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100+ Free NISM X-A Investment Adviser Level 1 Practice Questions

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Key Facts: NISM X-A Investment Adviser Level 1 Exam

150 marks

Total marks across 90 one-mark MCQs and 9 case-based questions

NISM - Investment Adviser (Level 1)

60% to pass

Candidates need 90 of 150 marks to pass the examination

NISM - FAQ (Investment Adviser Level 1)

25% negative marking

A quarter of the marks for a question is deducted for each wrong answer

NISM - Investment Adviser (Level 1)

3 hours

Time allowed to complete the computer-based examination

NISM - Investment Adviser (Level 1)

Rs. 3000

Examination fee plus payment-gateway charges and applicable GST

NISM - FAQ (Investment Adviser Level 1)

3 years

Validity of the NISM-Series-X-A certificate from the exam date

NISM - Investment Adviser (Level 1)

9 units

Official syllabus spans nine units from financial planning to regulation

NISM - Investment Adviser (Level 1)

100

Free original practice questions in this bank

OpenExamPrep

The NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination is the SEBI-mandated level-1 benchmark for individuals offering investment advice under the SEBI (Investment Advisers) Regulations, 2013. The test runs for 3 hours and contains 90 one-mark multiple-choice questions plus 9 case-based questions (6 caselets of five 1-mark questions and 3 caselets of five 2-mark questions), totalling 135 questions and 150 marks. The passing score is 60% (90 of 150 marks), with negative marking of 25% of the marks for each wrong answer. The fee is Rs. 3000 and the certificate is valid for 3 years. This 100-question bank gives original practice weighted to the nine official units, including calculation items for returns, risk and asset allocation.

Sample NISM X-A Investment Adviser Level 1 Practice Questions

Try these sample questions to test your NISM X-A Investment Adviser Level 1 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 best describes the primary purpose of financial planning for a client?
A.To guarantee the highest possible investment return
B.To align a client's resources and investments with their life goals
C.To avoid paying any income tax
D.To time the entry and exit of the stock market
Explanation: Financial planning is a goal-based process that aligns a client's income, savings and investments with their specific life goals such as retirement, education or buying a home. It is about suitability and discipline, not guaranteeing returns or timing markets.
2In the standard six-step financial planning process, which step immediately follows 'establishing the client-adviser relationship and gathering client data'?
A.Implementing the financial plan
B.Analysing the data and identifying financial goals
C.Monitoring and reviewing the plan
D.Charging the advisory fee
Explanation: After establishing the relationship and gathering data, the adviser analyses the information and identifies the client's financial goals and gaps. Recommendations, implementation and periodic review follow later in the process.
3A client's net worth is best calculated as:
A.Total annual income minus total annual expenses
B.Total assets minus total liabilities
C.Total investments minus taxes paid
D.Monthly savings multiplied by twelve
Explanation: Net worth is a measure of wealth at a point in time, calculated as total assets minus total liabilities. Income minus expenses gives the surplus available for saving, which is a cash-flow measure, not net worth.
4During which stage of the financial life cycle is a person typically able to take the highest level of investment risk?
A.The early accumulation (young earner) stage
B.The pre-retirement stage
C.The retirement (distribution) stage
D.The estate-transfer stage
Explanation: Young earners in the early accumulation stage have a long time horizon and steady future income, so they can ride out market volatility and generally take higher risk. Risk capacity usually falls as a person approaches and enters retirement.
5An investor buys a stock for Rs. 200 and sells it one year later for Rs. 230 after receiving a dividend of Rs. 10. What is the holding-period return?
A.15%
B.20%
C.10%
D.23%
Explanation: Holding-period return = (capital gain + income) / cost = (30 + 10) / 200 = 40/200 = 20%. Both the Rs. 30 price gain and the Rs. 10 dividend are included in the total return.
6An investment grows from Rs. 1,00,000 to Rs. 1,33,100 over 3 years. What is its approximate compound annual growth rate (CAGR)?
A.11%
B.10%
C.33.1%
D.9%
Explanation: CAGR = (Ending/Beginning)^(1/n) - 1 = (1.331)^(1/3) - 1. Since 1.10 cubed equals 1.331, the CAGR is exactly 10% per year. CAGR smooths multi-year growth into a single annual rate.
7If an investment earns a nominal return of 9% in a year when inflation is 6%, the approximate real rate of return is closest to:
A.15%
B.3%
C.2.83%
D.1.5%
Explanation: Using the exact formula, real return = (1.09/1.06) - 1 = 0.0283 or about 2.83%. The simple approximation 9% - 6% = 3% is also acceptable, but the precise figure of 2.83% is the closest listed value.
8Which concept states that a rupee received today is worth more than a rupee received in the future?
A.Diversification
B.Time value of money
C.Dollar-cost averaging
D.Mean reversion
Explanation: The time value of money holds that money available now is worth more than the same amount later because it can be invested to earn a return. This underlies present-value and future-value calculations used in financial planning.
9A debt fund delivers a pre-tax return of 8%. If the investor is taxed at an effective rate of 30% on this return, the approximate post-tax return is:
A.8%
B.5.6%
C.2.4%
D.6.8%
Explanation: Post-tax return = pre-tax return x (1 - tax rate) = 8% x (1 - 0.30) = 8% x 0.70 = 5.6%. Comparing investments on a post-tax basis is essential when products are taxed differently.
10The annualised return that accounts for compounding and is used to compare investments held for different periods is best represented by:
A.Absolute return
B.Compound annual growth rate (CAGR)
C.Simple average of yearly returns
D.Cumulative return
Explanation: CAGR converts total growth into a single compounded annual rate, making it the standard measure to compare investments held over different time periods. Absolute and cumulative returns do not standardise for time, and a simple average ignores compounding.

