Unit ko samjho · NISM Series V-A
Investment Landscape
16 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- Which statement best distinguishes saving from investing?
- Why may a diversified equity allocation be relevant to a financial goal that is 15 years away?
- An investor says that losing ₹5,000 would upset her much more than gaining ₹5,000 would please her. Which bias is most directly illustrated?
- An investor sets a long-term equity-debt mix based on her goal and risk profile. After a market rally, she rebalances toward that mix without changing her goals. This is primarily:
- Which resource is most appropriate to plan for an unexpected essential expense that may have to be paid immediately?
- Over one year an investment grows by 8% while the price of the investor’s unchanged consumption basket rises by 6%. Ignoring taxes and costs, what is the exact real return, rounded to two decimal places?
- A goal costs ₹5,00,000 today and is due in three years. Assume its cost rises 6% a year. An existing ₹4,00,000 corpus grows 8% a year, with no further contributions. With annual compounding and no tax or costs, what shortfall remains at the goal date, rounded to the nearest rupee?
- A portfolio has ₹7.2 lakh in equity and ₹4.8 lakh in debt. The approved target is now 50% in each. The investor adds ₹3 lakh and wants to reach that target without selling anything. With unchanged values and no costs, how should the new money be split between equity and debt?
- An investor selects a fund solely because most colleagues have bought it. He has not examined its portfolio, risk or fit with his goal. Which behavioural bias is most directly illustrated?
- An investor favours a sector fund. While reviewing it, she reads only reports supporting her view and dismisses contrary evidence without checking it. Which bias is most directly illustrated?
- An investor needs to raise only ₹50,000. One asset is a ₹30 lakh property that cannot be sold in parts. Another is a unit holding that permits redemption of just ₹50,000. Before comparing payment time or sale price, which characteristic gives the unit holding an advantage?
- A goal requires ₹6,05,000 exactly two years from today. For this calculation, assume an investment earns 10% a year compounded annually, with no charges or taxes. What single amount invested today would meet the goal?
- An investor receives ₹80,000 a month after tax. Monthly living costs are ₹42,000 and loan instalments are ₹18,000. She also reserves ₹24,000 a year for insurance and ₹5,000 a month for an emergency fund. With no other commitments, what monthly amount remains for a new SIP?
- An investor estimates a security’s fair value by starting with its old issue price. Even after its business prospects change substantially, he makes only a small adjustment to that price. Which bias is most directly illustrated?
- Which holding does NOT itself generate contractual interest or rent merely from being held, assuming no separate lending, leasing or income arrangement?
- An investor contributes ₹50,000 at the END of each of the next three years. Assume a constant 10% annual return, annual compounding and no taxes or charges. What amount is available immediately after the third contribution?
Zaroori ideas
Practice bank se · 1
Which statement best distinguishes saving from investing?
This answer distinguishes setting money aside from deploying it toward a return. A person can first save part of their income and then invest those savings. The distinction is not the payment frequency or a rule that only one kind of return is possible. An investment may provide income, growth or both. Remember: Identify the action: setting money aside is saving, and deploying money toward a return is investing.
Hint Common mistake: Using the payment schedule or type of return as the definition.
VA-056Practice bank se · 2
Why may a diversified equity allocation be relevant to a financial goal that is 15 years away?
Growth participation is the relevant reason, with uncertainty and suitability still considered. Businesses may grow their earnings and value over time. An equity investor participates in those uncertain outcomes. A longer horizon can support an allocation intended for growth, provided the investor can bear the risk. It does not make losses impossible or establish a suitable allocation by itself. Remember: A long horizon can support growth-oriented exposure, but it does not turn an expected return into a promise.
Hint Common mistake: Treating a long holding period as protection against every loss.
VA-057Practice bank se · 3
An investor says that losing ₹5,000 would upset her much more than gaining ₹5,000 would please her. Which bias is most directly illustrated?
The disproportionate weight on a loss compared with an equal gain is the stated feature. The amounts are equal, but the investor describes a stronger emotional response to the loss. The stem does not say that she relies on recent events, filters evidence to support a view, or overestimates her skill. Remember: Look for unequal reactions to equal gains and losses when identifying loss aversion.
Hint Common mistake: Calling every reluctance to take investment risk loss aversion without evidence of gain-loss asymmetry.
VA-058Practice bank se · 4
An investor sets a long-term equity-debt mix based on her goal and risk profile. After a market rally, she rebalances toward that mix without changing her goals. This is primarily:
The transaction brings the portfolio back toward its long-term allocation. The allocation was selected using the goal and risk profile, rather than a short-term prediction. Rebalancing toward the existing policy maintains the strategy. It is not automatically a tactical bet merely because a transaction occurs. Remember: Classify an allocation decision by its purpose, not simply by whether the portfolio was traded.
Hint Common mistake: Assuming that every rebalance is a change in investment strategy.
