100+ Free NISM Series XXI-A Practice Questions

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Question 1

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An investor's risk appetite is best described as:

The tax bracket applicable to the investor

The legal limit on portfolio leverage

The maximum return an investor expects from a portfolio

The level of risk an investor is willing and able to take to achieve goals

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2026 Statistics

Key Facts: NISM Series XXI-A Exam

100

Total Marks

NISM PMS Distributors FAQ

60%

Passing Score

NISM PMS Distributors FAQ

25%

Negative Marking

NISM PMS Distributors FAQ

2 hrs

Exam Duration

NISM PMS Distributors FAQ

INR 1,500

Exam Fee (incl. GST)

NISM PMS Distributors FAQ

3 years

Certificate Validity

NISM PMS Distributors FAQ

The NISM-Series-XXI-A PMS Distributors examination is a computer-based test of 100 marks completed in 2 hours. It comprises 80 independent one-mark MCQs plus 3 caselets (2 caselets of five one-mark questions and 1 caselet of five two-mark questions). The passing score is 60%, with 25% negative marking on each wrong answer. The fee is INR 1,500 inclusive of GST, and the certificate is valid for 3 years. The exam is mandatory under SEBI norms for associated persons distributing Portfolio Management Services, and is distinct from the NISM-Series-XXI-B Portfolio Managers examination.

Sample NISM Series XXI-A Practice Questions

Try these sample questions to test your NISM Series XXI-A exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which regulator is the primary authority overseeing the securities market in India, including Portfolio Managers?

A.Securities and Exchange Board of India (SEBI)

B.Reserve Bank of India (RBI)

C.Insurance Regulatory and Development Authority of India (IRDAI)

D.Pension Fund Regulatory and Development Authority (PFRDA)

Explanation: SEBI, established under the SEBI Act, 1992, is the statutory regulator for the Indian securities market and registers and regulates Portfolio Managers under the SEBI (Portfolio Managers) Regulations, 2020.

2Which of the following functions is performed in the primary market?

A.Trading of already-issued shares between investors

B.Issuance of new securities by a company to raise capital

C.Settlement of trades through a clearing corporation

D.Lending of securities for short selling

Explanation: The primary market is where securities are issued for the first time, such as through an IPO or FPO, enabling issuers to raise fresh capital directly from investors.

3A Depository Participant (DP) in the Indian securities market acts primarily as a:

A.Market maker that quotes two-way prices

B.Credit rating agency for debt issues

C.Agent of a depository providing demat account services to investors

D.Stock exchange that lists securities

Explanation: A Depository Participant is an agent of a depository (NSDL or CDSL) and acts as the interface through which investors open and operate demat accounts to hold securities in electronic form.

4In India, the two depositories that hold securities in dematerialised form are:

A.NSE and BSE

B.NSCCL and ICCL

C.CRISIL and ICRA

D.NSDL and CDSL

Explanation: NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) are the two SEBI-registered depositories that hold securities in electronic (demat) form in India.

5What is the standard settlement cycle currently followed for equity trades in the Indian cash market?

A.T+1

B.T+3

C.T+5

D.T+0 mandatory for all stocks

Explanation: Indian equity cash-market trades settle on a T+1 basis, meaning settlement is completed one working day after the trade date. SEBI has introduced an optional T+0 cycle for a limited set of stocks, but the standard cycle remains T+1.

6Which intermediary guarantees the settlement of trades and manages counterparty risk on a stock exchange?

A.Depository

B.Clearing Corporation

C.Registrar and Transfer Agent

D.Merchant Banker

Explanation: A Clearing Corporation acts as the central counterparty, novating trades and guaranteeing settlement, thereby eliminating counterparty default risk between the buyer and seller.

7The role of a credit rating agency such as CRISIL or ICRA in the securities market is to:

A.Set interest rates on government securities

B.Guarantee repayment of the rated bond

C.Provide an opinion on the creditworthiness of a debt issuer or instrument

D.Underwrite equity public issues

Explanation: Credit rating agencies assign ratings that reflect their independent opinion on the relative ability and willingness of an issuer to meet its debt obligations on time; a rating is an opinion, not a guarantee.

8Which of the following is classified as a money market instrument?

A.Equity share

B.Equity-linked debenture

C.10-year government bond

D.Treasury Bill

Explanation: Treasury Bills are short-term debt instruments issued by the government with maturities of up to one year, making them money market instruments used for short-term liquidity management.

9An investor's risk appetite is best described as:

A.The level of risk an investor is willing and able to take to achieve goals

B.The maximum return an investor expects from a portfolio

C.The legal limit on portfolio leverage

D.The tax bracket applicable to the investor

Explanation: Risk appetite reflects the amount and type of risk an investor is willing and able to bear in pursuit of financial goals, shaped by factors such as time horizon, income stability, and psychology.

10Which statement about the relationship between risk and return is generally true for investments?

A.Risk and return are unrelated

B.Higher expected returns generally require accepting higher risk

C.Lower-risk assets always deliver higher returns

D.Government bonds carry the highest equity-like risk

Explanation: The risk-return tradeoff holds that investors must generally accept greater uncertainty (risk) to target higher expected returns; there is no reward without bearing some risk.