About the NISM X-A Investment Adviser Level 1 Exam

The NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination is the level-1 certification for individuals who act as investment advisers, principal officers of non-individual investment advisers, or persons associated with investment advice under SEBI (Investment Advisers) Regulations, 2013. It creates a common minimum knowledge benchmark covering the financial-planning process, measuring investment returns, managing investment risk, investment vehicles, asset allocation and investment strategies, insurance planning, retirement planning, tax and estate planning, and the regulatory environment and ethical issues. Candidates must also pass NISM-Series-X-B (Level 2) to meet the full investment-adviser certification requirement. The examination is computer-based, uses multiple-choice and case-based questions, and applies 25% negative marking.

Assessment

90 independent multiple-choice questions of 1 mark each (90 marks) plus 9 case-based questions: 6 caselets of 5 one-mark questions (30 marks) and 3 caselets of 5 two-mark questions (30 marks). Total 135 questions for 150 marks.

Time Limit

3 hours (180 minutes).

Passing Score

60%, i.e. 90 marks out of 150. There is negative marking of 25% of the marks assigned to each question for every wrong answer.

Exam Fee

Rs. 3000 plus applicable payment-gateway charges and GST. The certificate is valid for 3 years from the date of the exam. (National Institute of Securities Markets (NISM))

NISM X-A Investment Adviser Level 1 Exam Content Outline

4%

Concept of Financial Planning

The need for and scope of financial planning, the six-step financial-planning process, the role and value of an investment adviser, the financial life cycle, household budgeting, net worth and goal setting.

11%

Measuring Investment Returns

Simple and compound returns, absolute and annualised returns, CAGR, holding-period return, real (inflation-adjusted) and post-tax returns, time value of money, and comparing returns across asset classes.

11%

Managing Investment Risk

Types of risk such as market, credit, interest-rate, liquidity, inflation and currency risk; measuring risk with standard deviation, variance and beta; the risk-return trade-off and the role of diversification.

16%

Investment Vehicles

Equity and debt instruments, money-market products, mutual funds and ETFs, derivatives, alternative investment funds (AIFs), portfolio management services (PMS), gold, real estate and structured products.