VA-059Practice bank se · 5
Which resource is most appropriate to plan for an unexpected essential expense that may have to be paid immediately?
The reserve is set aside for this purpose and is accessible when needed. The essential requirement is timely access to money when the expense arises. Money that is locked in, has an uncertain future arrival, or is exposed to a forced-sale risk does not meet that requirement as directly. Remember: Match emergency needs to accessibility and capital stability rather than to the highest expected return.
Hint Common mistake: Counting all investments as equally available cash.
VA-060Practice bank se · 6
Over one year an investment grows by 8% while the price of the investor’s unchanged consumption basket rises by 6%. Ignoring taxes and costs, what is the exact real return, rounded to two decimal places?
The purchasing-power growth factor is 1.08 / 1.06. Subtracting 1 and converting to a percentage gives approximately 1.89%. Take an initial investment of ₹100 and a consumption basket initially costing ₹100. After one year they become ₹108 and ₹106 respectively. The investment can now buy 108 / 106 = 1.0188679 of the original basket quantity. Exact real return = [(1 + nominal return) / (1 + inflation)] − 1 = 1.08 / 1.06 − 1 = 0.0188679. Multiply by 100 and round to two decimal places to obtain 1.89%. The 2% difference is only the simple approximation. Remember: For an exact real return, divide the investment growth factor by the price growth factor and subtract one.
Hint Common mistake: Subtracting inflation when the question specifically asks for exact purchasing-power growth.
VA-065Practice bank se · 7
A goal costs ₹5,00,000 today and is due in three years. Assume its cost rises 6% a year. An existing ₹4,00,000 corpus grows 8% a year, with no further contributions. With annual compounding and no tax or costs, what shortfall remains at the goal date, rounded to the nearest rupee?
The goal becomes ₹5,00,000 × 1.06³ = ₹5,95,508. The corpus becomes ₹4,00,000 × 1.08³ = ₹5,03,884.80. The shortfall is ₹91,623.20, rounded to ₹91,623. Project the goal cost: ₹5,00,000 × (1.06)³ = ₹5,95,508. Project the existing corpus: ₹4,00,000 × (1.08)³ = ₹5,03,884.80. Compare the values at the same three-year date: ₹5,95,508 − ₹5,03,884.80 = ₹91,623.20. Round only the final shortfall to the nearest rupee: ₹91,623. These projections use stated hypothetical growth assumptions. They do not promise that an actual investment will earn 8% or that actual inflation will remain 6%. Remember: Bring both the goal cost and the funding corpus to the same date before calculating a gap.
Hint Common mistake: Inflating only the goal, growing only the corpus, or using simple growth when compounding is specified.
VA-066Practice bank se · 8
A portfolio has ₹7.2 lakh in equity and ₹4.8 lakh in debt. The approved target is now 50% in each. The investor adds ₹3 lakh and wants to reach that target without selling anything. With unchanged values and no costs, how should the new money be split between equity and debt?
Final total value is ₹15 lakh, so each asset class should hold ₹7.5 lakh. Equity needs ₹0.3 lakh and debt needs ₹2.7 lakh. Existing total = ₹7.2 lakh + ₹4.8 lakh = ₹12 lakh. After the contribution it becomes ₹15 lakh. At the given 50:50 target, each asset class should hold 50% × ₹15 lakh = ₹7.5 lakh. Equity needs ₹7.5 lakh − ₹7.2 lakh = ₹0.3 lakh. Debt needs ₹7.5 lakh − ₹4.8 lakh = ₹2.7 lakh. The additions sum to ₹3 lakh and are both non-negative, so the target can be reached without a sale. The 50:50 target is supplied by the question. This calculation does not recommend that allocation for every investor. Remember: Work backwards from the required final holdings when using a contribution to rebalance.
Hint Common mistake: Applying the target ratio only to fresh money while ignoring the portfolio already held.
VA-074Practice bank se · 9
An investor selects a fund solely because most colleagues have bought it. He has not examined its portfolio, risk or fit with his goal. Which behavioural bias is most directly illustrated?
The investor is copying the group’s decision without evaluating the fund for his own needs. The deciding fact is that other people have bought the fund. The stem does not identify an earlier reference price, selective use of research or disproportionate reliance on recent performance. Following the group is therefore the most direct explanation among the four alternatives. The scenario does not prove that the chosen fund will perform badly. Remember: Identify the actual decision trigger before assigning a behavioural-bias label.
Hint Common mistake: Calling every poorly researched investment decision recency bias.
VA-097Practice bank se · 10
An investor favours a sector fund. While reviewing it, she reads only reports supporting her view and dismisses contrary evidence without checking it. Which bias is most directly illustrated?
