Market (Dealers) exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which of the following functions of the Indian capital market most directly supports the capital formation process in the economy?

A.Providing a secondary market for speculative price discovery and daily liquidity

B.Channels household savings into productive corporate investments through primary market issues

C.Offering margin trading and leverage facilities to short-term dealers

D.Redressing minor investor complaints and arbitration cases between brokers

Explanation: The primary economic function of the capital market is to mobilize savings from household and other surplus sectors and channel them to productive corporate and government investments via primary issues. This process of allocation directly drives the capital formation of the country.

2What is the primary operational difference between the primary market and the secondary market in India?

A.The primary market deals only in debt instruments while the secondary market deals only in equity shares

B.In the primary market, transactions occur between issuers and investors, whereas in the secondary market, transactions are between investors themselves

C.Primary market transactions are regulated by the Reserve Bank of India, while secondary market transactions are regulated by SEBI

D.The primary market utilizes the NEAT trading system for matching, while the secondary market does not use screen-based trading

Explanation: In the primary market, security transactions occur directly between the issuing company and the investors (new capital is raised). In the secondary market, existing securities are traded among investors themselves on stock exchanges, with no direct cash flow to the original issuer.

3Which of the following is a characteristic feature of corporate debt instruments compared to equity shares in the Indian securities market?

A.Debt instruments represent ownership capital and carry voting rights at annual general meetings

B.Debt instruments provide variable returns linked to the quarterly profits of the issuing firm

C.Debt instruments have a fixed maturity date and represent a creditor relationship with the company

D.Debt instruments are cleared and settled without any margins or settlement guarantees

Explanation: Corporate debt instruments (like debentures and bonds) represent a creditor relationship with the company. They have a fixed maturity, pay a specified interest (coupon) rate periodically, and do not carry voting rights, unlike equity shares which represent ownership capital.

4If a listed company has 10,000,000 outstanding shares, the current market price per share is Rs. 150, and the promoter holdings comprise 40% of the total equity, what is the Free-Float Market Capitalisation of the company?

A.Rs. 1,500,000,000

B.Rs. 900,000,000

C.Rs. 600,000,000

D.Rs. 150,000,000

Explanation: First, calculate the Full Market Capitalisation: 10,000,000 shares * Rs. 150 = Rs. 1,500,000,000. Free-float excludes promoter holdings (40%), meaning the free-float percentage is 60%. Free-Float Market Capitalisation = Rs. 1,500,000,000 * 60% = Rs. 900,000,000.

5In the Indian stock market context, which of the following holdings is generally excluded from the calculation of a company's free-float market capitalisation?

A.Shares held by retail individual investors holding less than Rs. 2 lakh nominal value

B.Shares held by mutual funds in their diversified equity schemes

C.Shares held by promoters, controlling interest groups, and government holdings as strategic investments

D.Shares held by Foreign Portfolio Investors (FPIs) in the secondary market

Explanation: Free-float market capitalization represents the active market-tradable shares. It excludes strategic holdings that are not expected to be sold in the normal course, such as promoter holdings, government shares, strategic corporate stakes, and locked-in employee stock options.

6What is the primary function of NSDL and CDSL in the Indian capital market?

A.To execute stock trades and discover the daily closing prices of securities

B.To maintain records of securities in electronic (dematerialised) form and facilitate transfer of ownership

C.To act as clearing banks for the pay-in and pay-out of funds between brokers

D.To inspect the books of accounts of trading members and enforce financial fines

Explanation: National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) are the two licensed depositories in India. Their primary role is to hold securities (like shares, debentures, mutual funds) in electronic/dematerialised form and facilitate safe ownership transfers.

7Which of the following instruments is classified as a money market instrument rather than a capital market instrument in India?

A.Treasury Bills (T-Bills)

B.Equity Shares

C.Zero Coupon Bonds

D.Gilt-edged Securities

Explanation: Treasury Bills (T-Bills) are short-term debt instruments issued by the Government of India with maturities of 91 days, 182 days, or 364 days, making them money market instruments. Equity shares, bonds, and gilt-edged securities are long-term instruments of the capital market.

8Which of the following best describes the methodology used to calculate the Nifty 50 index on the National Stock Exchange?

A.Price-Weighted Index Methodology

B.Equal-Weighted Index Methodology

C.Full Market Capitalisation Methodology

D.Free-Float Market Capitalisation Methodology

Explanation: The Nifty 50 index is calculated using the Free-Float Market Capitalisation methodology. In this method, the level of the index reflects the total market value of all the stocks in the index relative to a base period, but only including the shares available for public trading.

9An index has only three constituent stocks (A, B, and C). Stock A has a free-float market cap of Rs. 500 crores, Stock B has Rs. 300 crores, and Stock C has Rs. 200 crores. What is the weight of Stock A in this free-float index?

A.50.00%

B.30.00%

C.20.00%

D.40.00%

Explanation: To find the weight of Stock A, first compute the total free-float market cap of the index: Rs. 500 + Rs. 300 + Rs. 200 = Rs. 1,000 crores. The weight of Stock A = (Free-float market cap of A / Total index free-float market cap) * 100 = (500 / 1,000) * 100 = 50.00%.

10How does a 1-for-1 bonus share issue by a listed company typically affect its share price and market capitalisation on the ex-date, assuming no other market changes?

