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100+ Free NISM Series IX (Merchant Banking) Practice Questions

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Key Facts: NISM Series IX (Merchant Banking) Exam

100 questions

NISM Series IX exam consists of 100 multiple-choice questions of 1 mark each

NISM Series IX Structure

120 minutes

Candidates are given a total of 2 hours to complete the online examination

NISM Series IX Structure

60% pass

The passing score is 60 out of 100 marks

NISM Series IX FAQ

25% penalty

Each wrong answer carries a negative marking of 0.25 marks

NISM Series IX Structure

Rs. 1,500

The standard examination fee is Rs. 1,500 plus applicable GST

NISM Series IX FAQ

3 years

The NISM Series IX certification is valid for 3 years from the date of the exam

NISM Series IX FAQ

8 years

Merchant bankers must preserve their books of accounts for eight financial years

SEBI Regulations

90% target

Voluntary delisting requires the promoter to reach at least 90% shareholding

SEBI Delisting Regulations

25% trigger

The threshold for triggering a mandatory open offer under SEBI SAST is 25%

SEBI SAST Regulations

NISM-Series-IX (Merchant Banking) is a SEBI-mandated certification for merchant banking professionals managing public issues, takeovers, buybacks, and delisting. The exam consists of 100 multiple-choice questions to be completed in 2 hours, with a 60% passing score and 25% negative marking. The fee is Rs. 1,500 and the certificate is valid for 3 years. This 100-question practice bank covers all 7 chapters of the syllabus with complete explanations.

