Unit ko samjho · NISM Series VI
Introduction to the Indian Capital Market
8 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
- A company issues fresh equity shares to investors and receives the subscription money. This transaction belongs to the:
- Rina buys listed shares from another investor through an exchange. Who normally receives the sale consideration, ignoring fees and settlement intermediaries?
- Which pairing correctly distinguishes an ordinary equity shareholder from a holder of a plain non-convertible debenture?
- Which body is the principal regulator of depositories and depository participants in India’s securities market?
- Which statute specifically establishes the framework for holding and transferring securities through depositories?
- A customer needs to place an exchange order, hold the resulting shares electronically and pay for them. Which combination matches these three functions?
- A valid share purchase has been executed, but the seller fails to deliver the required securities on settlement. Which risk is illustrated most directly?
- A DP says its customer agreement permits a practice that a binding SEBI direction prohibits. Which position is correct?
Zaroori ideas
Practice bank se · 1
A company issues fresh equity shares to investors and receives the subscription money. This transaction belongs to the:
The defining feature is that the issuer creates and allots new securities and receives the proceeds. That is a primary-market transaction. Subsequent trading of existing shares between investors belongs to the secondary market. A demat credit records the resulting holding, but it does not change which market the capital-raising transaction belongs to. Remember: Classify a transaction by whether new securities are issued or existing holdings are traded.
Hint Common mistake: Treating every transaction that creates a demat credit as a secondary-market purchase.
VI-001Practice bank se · 2
Rina buys listed shares from another investor through an exchange. Who normally receives the sale consideration, ignoring fees and settlement intermediaries?
This is a secondary-market sale of existing shares. The buyer acquires the holding from the seller, and the economic consideration belongs to that seller. The issuer does not receive new capital merely because its shares change hands. Clearing and depository arrangements facilitate completion of the trade rather than becoming its economic beneficiaries. Remember: Secondary-market lets investors exchange ownership without a new issue by the company.
Hint Common mistake: Confusing the issuer of a security with the seller in every subsequent transaction.
VI-002Practice bank se · 3
Which pairing correctly distinguishes an ordinary equity shareholder from a holder of a plain non-convertible debenture?
An ordinary share represents an ownership interest in the company. A plain non-convertible debenture represents borrowing and a contractual debt claim. Holding either instrument through a depository changes its form of recordkeeping, not its legal and economic character. Interest and repayment terms of debt should not be confused with discretionary equity dividends. Remember: Demat is the holding form. Debt or equity describes the underlying claim.
Hint Common mistake: Assuming securities in one demat account all confer the same rights.
VI-003Practice bank se · 4
Which body is the principal regulator of depositories and depository participants in India’s securities market?
SEBI is in charge of the rules for the securities market. This covers depositories and registered depository participants (DPs). RBI has key duties in banking and monetary matters. It also has duties for government securities. But these duties do not make it the main regulator of DP services. A DP’s registration and compliance come under SEBI and the depository framework. Remember: Distinguish the securities-market regulator from banking and insurance regulators.
Hint Common mistake: Naming the regulator of the DP’s parent bank instead of the regulator of its DP activity.
VI-004Practice bank se · 5
Which statute specifically establishes the framework for holding and transferring securities through depositories?
The Depositories Act deals with the depository framework. It covers electronic ownership records and beneficial owners. It also covers participants, fungibility and related rights. Other Acts may affect an entity or a transaction. But they do not replace the law that governs the depository relationship tested here. Remember: Link each regulatory topic to its specific governing legislation.
Hint Common mistake: Assuming a bank-operated DP is governed only by banking legislation.
VI-005Practice bank se · 6
A customer needs to place an exchange order, hold the resulting shares electronically and pay for them. Which combination matches these three functions?
The trading relationship provides order execution through a broker. The demat relationship records securities ownership through a DP. The bank account supports money movement. Providers may integrate the customer experience, but integration does not erase the separate functions or the need for valid instructions for each type of asset. Remember: An integrated platform still contains distinct trading, securities-holding and cash functions.
Hint Common mistake: Treating the demat login as proof that every transaction is a DP service.
VI-006Practice bank se · 7
A valid share purchase has been executed, but the seller fails to deliver the required securities on settlement. Which risk is illustrated most directly?
The problem concerns completion of an already executed trade: the promised securities are not delivered. That is settlement risk. Changes in market price or interest rates may create other exposures, but they do not describe this operational failure. Depository and clearing processes reduce such risks. They do not make a failed obligation conceptually impossible. Remember: Execution of an order and completion of settlement are separate stages.
Hint Common mistake: Assuming a trade confirmation proves that securities have already arrived.
VI-007Practice bank se · 8
A DP says its customer agreement permits a practice that a binding SEBI direction prohibits. Which position is correct?
Contractual terms operate within the applicable law and regulatory framework. A customer’s signature cannot authorise a DP to disregard a binding direction. Disclosure of a charge also does not cure a prohibited practice. The operational task is to apply the required control and revise conflicting contractual or procedural wording. Remember: Regulatory obligations set boundaries within which customer contracts operate.
Hint Common mistake: Treating consent as a blanket waiver of statutory investor protection.
VI-008Liquidity describes how easily a given quantity can be traded.
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