Selecting supporting reports while dismissing contrary evidence reinforces the investor’s existing view. The investor already favours the fund before reviewing the evidence. She accepts supporting information but does not fairly examine conflicting information. That selective review is the defining feature being tested. The question does not describe following a crowd, feeling losses more strongly than equal gains, or relying on one reference number. Remember: Identify the behaviour causing the decision, rather than choosing a bias merely because the investment looks risky.
Hint Common mistake: Calling every poor investment decision herding without checking whether other people actually influenced it.
VA-101Practice bank se · 11
An investor needs to raise only ₹50,000. One asset is a ₹30 lakh property that cannot be sold in parts. Another is a unit holding that permits redemption of just ₹50,000. Before comparing payment time or sale price, which characteristic gives the unit holding an advantage?
The unit holding can be reduced by the required amount without disposing of the entire investment. The investor needs a small amount relative to the value of the property. The property cannot be divided for sale under the stated facts. The unit holding permits a partial redemption matching the amount needed. This identifies divisibility. It does not establish the speed, price or risk of either transaction. Remember: Distinguish the ability to sell part of an asset from the time and price at which a sale can be completed.
Hint Common mistake: Assuming that a divisible investment must also be instantly liquid or stable in value.
VA-102Practice bank se · 12
A goal requires ₹6,05,000 exactly two years from today. For this calculation, assume an investment earns 10% a year compounded annually, with no charges or taxes. What single amount invested today would meet the goal?
Discounting the specified future amount for both annual compounding periods gives ₹5,00,000. Use present value = future value ÷ (1 + annual return)^number of years. The two-year growth factor is 1.10² = 1.21. Required investment = ₹6,05,000 ÷ 1.21 = ₹5,00,000. As a check, ₹5,00,000 grows to ₹5,50,000 after year one and ₹6,05,000 after year two. The future goal amount already includes everything required for the goal. Remember: When the future goal amount is already given, discount it to today rather than inflating it again.
Hint Common mistake: Using a simple-interest factor or counting one compounding period when the stem specifies two.
VA-103Practice bank se · 13
An investor receives ₹80,000 a month after tax. Monthly living costs are ₹42,000 and loan instalments are ₹18,000. She also reserves ₹24,000 a year for insurance and ₹5,000 a month for an emergency fund. With no other commitments, what monthly amount remains for a new SIP?
₹13,000 is the balance after all four commitments are included. Convert the annual insurance amount into a monthly provision: ₹24,000 ÷ 12 = ₹2,000. Total monthly commitments are ₹42,000 + ₹18,000 + ₹2,000 + ₹5,000 = ₹67,000. The remaining monthly surplus is ₹80,000 − ₹67,000 = ₹13,000. This is a budget result, not a recommended scheme or promised return. Remember: Convert irregular bills to the same time period as income before fixing a systematic contribution.
Hint Common mistake: Calling the balance after routine bills investible without allowing for known annual expenses.
VA-126Practice bank se · 14
An investor estimates a security’s fair value by starting with its old issue price. Even after its business prospects change substantially, he makes only a small adjustment to that price. Which bias is most directly illustrated?
The estimate remains tied to the initial issue-price reference despite materially changed circumstances. The old issue price is the reference around which the investor continues to make his estimate. The key clue is insufficient adjustment after new information. The scenario does not describe following a crowd or selectively searching for supporting reports. Remember: Identify the influential reference point when distinguishing anchoring from other behavioural biases.
Hint Common mistake: Treating every persistent investment opinion as confirmation bias.
VA-127Practice bank se · 15
Which holding does NOT itself generate contractual interest or rent merely from being held, assuming no separate lending, leasing or income arrangement?
Simply storing the gold creates no interest or rent payment. This is separate from possible capital appreciation. Interest on a deposit or coupon-paying bond arises from a payment obligation. Rent arises from the stated lease. Gold bars in storage have no such payment arrangement in this scenario. Their market value may rise or fall, and storage can itself involve a cost. Remember: Distinguish income generated by an asset from a gain in its resale value.
Hint Common mistake: Assuming that every asset expected to appreciate also produces periodic income.
VA-128Practice bank se · 16
An investor contributes ₹50,000 at the END of each of the next three years. Assume a constant 10% annual return, annual compounding and no taxes or charges. What amount is available immediately after the third contribution?
₹1,65,500 gives each contribution only the earning periods actually available. The first end-of-year contribution earns for two years: ₹50,000 × 1.10² = ₹60,500. The second earns for one year: ₹50,000 × 1.10 = ₹55,000. The third is just deposited, so its value is ₹50,000. Total = ₹60,500 + ₹55,000 + ₹50,000 = ₹1,65,500. Equivalently, the ordinary-annuity future-value factor is [(1.10³ − 1) ÷ 0.10] = 3.31. Multiplying by ₹50,000 gives the same result. Remember: Draw a contribution timeline before applying an annuity or compounding formula.
Hint Common mistake: Giving every instalment the same investment period or treating end-period payments as beginning-period payments.
VA-129