Sample NISM Series IX (Merchant Banking) Practice Questions

Try these sample questions to test your NISM Series IX (Merchant Banking) 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 describes the primary role of the capital market in an economy?
A.Providing short-term working capital to small businesses
B.Channeling long-term savings into productive investments
C.Regulating the daily exchange rates of foreign currencies
D.Printing and circulating currency notes on behalf of the central bank
Explanation: The capital market acts as a bridge by channeling long-term financial resources from surplus units (savers) to deficit units (investors/corporates) for productive economic activities. Money markets handle short-term funds, whereas the central bank handles currency issuance.
2What is the key structural difference between the primary market and the secondary market?
A.Primary market transactions involve the issuer directly, while secondary market transactions are between investors.
B.Only institutional investors can participate in the primary market, whereas retail investors only use the secondary market.
C.The secondary market is regulated by the Ministry of Finance, whereas the primary market is regulated by SEBI.
D.Primary market securities are short-term, whereas secondary market securities are long-term.
Explanation: In the primary market, issuers raise new capital directly from investors through public or private offerings. In the secondary market, existing securities are traded among investors on stock exchanges, and the issuer is not directly involved.
3Which of the following is a key feature of cumulative preference shares that distinguishes them from equity shares?
A.They carry mandatory voting rights on all corporate resolutions.
B.Unpaid dividends accumulate and must be paid before any dividend is paid to equity shareholders.
C.They represent a permanent, non-redeemable equity stake in the company.
D.The dividend rate fluctuates dynamically based on annual net profits.
Explanation: Cumulative preference shares require that any unpaid dividends accumulate over years and must be cleared in full before equity shareholders receive any dividends. Equity dividends do not accumulate and voting rights are restricted for preference shares.
4Which of the following instruments is classified as a money market instrument rather than a capital market instrument?
A.Equity Shares
B.Non-Convertible Debentures (NCDs)
C.Commercial Paper (CP)
D.Public Sector Undertaking (PSU) Bonds
Explanation: Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note with a maturity period of up to one year. Shares, debentures, and bonds are long-term capital market instruments.
5How does a Private Equity (PE) investor typically differ from a Venture Capital (VC) investor in the capital market?
A.PE investors only invest in listed public companies through open market purchases.
B.VC investors invest in mature companies with stable cash flows, while PE investors target startups.
C.PE investors usually acquire significant stakes in mature, late-stage companies, while VC investors focus on early-stage, high-growth startups.
D.VC investments are funded entirely by debt, whereas PE investments are funded entirely by equity.
Explanation: Venture Capital focuses on early-stage, seed, and startup companies that have high growth potential but lack a track record. Private Equity generally targets established, mature companies, often taking majority control or significant minority stakes to restructure them.
6Under the SEBI Act, 1992, which of the following is considered a regulatory function of SEBI rather than a developmental one?
A.Conducting training programs for market intermediaries
B.Promoting investor education and awareness
C.Registering and regulating the working of venture capital funds
D.Encouraging self-regulatory organizations (SROs)
Explanation: Registering and regulating market participants (like venture capital funds, mutual funds, and brokers) is a core regulatory function of SEBI to maintain market order. Promoting education, training, and SROs are classified as developmental functions.
7Which of the following stock exchange segments in India is specifically designed to facilitate the listing of small and medium enterprises (SMEs) with relaxed post-listing compliance requirements?
A.Main Board
B.SME Exchange / SME Platform
C.Institutional Trading Platform (ITP)
D.Debt Segment
Explanation: SEBI introduced the SME Platform (like BSE SME or NSE Emerge) to allow smaller companies to raise public capital with relaxed eligibility and reporting guidelines. The Main Board is for larger corporates, while ITP is for tech startups without public issues.
8According to the SEBI (Merchant Bankers) Regulations, 1992, which of the following activities requires mandatory registration as a Category I Merchant Banker?
A.Providing simple loan syndication advisory
B.Acting as the lead manager to a public issue
C.Conducting basic financial literacy workshops
D.Acting solely as a share transfer agent
Explanation: Only Category I Merchant Bankers are authorized by SEBI to act as lead managers, co-managers, or advisors to public issues, rights issues, and open offers. Acting as a share transfer agent requires a separate license.
9What is the primary operational distinction between a Merchant Bank and a Commercial Bank in India?
A.Merchant banks can accept public deposits, while commercial banks cannot.
B.Merchant banks focus on fee-based advisory and capital raising services, whereas commercial banks focus on asset-liability management and credit lending.
C.Commercial banks only service retail clients, while merchant banks only service government bodies.
D.Merchant banks are regulated by the Reserve Bank of India (RBI) only, whereas commercial banks are regulated by SEBI only.
Explanation: Merchant banks operate as fee-based financial intermediaries specializing in capital market issues, M&A, and corporate advisory. Commercial banks are deposit-taking institutions that primarily engage in lending and retail banking services.
10Which of the following institutions is historically credited with setting up the first merchant banking division in India in 1969?
A.State Bank of India (SBI)
B.Industrial Credit and Investment Corporation of India (ICICI)
C.National and Grindlays Bank
D.Citibank
Explanation: National and Grindlays Bank (a foreign bank operating in India) established the country's first dedicated merchant banking division in 1969. SBI followed by establishing its division in 1972.

About the NISM Series IX (Merchant Banking) Exam

NISM-Series-IX: Merchant Banking Certification is a SEBI-mandated exam administered by the National Institute of Securities Markets. It is the requisite standard for employees of registered merchant bankers who perform regulated functions such as managing public/rights issues, book building, open offers, buybacks, delisting, and preparing due diligence certificates. The syllabus covers the structure of capital markets; evolution and regulatory framework of merchant banking; SEBI registration, code of conduct, and obligations; issue management terms and processes including pricing, allotment, and underwriting; due diligence certificates and special issue types (QIP, Preferential, Rights, IDR); and other activities like Takeovers (SAST), Buybacks, Delisting, and Debt Listing. The exam consists of 100 multiple-choice questions to be completed in 2 hours, with a passing score of 60% and 25% negative marking.

Assessment

100 multiple-choice questions of 1 mark each, totalling 100 marks, drawn from seven chapters covering capital markets, merchant banking regulations, registration requirements, issue management terms, process, due diligence, and takeovers/buybacks/delisting.

Time Limit

2 hours (120 minutes).

Passing Score

60% (60 out of 100 marks). Negative marking of 25% of the marks assigned to a question applies for each wrong answer.