A.The share price doubles and the market capitalisation doubles

B.The share price is halved and the market capitalisation remains unchanged

C.The share price remains unchanged and the market capitalisation doubles

D.The share price is halved and the market capitalisation is halved

Explanation: A 1-for-1 bonus issue doubles the number of outstanding shares. Since no new capital or asset is added to the company, the price per share is adjusted downwards by half (ex-bonus price) to ensure the total market capitalization (shares * price) remains exactly the same.

About the NCFM Capital Market (Dealers) Exam

The NCFM Capital Market (Dealers) Module is an intermediate-level certification offered by NSE Academy. It is designed to provide candidates with a practical and comprehensive understanding of the Indian securities market, stockbroking operations, screen-based electronic trading on the NEAT system, clearing and settlement procedures, risk management, and the legal framework governing capital markets. The syllabus covers the roles of market intermediaries and depositories, trading membership requirements, order routing and matching rules, pre-open sessions, transaction costs, clearing corporation functions, margin frameworks (VaR, ELM, MTM, peak margin), delivery defaults, SEBI regulations, insider trading rules, and fundamental financial valuation concepts (time value of money, P/E ratio, dividend yield). The certification is highly valued for anyone seeking to work as equity dealers, sub-brokers, compliance officers, or operations staff in the Indian financial sector. The exam has 60 questions to be solved in 105 minutes, requires a 50% score to pass, imposes 25% negative marking, and the certificate is valid for 5 years.

Assessment

The exam consists of 60 multiple-choice questions (MCQs) to be completed in 105 minutes, covering the Indian securities market, trading membership, NEAT system trading, clearing and settlement, legal regulations, and valuation concepts.

Time Limit

105 minutes

Passing Score

50% (equivalent to 50 out of 100 marks). There is a negative marking of 25% (0.25 marks deducted per wrong answer).

Exam Fee

Rs. 2,596 (inclusive of GST) (NSE Academy / National Stock Exchange of India)

NCFM Capital Market (Dealers) Exam Content Outline

10%

An Overview of the Indian Securities Market

Understanding market structure, primary vs. secondary markets, money market products, role of depositories (NSDL/CDSL), and free-float market capitalization indices.

20%

Trading Membership

NSE membership criteria, corporate member net worth, Authorised Persons, suspension and surrender procedures, broker-client relations (KYC/UCC), and investor grievance arbitration.

30%

Trading

Operations of the screen-based NEAT system, market segments, order types and time/price conditions, pre-open session matching, index circuit breakers, transaction costs, and impact cost calculations.

25%

Clearing and Settlement

Clearing members vs. clearing corporation (NCL), T+1 rolling settlement schedule, pay-in/pay-out of funds and securities, margin requirements (VaR, ELM, MTM, peak margin), short deliveries, and auction mechanism.

Legal Framework

Securities Contracts (Regulation) Act, SEBI Act powers, SEBI regulations for insider trading (UPSI) and fraudulent trade practices (PFUTP), and Prevention of Money Laundering Act obligations.

Fundamental Valuation Concepts

Basic financial mathematics, time value of money calculations (PV/FV), dividend yield, equity valuation ratios (P/E, EPS, book value), and balance sheet analysis.

How to Pass the NCFM Capital Market (Dealers) Exam

What You Need to Know

Passing score: 50% (equivalent to 50 out of 100 marks). There is a negative marking of 25% (0.25 marks deducted per wrong answer).
Assessment: The exam consists of 60 multiple-choice questions (MCQs) to be completed in 105 minutes, covering the Indian securities market, trading membership, NEAT system trading, clearing and settlement, legal regulations, and valuation concepts.
Time limit: 105 minutes
Exam fee: Rs. 2,596 (inclusive of GST)

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

NCFM Capital Market (Dealers) Study Tips from Top Performers

1Prioritize high-weight chapters: Trading (30%), Clearing and Settlement (25%), and Trading Membership (20%) together account for 75% of the total marks.

2Understand the mechanics of order matching on the NEAT system, including pre-open price discovery and price-time priority rules.

3Master margin calculations, specifically Mark-to-Market (MTM) margins, VaR margins, and the peak margin reporting framework.

4Learn pay-in and pay-out deadlines for the T+1 rolling settlement cycle and the auction settlement price formula for short deliveries.

5Practice basic financial formulas such as present value, future value, dividend yield, and price-to-earnings (P/E) ratios, as there are direct math questions.

6Be careful of the negative marking (0.25 marks per incorrect answer). Skip a question if you are not sure, or eliminate wrong options first to increase your odds.

Frequently Asked Questions

How many questions are on the NCFM Capital Market (Dealers) Module exam and how long is it?

The exam consists of 60 multiple-choice questions to be completed in 105 minutes.

What is the passing score for the NCFM Capital Market (Dealers) Module?

The passing score is 50%. There is a negative marking of 25% of the marks assigned to a question (0.25 marks deducted) for each incorrect answer.

What is the fee and validity of the NCFM Capital Market (Dealers) certification?

The exam fee is Rs. 2,596 (inclusive of GST). The certificate is valid for 5 years from the date of passing the exam.

Does the NCFM Capital Market (Dealers) exam have negative marking?

Yes, there is negative marking of 25% of the marks assigned to a question. For every incorrect answer, 0.25 marks will be deducted. Unanswered questions do not carry negative marks.

Who should take the NCFM Capital Market (Dealers) Module certification?

This module is ideal for equity dealers, stockbrokers, sub-brokers, compliance officers, back-office operations staff, finance students, and professionals in the broking industry.

Are these official NCFM practice questions?

No, these are original practice questions created by OpenExamPrep to help you prepare. NSE Academy provides its own study material and candidate workbooks separately.