NISM Series 5A Mock Test 1: Free Mutual Fund 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 nothing, so answer every question.
• You pass with 50% 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 8 chapters. Each chapter gets a share that follows our question bank.

• Investment Landscape: 6 questions.
• Structure of Mutual Funds: 5 questions.
• Accounting, Valuation and Taxation: 6 questions.
• Mutual Fund Products: 8 questions.
• Investor Services: 6 questions.
• Risk, Return and Performance: 7 questions.
• Legal and Regulatory Environment: 6 questions.
• Scheme Selection: 6 questions.

By level: Beginner 14 · Intermediate 27 · 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.

• Investment Landscape: Beginner 3 · Intermediate 2 · Advanced 1.
• Structure of Mutual Funds: Beginner 3 · Intermediate 2 · Advanced 0.
• Accounting, Valuation and Taxation: Beginner 0 · Intermediate 4 · Advanced 2.
• Mutual Fund Products: Beginner 3 · Intermediate 4 · Advanced 1.
• Investor Services: Beginner 2 · Intermediate 4 · Advanced 0.
• Risk, Return and Performance: Beginner 0 · Intermediate 5 · Advanced 2.
• Legal and Regulatory Environment: Beginner 2 · Intermediate 3 · Advanced 1.
• Scheme Selection: Beginner 1 · Intermediate 3 · Advanced 2.

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. Q1An unhedged overseas holding is worth USD 1,000 when the exchange rate is ₹80 per USD. It rises to USD 1,080 while the exchange rate falls to ₹76 per USD. Ignoring distributions, costs and taxes, what is the return in rupees?

   • A

     Option A. 8.00%

     Why it is wrong: 8% is the dollar return. It ignores the smaller number of rupees received for each dollar at the end.

   • B

     Option B. 3.00%

     Why it is wrong: 3% simply subtracts the 5% exchange-rate decline from the 8% asset gain. It omits the interaction between them.

   • C

     Option C. 2.60% — Correct answer

   • D

     Option D. 13.00%

     Why it is wrong: 13% adds the exchange-rate move with the wrong sign and also ignores compounding.

   Answer: C. The two currency conversions produce a ₹2,080 gain on ₹80,000, or 2.60%. Initial rupee value = USD 1,000 × ₹80 per USD = ₹80,000. Final rupee value = USD 1,080 × ₹76 per USD = ₹82,080. Gain = ₹82,080 − ₹80,000 = ₹2,080. Rupee return = ₹2,080 ÷ ₹80,000 × 100 = 2.60%. Equivalently, the value multiplier is 1.08 × (76 ÷ 80) = 1.026. The stronger rupee offsets part of the foreign-asset gain. Remember: Value the foreign holding in rupees at both endpoints before calculating its rupee return.

   Hint, shown before you answer in practice mode: Common mistake: Adding the asset and currency percentage changes instead of multiplying their value factors.

   VA-087hardnumerical

   Study this unit

2. Q2A scheme has net assets of ₹5 crore and 20 lakh units. A fresh ₹50 lakh subscription is fully invested at the existing NAV. With no market change, tax, charge or other transaction, what is the NAV immediately after allotment?

   • A

     Option A. ₹27.50

     Why it is wrong: ₹27.50 adds the new cash to assets but incorrectly keeps the old 20 lakh unit count.

   • B

     Option B. ₹22.73

     Why it is wrong: About ₹22.73 increases the units to 22 lakh but fails to add the subscription cash to assets.

   • C

     Option C. ₹25.00 — Correct answer

   • D

     Option D. ₹26.19

     Why it is wrong: About ₹26.19 uses 21 lakh units, as though only 1 lakh new units were issued. The correct allotment is 2 lakh.

   Answer: C. Both sides increase proportionately, leaving the per-unit value unchanged at ₹25. Before the subscription, NAV = ₹500 lakh ÷ 20 lakh units = ₹25. New units = ₹50 lakh ÷ ₹25 = 2 lakh units. After allotment, net assets are ₹550 lakh and units are 22 lakh. NAV = ₹550 lakh ÷ 22 lakh = ₹25. Existing investors have not gained merely because another investor supplied capital. Remember: For a subscription at NAV, add the cash and the newly issued units together.

   Hint, shown before you answer in practice mode: Common mistake: Mistaking growth in assets under management for a gain in NAV.

   VA-080mediumnumerical

   Study this unit

3. Q3An investor holds ₹3 lakh in Fund P, which has 20% in Company X, and ₹2 lakh in Fund Q, which has 10% in Company X. The investor adds ₹1 lakh to Fund R, which has 40% in Company X. Assume these percentages and values remain unchanged. What is the combined exposure to Company X as a percentage of the ₹6 lakh portfolio?

   • A

     Option A. 20.00% — Correct answer

   • B

     Option B. 23.33%

     Why it is wrong: This is the unweighted mean of 20%, 10% and 40%. It assumes equal amounts in the three funds.

   • C

     Option C. 16.00%

     Why it is wrong: This is the old exposure of ₹0.80 lakh divided by the old ₹5 lakh portfolio, before Fund R is added.

   • D

     Option D. 70.00%

     Why it is wrong: This simply adds the three fund-level percentages without applying their different investor weights.

   Answer: A. The rupee exposures total ₹1.20 lakh out of ₹6 lakh, giving 20%. Company X exposure through P = ₹3 lakh × 20% = ₹0.60 lakh. Exposure through Q = ₹2 lakh × 10% = ₹0.20 lakh, and through R = ₹1 lakh × 40% = ₹0.40 lakh. Total Company X exposure = ₹0.60 lakh + ₹0.20 lakh + ₹0.40 lakh = ₹1.20 lakh. Combined percentage = ₹1.20 lakh ÷ ₹6 lakh × 100 = 20%. The additional fund raises the exposure from its earlier level despite adding another fund name. Remember: Count underlying exposure in rupees before deciding whether adding another fund improves diversification.

   Hint, shown before you answer in practice mode: Common mistake: Assuming three fund names create three independent exposures, or averaging their holdings percentages equally.

   VA-122hardnumerical

   Study this unit

Then take Mock 2

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