NISM Series 21B Mock Test 3: Free Portfolio Managers Paper

How this mock is marked

• 50 questions, one mark each.
• The real exam gives 2 marks to each of its 30 case-study questions. In these mocks every question is worth one mark.
• 75 minutes on the clock. That is the real exam's pace: 180 minutes for 120 questions.
• A wrong answer loses a quarter 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 21 chapters. Each chapter gets a share that follows our question bank.

• Investment Landscape and Required Return: 1 question.
• Introduction to Securities Markets and Participants: 1 question.
• Investing in Stocks and Equity Research: 2 questions.
• Investing in Fixed Income Securities and Bond Valuation: 2 questions.
• Derivatives in Portfolio Management: 2 questions.
• Mutual Fund: 2 questions.
• Role of Portfolio Managers in India: 3 questions.
• Operational Aspects of Portfolio Managers (Onboarding and Fees): 3 questions.
• Portfolio Management Process and Asset Allocation: 3 questions.
• Taxation: 2 questions.
• Regulatory, Governance and Ethical Aspects of Portfolio Managers: 3 questions.
• Introduction to Indices: 2 questions.
• Concept of Informational Efficiency: 2 questions.
• Behavioral Finance: 2 questions.
• Introduction to Modern Portfolio Theory: 2 questions.
• Introduction to Capital Market Theory: 2 questions.
• Risk: 2 questions.
• Equity Portfolio Management Strategies: 4 questions.
• Fixed Income Portfolio Management Strategies: 5 questions.
• Performance measurement and evaluation of Portfolio Managers: 3 questions.
• Portfolio Rebalancing: 2 questions.

By level: Beginner 15 · Intermediate 25 · Advanced 10.

Chapter split of Mock 3

How Mock 3 shares its questions between chapters and levels. This split belongs to this paper. The other mocks of this exam have their own.

• Investment Landscape and Required Return: Beginner 1 · Intermediate 0 · Advanced 0.
• Introduction to Securities Markets and Participants: Beginner 0 · Intermediate 1 · Advanced 0.
• Investing in Stocks and Equity Research: Beginner 0 · Intermediate 2 · Advanced 0.
• Investing in Fixed Income Securities and Bond Valuation: Beginner 0 · Intermediate 1 · Advanced 1.
• Derivatives in Portfolio Management: Beginner 1 · Intermediate 1 · Advanced 0.
• Mutual Fund: Beginner 0 · Intermediate 1 · Advanced 1.
• Role of Portfolio Managers in India: Beginner 2 · Intermediate 1 · Advanced 0.
• Operational Aspects of Portfolio Managers (Onboarding and Fees): Beginner 1 · Intermediate 1 · Advanced 1.
• Portfolio Management Process and Asset Allocation: Beginner 1 · Intermediate 2 · Advanced 0.
• Taxation: Beginner 1 · Intermediate 1 · Advanced 0.
• Regulatory, Governance and Ethical Aspects of Portfolio Managers: Beginner 1 · Intermediate 1 · Advanced 1.
• Introduction to Indices: Beginner 1 · Intermediate 1 · Advanced 0.
• Concept of Informational Efficiency: Beginner 1 · Intermediate 1 · Advanced 0.
• Behavioral Finance: Beginner 1 · Intermediate 0 · Advanced 1.
• Introduction to Modern Portfolio Theory: Beginner 1 · Intermediate 1 · Advanced 0.
• Introduction to Capital Market Theory: Beginner 0 · Intermediate 1 · Advanced 1.
• Risk: Beginner 0 · Intermediate 1 · Advanced 1.
• Equity Portfolio Management Strategies: Beginner 0 · Intermediate 3 · Advanced 1.
• Fixed Income Portfolio Management Strategies: Beginner 1 · Intermediate 3 · Advanced 1.
• Performance measurement and evaluation of Portfolio Managers: Beginner 1 · Intermediate 1 · Advanced 1.
• Portfolio Rebalancing: Beginner 1 · Intermediate 1 · Advanced 0.

3 sample questions, with answers

These 3 questions are not in Mock 3, so reading them spoils nothing here. They come from Mock 2 of this exam. Each one shows the hint, the answer and why every wrong option is wrong.

1. Q1A put with strike ₹100 costs ₹7. At expiry the underlying is ₹85. What is the buyer’s profit per unit?

   • A

     Option A. ₹15 profit

     Why it is wrong: This is the payoff before deducting the ₹7 premium.

   • B

     Option B. ₹7 loss

     Why it is wrong: This ignores the put’s positive payoff at expiry.

   • C

     Option C. ₹8 profit — Correct answer

   • D

     Option D. ₹22 profit

     Why it is wrong: This adds the premium instead of treating it as the buyer’s cost.

   Answer: C. The buyer earns ₹8 per unit because the ₹15 payoff exceeds the ₹7 premium. Put payoff = max(₹100 − ₹85, 0) = ₹15. Profit = ₹15 − ₹7 = ₹8, ignoring charges. Remember: Option payoff and option profit differ by the premium paid.

   Hint, shown before you answer in practice mode: Distinguish exercise value from the buyer’s net result. Common mistake: Reporting intrinsic value as profit without deducting the premium.

   XXI-B-023mediumnumerical

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2. Q2A hypothetical PMS agreement starts the year with ₹100 lakh. Its annual fixed management fee is 1% of that opening value, with no cash flows or other charges. What fixed fee is payable?

   • A

     Option A. ₹1 lakh — Correct answer

   • B

     Option B. ₹0.10 lakh

     Why it is wrong: This applies 0.1% rather than the stated 1%.

   • C

     Option C. ₹10 lakh

     Why it is wrong: This applies 10% rather than the stated 1%.

   • D

     Option D. ₹1.15 lakh

     Why it is wrong: This uses a different fee base rather than the stated opening value.

   Answer: A. The fixed fee is ₹1 lakh because the agreement applies 1% to the ₹100 lakh opening value. Working: ₹100 lakh × 0.01 = ₹1 lakh. The rate is a case assumption, not a statutory limit. Remember: A fee percentage is meaningful only when its calculation base is known.

   Hint, shown before you answer in practice mode: Use the fee base specified in this hypothetical agreement. Common mistake: Applying a rate to closing wealth when the agreement specifies opening wealth.

   XXI-B-044mediumapplication

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3. Q3Two companies have market values of ₹1,000 crore and ₹500 crore, with free floats of 25% and 80%. What is the first company’s free-float weight?

   • A

     Option A. 38.46% — Correct answer

   • B

     Option B. 66.67%

     Why it is wrong: This uses full market capitalisation and ignores each company’s free-float percentage.

   • C

     Option C. 61.54%

     Why it is wrong: This is the second company’s share of the combined free-float market value.

   • D

     Option D. 25.00%

     Why it is wrong: This is the first company’s own free-float percentage, not its index weight.

   Answer: A. The first company’s weight is 38.46% because its free-float value is ₹250 crore out of ₹650 crore. First value = ₹1,000 crore × 25% = ₹250 crore. Second value = ₹500 crore × 80% = ₹400 crore. Weight = ₹250 ÷ ₹650 × 100 = 38.46%. Remember: Free-float weighting uses adjusted market values, not raw share prices.

   Hint, shown before you answer in practice mode: Adjust both company values for free float before comparing them. Common mistake: Mistaking a company’s free-float percentage for its final index weight.

   XXI-B-073mediumnumerical

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Practise the chapters you missed

Your result shows which chapters need more work. Open a chapter on the NISM Series XXI-B practice page. Check each answer and read why it is right.