Exam Fee

Rs. 1,500 (plus payment gateway charges and applicable GST). (National Institute of Securities Markets (NISM), established by SEBI.)

NISM Series IX (Merchant Banking) Exam Content Outline

7%

Introduction to the Capital Market

Capital market structure, role in the economy, money market, equity, debt, and derivative instruments, and key market participants and regulators.

15%

Introduction to Merchant Banking

Concept, evolution, and regulatory history of merchant banking in India, comparing it with commercial and investment banking.

15%

Registration, Code of Conduct & General Obligations of Merchant Bankers in India

SEBI Category I registration, eligibility, renewals, code of conduct, books of accounts preservation for 8 years, and SCORES portal.

5%

Issue Management – Important Terms

Core concepts of draft red herring prospectus, book building, green shoe option (up to 15%), price bands, and fast track issues.

18%

Issue Management – Process and Underwriting

Sponsor role, pricing, underwriting agreements, minimum promoter contribution (20%), lock-in rules (18 months/6 months), allotment, and refund processes.

15%

Issue Management – General Obligations of Merchant Bankers and Due Diligence

Due diligence certificates, rights issues, preferential allotments, qualified institutional placements (QIP), and Indian Depository Receipts (IDR).

25%

Other Merchant Banking Activities

SEBI SAST Regulations (25% open offer trigger, 26% offer size, 5% creeping acquisition), Buybacks (10% board / 25% shareholder limits), Delisting (90% threshold), and listing of non-convertible debt.

How to Pass the NISM Series IX (Merchant Banking) Exam

What You Need to Know

  • Passing score: 60% (60 out of 100 marks). Negative marking of 25% of the marks assigned to a question applies for each wrong answer.
  • Assessment: 100 multiple-choice questions of 1 mark each, totalling 100 marks, drawn from seven chapters covering capital markets, merchant banking regulations, registration requirements, issue management terms, process, due diligence, and takeovers/buybacks/delisting.
  • Time limit: 2 hours (120 minutes).
  • Exam fee: Rs. 1,500 (plus payment gateway charges and applicable 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

NISM Series IX (Merchant Banking) Study Tips from Top Performers

1Focus heavily on Chapter 7 (Other Merchant Banking Activities) which carries 25% weightage and Chapter 5 (Process and Underwriting) which carries 18%. Combined, they represent 43% of the marks.
2Understand the key SEBI regulations thoroughly, including SAST triggers (25% initial trigger, 26% open offer size, 5% creeping acquisition) and Buyback thresholds (10% board vs 25% shareholder approval).
3Memorise promoter contribution lock-in guidelines post-2021 amendments: 18 months for minimum contribution (20%) and 6 months for excess holdings.
4Learn the book-building allocation quotas: mainboard IPOs require different QIB and Retail limits based on Regulation 6(1) vs Regulation 6(2) routes.
5Pay attention to timelines: bought-back shares must be destroyed within 7 days, and books of accounts must be maintained for 8 financial years.
6Since there is 25% negative marking, practice educated elimination of options and avoid wild guesses on questions you are completely unsure about.

Frequently Asked Questions

How many questions are on the NISM Series IX exam and what is the duration?

The exam consists of 100 multiple-choice questions to be completed in 2 hours (120 minutes).

What is the passing score and negative marking for NISM Series IX?

The passing score is 60% (60 marks out of 100). Each incorrect answer carries a negative marking of 25% (i.e., a deduction of 0.25 marks).

Who needs to take the NISM Series IX (Merchant Banking) certification?

It is mandated by SEBI for employees of registered merchant bankers who engage in regulated activities such as public issues, rights issues, open offers, buybacks, delisting, and due diligence.

What is the fee and validity for the NISM Series IX certificate?

The exam fee is Rs. 1,500 plus applicable GST. The certification is valid for 3 years from the date of passing the exam.

Are these the official exam questions from NISM?

No. These are original practice questions created by OpenExamPrep, aligned with the latest NISM Series IX syllabus, to help candidates practice key concepts.