Introduction to Personal Financial Planning
4 questions. Each answer is explained.
Question 1 of 4Practice · Series X-A — Investment Adviser (Level 1)
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Learn these topics
More units in NISM Series X-A
- Time Value of Money14
- Evaluating the Financial Position of Clients5
- Debt Management and Loans2
- Introduction to the Indian Financial Markets4
- Securities Market Segments21
- Introduction to Investment5
- Investing in Stocks20
- Investing in Fixed Income Securities25
- Understanding Derivatives25
- Mutual Funds25
- Portfolio Manager10
- Overview of Alternative Investment Funds (AIFs)15
- Introduction to Modern Portfolio Theory14
- Portfolio Construction Process11
- Portfolio Performance Measurement and Evaluation25
- Operational Aspects of Investment Management15
- Key Regulations15
- Ethical Issues15
- Grievance Redress Mechanism15
Exam format
| Questions | 135 · 1 or 2 marks each |
|---|---|
| Duration | 180 min · 3 hours |
| Pass mark | 60% · 90 of 150 marks |
| Negative marking | 25% · 0.25 or 0.5 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series X-A Investment Adviser (Level 1)
Exam rules read on NISM's site on 3 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 3 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 4 questions on Introduction to Personal Financial Planning, with answers
Q1Which statement most clearly specifies a financial goal that an adviser can evaluate for funding?
Option A. I want my money to grow quickly so I can retire early and comfortably.
Why it is wrong: A states a broad wish to retire early but gives neither a required amount nor a payment date.
Option B. I want to buy whichever investment performed best last year.
Why it is wrong: B names a way of selecting investments, not the amount and timing of a financial need.
Option C. I need ₹12,00,000, payable five years from today, for a house down payment. — Correct answer
Option D. I want to earn more from my investments than my colleagues earn.
Why it is wrong: D compares income with other people but does not define a specific future payment.
Answer: C. C defines the purpose, target amount and horizon sufficiently to begin evaluating funding. Read each statement for a purpose, an amount and a deadline. C supplies a house down payment, ₹12,00,000 and a date five years away. Its wording also states that ₹12,00,000 is the amount payable then, rather than today’s cost. These details allow a funding calculation. They do not prove that the goal is affordable or that any particular investment is suitable. Remember: Specify the goal before choosing how to fund it. Distinguish a future cash requirement from a cost quoted in today’s money.
Hint, shown before you answer in practice mode: Common mistake: Applying inflation again to a target already expressly stated as the future amount payable.
X-A-001easyconceptual
Q2A client has ₹8,00,000 in bank deposits, investments worth ₹14,00,000 and a house worth ₹55,00,000. Outstanding housing and vehicle loans are ₹22,00,000 and ₹3,00,000 respectively. Using these current values and outstanding balances, what is the client’s net worth?
Option A. ₹77,00,000
Why it is wrong: ₹77,00,000 is gross assets before deducting the loans.
Option B. ₹52,00,000 — Correct answer
Option C. ₹55,00,000
Why it is wrong: ₹55,00,000 is only the house value. It is not the household’s net worth.
Option D. ₹25,00,000
Why it is wrong: ₹25,00,000 is total liabilities, not assets less liabilities.
Answer: B. ₹52,00,000 is the residual asset value after both outstanding loans are deducted. Add current assets: ₹8,00,000 + ₹14,00,000 + ₹55,00,000 = ₹77,00,000. Add the unpaid loan balances: ₹22,00,000 + ₹3,00,000 = ₹25,00,000. Subtract liabilities once: ₹77,00,000 − ₹25,00,000 = ₹52,00,000. Include the house as an asset and its loan separately as a liability. Remember: A financed asset is not excluded from the balance sheet. Record both its current value and its outstanding debt without double counting.
Hint, shown before you answer in practice mode: Common mistake: Deducting a loan from an asset first and then deducting the same loan again from total assets.
X-A-002easynumerical
Q3A client initially has cash of ₹10,00,000, other assets of ₹40,00,000 and liabilities of ₹15,00,000. The client buys a car worth ₹8,00,000 using ₹2,00,000 cash and a new ₹6,00,000 loan. Assume the car’s immediate market value equals its price, with no fees or depreciation. What happens to net worth immediately after the purchase?
Option A. It increases by ₹8,00,000.
Why it is wrong: The car cannot be counted as an ₹8,00,000 gain while ignoring the cash used and debt incurred.
Option B. It decreases by ₹2,00,000.
Why it is wrong: The ₹2,00,000 cash payment buys part of an equally valued asset. It is not an immediate loss under these assumptions.
Option C. It decreases by ₹6,00,000.
Why it is wrong: The new loan is matched by the acquisition of an asset, so subtracting the loan alone is incomplete.
Option D. It remains ₹35,00,000. — Correct answer
Answer: D. The before-and-after calculations both give ₹35,00,000. Before purchase: assets are ₹10,00,000 + ₹40,00,000 = ₹50,00,000. Net worth is ₹50,00,000 − ₹15,00,000 = ₹35,00,000. After purchase: cash falls to ₹8,00,000, other assets remain ₹40,00,000 and the car adds ₹8,00,000. Total assets become ₹56,00,000. Liabilities increase by ₹6,00,000 to ₹21,00,000. Net worth remains ₹56,00,000 − ₹21,00,000 = ₹35,00,000. Remember: An equal-value asset exchange does not itself create wealth. Fees, overpayment or immediate depreciation would change the result, but are expressly excluded.
Hint, shown before you answer in practice mode: Common mistake: Following only the change in cash or only the change in debt rather than both sides of the balance sheet.
X-A-003mediumconceptual
Q4A client can currently invest ₹25,000 a month. Under the agreed planning assumptions, funding all stated goals would require ₹40,000 a month. Which is the most appropriate next planning step?
Option A. Discuss priorities, target amounts, deadlines and ways to increase the investible surplus. — Correct answer
Option B. Keep every goal unchanged and raise the assumed investment return until the plan balances.
Why it is wrong: Raising an assumed return changes a projection, not the current capacity to contribute. The associated risk cannot be ignored.
Option C. Borrow the monthly shortfall before assessing the effect of repayments on the budget.
Why it is wrong: Borrowing creates repayment obligations. Taking a loan before assessing affordability may worsen the cash-flow constraint.
Option D. Choose the recent best-performing investment without revisiting the funding assumptions.
Why it is wrong: Choosing a product based on recent returns does not establish that the stated contribution gap will be funded.
Answer: A. This addresses the actual constraint and includes the client in choosing the trade-offs. Required contribution is ₹40,000 per month. Available contribution is ₹25,000. The monthly funding gap is ₹15,000. The next step is to discuss which goals matter most and whether target amounts, dates or the surplus can realistically change. Only after agreeing feasible changes should the adviser reassess investments and risk. The question does not identify any specific goal as the one to cut. Remember: Adjust resources or goals transparently rather than making an unfunded plan appear feasible through optimistic return assumptions.
Hint, shown before you answer in practice mode: Common mistake: Treating a forecast return as certain funding or recommending borrowing without evaluating the new repayment burden.
X-A-004mediumconceptual
Introduction to Personal Financial Planning: common questions
How many practice questions are there on Introduction to Personal Financial Planning?
4 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 20 practice topics for NISM Series X-A, which has 285 questions in total.
Are these real NISM Series X-A questions on Introduction to Personal Financial Planning?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
Does negative marking apply to NISM Series X-A?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1 or 2-mark question that is 0.25 or 0.5 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Time Value of Money
14 questions on Time Value of Money. Its quiz opens on that unit.
Open Time Value of Money