Operational Aspects of Investment Management
15 questions. Each answer is explained.
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Learn these topics
More units in NISM Series X-A
- Introduction to Personal Financial Planning4
- 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
- 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 15 questions on Operational Aspects of Investment Management, with answers
Q1A client completed KYC with one SEBI-registered intermediary last year. She now opens an account with another intermediary. What normally happens to her KYC?
Option A. She must repeat the whole KYC process because KYC stays with one intermediary
Why it is wrong: KYC uploaded to a KYC Registration Agency can be used by other SEBI-registered intermediaries.
Option B. Her KYC lapses after a year and must be done again from the start
Why it is wrong: KYC does not lapse just because a year has passed.
Option C. The new intermediary can rely on her record with a KYC Registration Agency — Correct answer
Option D. She needs no KYC at all for the new account because her PAN is enough
Why it is wrong: PAN is one part of KYC. It does not replace the KYC process.
Answer: C. The new intermediary can rely on her existing KYC record. KYC done with one SEBI-registered intermediary is uploaded to a KYC Registration Agency (KRA). Other intermediaries can fetch it, subject to their own checks. Remember: KYC done once and recorded with a KRA can be used across SEBI-registered intermediaries.
Hint, shown before you answer in practice mode: Common mistake: Thinking each new intermediary must start the whole KYC process again.
X-A-226easyconceptual
Q2An investor wants to convert physical share certificates into demat form. Where does she submit the request and the certificates?
Option A. To her depository participant, who sends the request to the company's registrar — Correct answer
Option B. To the stock exchange, which credits the shares after market hours
Why it is wrong: Stock exchanges handle trading. They do not convert physical certificates.
Option C. To SEBI, which approves every conversion before any credit
Why it is wrong: SEBI does not approve individual demat requests.
Option D. To her investment adviser, who keeps the certificates safe until the credit appears
Why it is wrong: An adviser has no role in processing a demat request.
Answer: A. She submits a demat request form and the certificates to her depository participant (DP). The DP sends the request to the company's registrar. Once the registrar confirms, the depository credits her demat account. Remember: Demat requests go through the DP to the issuer's registrar, and the depository then credits the account.
Hint, shown before you answer in practice mode: Common mistake: Assuming the stock exchange or the regulator converts physical certificates.
X-A-227easyconceptual
Q3What is rematerialisation of securities?
Option A. Moving securities from one demat account to another of the same holder
Why it is wrong: That is a transfer between accounts, not rematerialisation.
Option B. Reissuing lost share certificates in the investor's own name
Why it is wrong: That is the issue of duplicate certificates.
Option C. Converting mutual fund units into listed shares of the fund house
Why it is wrong: Units of a fund are not converted into shares of the fund house.
Option D. Turning securities held in demat form back into physical certificates — Correct answer
Answer: D. Rematerialisation turns electronic holdings back into physical certificates. It is the reverse of dematerialisation. The request goes through the investor's depository participant. Remember: Remat is the reverse of demat: electronic holdings become physical certificates again.
Hint, shown before you answer in practice mode: Common mistake: Confusing rematerialisation with moving shares between demat accounts.
X-A-228easyconceptual
Q4A client wants her broker to debit shares from her demat account only to settle her own sales and to pledge them for margin. Which document is designed for these limited uses?
Option A. A general power of attorney over all her demat and bank accounts
Why it is wrong: A broad power of attorney gives far more authority than these limited uses need.
Option B. A nomination form that names the broker
Why it is wrong: Nomination decides who receives holdings on death. It gives no trading authority.
Option C. A delivery instruction slip signed in blank for later use
Why it is wrong: Signing blank delivery slips is unsafe and is not an accepted practice.
Option D. A Demat Debit and Pledge Instruction (DDPI) — Correct answer
Answer: D. A Demat Debit and Pledge Instruction (DDPI) covers exactly these purposes. SEBI introduced it to limit what a broker can do with a client's demat account. It replaces a broad power of attorney for uses such as settling the client's own trades and pledging for margin. Remember: DDPI gives a limited, purpose-specific authority instead of a broad power of attorney.
Hint, shown before you answer in practice mode: Common mistake: Signing a broad power of attorney when only limited authority is needed.
X-A-229mediumapplication
Q5Under SEBI's nomination rules in force from 1 September 2026, how many nominees can an investor name for a demat account?
Option A. Only one, who receives the whole holding
Why it is wrong: More than one nominee is allowed, with shares the investor can set.