8%

Asset Allocation and Investment Strategies

Strategic and tactical asset allocation, rebalancing, active versus passive strategies, goal-based and life-cycle investing, and constructing portfolios suited to the client.

12%

Insurance Planning

Need for insurance, human life value, life insurance products (term, endowment, ULIPs), general and health insurance, riders, and integrating insurance into the financial plan.

14%

Retirement Planning

Retirement needs analysis, accumulation and distribution phases, and retirement products including EPF, PPF, the National Pension System (NPS), annuities and pension plans.

14%

Tax and Estate Planning

Income heads and slabs, taxation of equity, debt and mutual funds, capital gains, tax-saving instruments under Section 80C, and estate-planning tools such as wills, nomination, gifts and trusts.

10%

Regulatory Environment and Ethical Issues

SEBI (Investment Advisers) Regulations, 2013, registration and qualification requirements, fee models, risk profiling and suitability, disclosures, segregation of advice and distribution, the code of conduct and managing conflicts of interest.

How to Pass the NISM X-A Investment Adviser Level 1 Exam

What You Need to Know

  • Passing score: 60%, i.e. 90 marks out of 150. There is negative marking of 25% of the marks assigned to each question for every wrong answer.
  • Assessment: 90 independent multiple-choice questions of 1 mark each (90 marks) plus 9 case-based questions: 6 caselets of 5 one-mark questions (30 marks) and 3 caselets of 5 two-mark questions (30 marks). Total 135 questions for 150 marks.
  • Time limit: 3 hours (180 minutes).
  • Exam fee: Rs. 3000 plus applicable payment-gateway charges and GST. The certificate is valid for 3 years from the date of the exam.

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 X-A Investment Adviser Level 1 Study Tips from Top Performers

1Master the return formulas early: practise CAGR, holding-period return, real (inflation-adjusted) return and post-tax return until you can compute them quickly without a calculator panic.
2Because there is 25% negative marking, skip questions where you can not eliminate at least two options rather than guessing blindly.
3Learn the SEBI (Investment Advisers) Regulations, 2013 in detail, especially registration, fee limits, risk profiling, suitability, disclosures and the requirement to segregate advice from distribution.
4Know the tax treatment of equity, debt and mutual funds, including the holding periods that separate short-term from long-term capital gains, as several questions test these thresholds.
5Compare investment vehicles side by side, particularly mutual funds, PMS and AIFs, on minimum investment, regulation and investor suitability.
6Work through caselet-style scenarios where you read a client's goals, income, risk profile and tax status, then choose the most suitable asset allocation or product.

Frequently Asked Questions

How many questions are on the NISM-Series-X-A exam?

The exam has 90 independent multiple-choice questions of 1 mark each plus 9 case-based questions delivered as 6 caselets of five 1-mark questions and 3 caselets of five 2-mark questions, totalling 135 questions and 150 marks.

What is the passing score and is there negative marking?

The passing score is 60%, which is 90 marks out of 150. There is negative marking of 25% of the marks assigned to each question for every wrong answer, so unsure guesses can reduce your score.

How long is the NISM Investment Adviser Level 1 exam?

The examination duration is 3 hours (180 minutes) and is taken on a computer at an NISM-authorised test centre.

What is the fee and how long is the certificate valid?

The examination fee is Rs. 3000 plus applicable payment-gateway charges and GST. The certificate is valid for 3 years from the date of passing the exam.

Is NISM-Series-X-A enough to become a registered investment adviser?

No. NISM-Series-X-A is the Level 1 examination. Individuals must also pass NISM-Series-X-B (Level 2) to meet the full certification requirement under the SEBI (Investment Advisers) Regulations, 2013.

Are these official NISM practice questions?

No. These are original OpenExamPrep questions modelled on the nine official NISM-Series-X-A units. NISM publishes its own workbook and study material separately on its website.