NISM Series 21A Mock Test 1: Free Portfolio Management Paper

How this mock is marked

• 50 questions, one mark each.
• 60 minutes on the clock. That is the real exam's pace: 120 minutes for 100 questions.
• A wrong answer loses one tenth of a mark. A blank loses nothing.
• You pass with 60% or more.
• Submit to see your score and the chapters to work on. Then check each right answer and why it is right.

What this paper covers

50 questions from 12 chapters. Each chapter gets a share that follows our question bank.

• Investments: 4 questions.
• Introduction to Securities Markets: 2 questions.
• Investing in Stocks: 5 questions.
• Investing in Fixed Income Securities: 3 questions.
• Derivatives: 2 questions.
• Collective Investment Vehicles: 3 questions.
• Role of Portfolio Managers: 5 questions.
• Operational Aspects of Portfolio Managers: 7 questions.
• Portfolio Management Process: 7 questions.
• Performance Measurement and Evaluation of Portfolio Managers: 5 questions.
• Taxation: 2 questions.
• Regulatory, Governance and Ethical Aspects of Portfolio Managers: 5 questions.

By level: Beginner 13 · Intermediate 28 · Advanced 9.

Chapter split of Mock 1

How Mock 1 shares its questions between chapters and levels. This split belongs to this paper. The other mocks of this exam have their own.

• Investments: Beginner 2 · Intermediate 1 · Advanced 1.
• Introduction to Securities Markets: Beginner 1 · Intermediate 1 · Advanced 0.
• Investing in Stocks: Beginner 1 · Intermediate 4 · Advanced 0.
• Investing in Fixed Income Securities: Beginner 1 · Intermediate 1 · Advanced 1.
• Derivatives: Beginner 0 · Intermediate 1 · Advanced 1.
• Collective Investment Vehicles: Beginner 1 · Intermediate 2 · Advanced 0.
• Role of Portfolio Managers: Beginner 2 · Intermediate 3 · Advanced 0.
• Operational Aspects of Portfolio Managers: Beginner 2 · Intermediate 4 · Advanced 1.
• Portfolio Management Process: Beginner 1 · Intermediate 4 · Advanced 2.
• Performance Measurement and Evaluation of Portfolio Managers: Beginner 0 · Intermediate 3 · Advanced 2.
• Taxation: Beginner 1 · Intermediate 1 · Advanced 0.
• Regulatory, Governance and Ethical Aspects of Portfolio Managers: Beginner 1 · Intermediate 3 · Advanced 1.

3 sample questions, with answers

These 3 questions are not in Mock 1, so reading them spoils nothing here. They come from Mock 3 of this exam. Each one shows the hint, the answer and why every wrong option is wrong.

1. Q1A call option has strike price ₹500. The buyer pays a premium of ₹20 per share. At expiry the underlying is ₹560. What is the buyer’s net profit per share, ignoring costs?

   • A

     Option A. ₹80

     Why it is wrong: This adds the premium to the payoff instead of treating it as a cost.

   • B

     Option B. ₹60

     Why it is wrong: This is the option payoff before deducting the premium.

   • C

     Option C. −₹20

     Why it is wrong: This is the result if the option expires worthless, which it does not here.

   • D

     Option D. ₹40 — Correct answer

   Answer: D. An option’s terminal payoff and the buyer’s profit differ by the premium and any other relevant costs. Call payoff per share = max(₹560 − ₹500, 0) = ₹60. Net profit = ₹60 − ₹20 = ₹40 per share. No further premium payment is added at expiry. Remember: Deduct the premium when moving from option payoff to buyer profit.

   Hint, shown before you answer in practice mode: Common mistake: Reporting intrinsic value as net profit.

   XXI-A-044mediumnumerical

   Study this unit

2. Q2A portfolio starts at ₹100 lakh and pays ₹10 lakh immediately after year 1. Returns are +20% then −20% in Path A, and −20% then +20% in Path B. With no other flows, what are the final values?

   • A

     Option A. A: ₹84 lakh. B: ₹88 lakh.

     Why it is wrong: This reverses the calculations for the two return sequences.

   • B

     Option B. A: ₹88 lakh. B: ₹84 lakh. — Correct answer

   • C

     Option C. A: ₹96 lakh. B: ₹96 lakh.

     Why it is wrong: This ignores the withdrawal completely.

   • D

     Option D. A: ₹86 lakh. B: ₹86 lakh.

     Why it is wrong: This compounds first and then subtracts the withdrawal at the end, changing its stated timing.

   Answer: B. External withdrawals can make the sequence of returns matter even when the set of annual returns is identical. Path A: (₹100 lakh × 1.20 − ₹10 lakh) × 0.80 = ₹88 lakh. Path B: (₹100 lakh × 0.80 − ₹10 lakh) × 1.20 = ₹84 lakh. Without withdrawals the two compound factors would produce the same final value. Remember: Model cash-flow timing when assessing a withdrawal portfolio’s risk.

   Hint, shown before you answer in practice mode: Common mistake: Assuming that identical average returns imply identical outcomes with withdrawals.

   XXI-A-098hardconceptual

   Study this unit

3. Q3A zero-coupon bond will repay ₹1,210 in two years. At a required annual compound yield of 10%, what is its present value?

   • A

     Option A. ₹1,000 — Correct answer

   • B

     Option B. ₹1,464.10

     Why it is wrong: This compounds the future payment forward instead of discounting it back.

   • C

     Option C. ₹1,008.33

     Why it is wrong: This uses two years of simple interest rather than compound discounting.

   • D

     Option D. ₹1,100

     Why it is wrong: This discounts for only one year.

   Answer: A. A zero-coupon bond’s value is the present value of its single promised payment, subject to the chosen yield and credit assumptions. Use present value = maturity payment ÷ (1 + annual yield)^years. ₹1,210 ÷ 1.10² = ₹1,210 ÷ 1.21 = ₹1,000. There are no interim coupons to add. Remember: One future payment still requires the full compounding period in the discount factor.

   Hint, shown before you answer in practice mode: Common mistake: Discounting a two-year cash flow for only one year.

   XXI-A-035mediumnumerical

   Study this unit

Then take Mock 2

Read the chapters your result names first. A new paper then shows whether those gaps have closed.