About the NISM Series XXI-A Exam

NISM-Series-XXI-A is the SEBI-mandated certification for persons distributing Portfolio Management Services in India. It tests knowledge of securities markets, equity, fixed income, derivatives, mutual funds, portfolio management, performance measurement, operations, and the regulatory and ethical framework for PMS distributors.

Questions

100 scored questions

Time Limit

2 hours (120 minutes)

Passing Score

60% (60 out of 100 marks), with 25% negative marking per wrong answer

Exam Fee

INR 1,500 inclusive of GST per attempt (National Institute of Securities Markets (NISM))

NISM Series XXI-A Exam Content Outline

Introduction to Securities Markets

Structure of Indian securities markets, primary and secondary markets, intermediaries, depositories (NSDL/CDSL), clearing corporations, T+1 settlement, and SEBI's role.

Investment Landscape

Investment objectives, risk and return, risk appetite, inflation and real returns, power of compounding, and the main asset classes.

11%

Investing in Stocks

Equity shares, fundamental and technical analysis, P/E and P/B, EPS, ROE, dividend yield, market capitalisation, indices, and corporate actions.

Investing in Fixed Income Securities

Bond features, coupon, yield to maturity, duration, interest-rate and credit risk, government securities, and zero-coupon bonds.

Derivatives

Forwards, futures, call and put options, payoffs, hedging, speculation, arbitrage, and the use of derivatives in portfolio risk management.

13%

Mutual Funds

Mutual fund structure, NAV, SIPs, ETFs, index and liquid funds, expense ratio, ELSS, hybrid and debt funds, diversification, custodian, and AMC.

Introduction to Portfolio Management

Concept of portfolio management, PMS minimum investment, discretionary and non-discretionary services, systematic risk, beta, and correlation.

Portfolio Management Process

Investment policy, strategic and tactical asset allocation, security selection, rebalancing, active and passive management, and rupee-cost averaging.

11%

Performance Measurement and Evaluation

Benchmarking, Sharpe and Treynor ratios, alpha, standard deviation, time-weighted and money-weighted returns, and performance attribution.

Operational Aspects of Portfolio Managers

Client onboarding and KYC, segregation of client assets, periodic reporting, disclosure documents, high water mark, and fee structures.

10%

Regulatory, Governance and Ethical Aspects (Distributors)

SEBI Portfolio Managers Regulations 2020, PMLA, insider trading, fraudulent and unfair trade practices, trail-only commissions, code of conduct, Investor Charter, SCORES, and APMI.

How to Pass the NISM Series XXI-A Exam

What You Need to Know

Passing score: 60% (60 out of 100 marks), with 25% negative marking per wrong answer
Exam length: 100 questions
Time limit: 2 hours (120 minutes)
Exam fee: INR 1,500 inclusive of GST per attempt

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 XXI-A Study Tips from Top Performers

1Read the official NISM workbook thoroughly; the exam questions stay close to its concepts and examples.

2Practice with negative marking in mind, since a wrong answer costs 25% of the question's marks.

3Focus extra time on the regulatory, ethics, and performance-measurement units, which carry many tricky questions.

4Practise the three caselets separately, as they require applying multiple concepts to a short scenario.

5Memorise key thresholds such as the PMS minimum investment of Rs. 50 lakh and the 60% pass mark.

6Do at least three full-length timed mocks to build pacing for the 2-hour, 100-mark format.

Frequently Asked Questions

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

The examination is for 100 marks. It has 80 independent one-mark multiple-choice questions plus 3 case-based caselets: two caselets of five one-mark questions each and one caselet of five two-mark questions, all objective in format.

What is the passing score for NISM Series XXI-A?

Candidates must score at least 60%, that is 60 marks out of 100, to pass. There is negative marking of 25% of the marks assigned to a question for each incorrect answer.

How much does the NISM Series XXI-A exam cost in 2026?

The examination fee is Rupees 1,500 inclusive of GST, payable to NISM at the time of registration through the NISM certifications portal.

How long is the NISM Series XXI-A certificate valid?

The certificate obtained by passing the NISM-Series-XXI-A examination is valid for three years from the date of the examination, after which it must be renewed.

Is there negative marking in NISM Series XXI-A?

Yes. There is negative marking of 25% of the marks assigned to a question. For a one-mark question, 0.25 marks are deducted for a wrong answer, so guessing should be careful.

Who needs to pass the NISM Series XXI-A exam?

Under SEBI norms, associated persons engaged in the distribution of Portfolio Management Services must obtain this certification. It is distinct from NISM-Series-XXI-B, which is for portfolio managers themselves.

What is the duration of the NISM Series XXI-A exam?

The examination must be completed within 2 hours (120 minutes). It is a computer-based test conducted at NISM-empanelled test centres across India.

How is NISM Series XXI-A different from NISM Series XXI-B?

Series XXI-A is the PMS Distributors examination for those who sell or distribute PMS. Series XXI-B is the Portfolio Managers examination, mandatory for the principal officer and employees of a registered portfolio manager.