Option B. Up to three, with the share for each nominee if she wishes — Correct answer
Option C. Up to ten, as the January 2025 rules allowed
Why it is wrong: The 2026 rules replaced the earlier limit of ten nominees.
Option D. Any number of nominees, as long as each one is a close family member
Why it is wrong: There is a limit on the number, and nominees need not be family.
Answer: B. An investor can name up to three nominees. SEBI's circular of 29 May 2026, in force from 1 September 2026, set this limit and replaced the earlier rules. If shares are not specified, the holding is split equally. Remember: From 1 September 2026, up to three nominees can be named, and an unspecified split is equal.
Hint, shown before you answer in practice mode: Common mistake: Applying the 2025 limit of ten nominees, which the 2026 rules replaced.
X-A-230mediumregulatory
Q6The single holder of a demat account dies, and a nominee is registered on the account. What does the nominee mainly need to submit to receive the securities?
Option A. A claim with the death certificate and the nominee's own KYC — Correct answer
Option B. A succession certificate from a court in every case
Why it is wrong: With a registered nominee, a court document is not routinely needed.
Option C. Signed consent letters from every legal heir before any transfer
Why it is wrong: Transmission to a registered nominee does not wait for every heir's consent.
Option D. Nothing, because the depository moves the holdings on its own
Why it is wrong: The nominee must lodge a claim. Nothing moves automatically.
Answer: A. The nominee lodges a claim with the death certificate and the nominee's own KYC details. A registered nominee makes transmission simple. Court documents are mainly needed when there is no nominee. Remember: With a registered nominee, transmission needs mainly the death certificate and the nominee's KYC.
Hint, shown before you answer in practice mode: Common mistake: Assuming a court document is always needed even when a nominee is registered.
X-A-231mediumapplication
Q7A mutual fund folio was opened for a minor with her father as guardian. She has now turned 18. What must happen before new transactions in the folio?
Option A. Nothing, as the guardian keeps operating the folio until she turns 21 years old
Why it is wrong: The guardian's role ends when the minor becomes a major at 18.
Option B. Redeem everything and close the folio, as such folios cannot continue
Why it is wrong: The folio continues. Only its status changes to the new major.
Option C. Add the father as a joint holder so that operations continue
Why it is wrong: Adding a joint holder does not replace the change of status.
Option D. Change the folio's status to her name, with her own KYC and bank details — Correct answer
Answer: D. The folio must move to her own name, with her KYC and bank details. When a minor turns 18, the guardian can no longer act for her. New transactions wait until this change of status is done. Remember: When a minor turns 18, the account moves to the new adult's own KYC and bank details.
Hint, shown before you answer in practice mode: Common mistake: Letting the guardian keep operating the account after the child turns 18.
X-A-232mediumapplication
Q8A resident client moves abroad for good and becomes a non-resident Indian. What should he do about his resident accounts used for investing?
Option A. Keep using the resident accounts, since residency matters only for tax
Why it is wrong: Residency also decides which accounts he may hold under FEMA.
Option B. Sell all his Indian investments, because NRIs cannot hold any Indian securities
Why it is wrong: NRIs can hold Indian securities, through the right accounts.
Option C. Inform his intermediaries and change the accounts to NRI status under FEMA — Correct answer
Option D. Open a new account for future trades and leave the old ones unchanged
Why it is wrong: The existing resident accounts must also be redesignated.
Answer: C. He must report the change and move his accounts to NRI status. Under FEMA, a non-resident holds investments through non-resident accounts, such as NRO or NRE bank accounts. Resident accounts cannot simply carry on. Remember: A move from resident to non-resident must be reported so accounts are redesignated under FEMA.
Hint, shown before you answer in practice mode: Common mistake: Treating residency as a tax-only matter and leaving resident accounts unchanged.
X-A-233mediumapplication
Q9An employer offers to pay an employee's mutual fund SIP straight from the company's bank account through payroll. How do mutual funds treat this payment?
Option A. It is always accepted, because the units go into the employee's own folio
Why it is wrong: Payments from someone other than the investor are generally refused.
Option B. It can be accepted under the listed employer exception, with declarations — Correct answer
Option C. It is never accepted, because only the investor's own account may pay
Why it is wrong: A few listed cases allow another payer, and payroll is one of them.
Option D. It is accepted only if the employer is added as a joint holder of the folio
Why it is wrong: Joint holding is not how this exception works.
Answer: B. It can be accepted as one of the listed exceptions, with declarations. Mutual funds refuse third-party payments in general. An employer paying through payroll deductions is one of the few cases allowed. Remember: Mutual funds refuse third-party payments except in a few listed cases, such as payroll payments by an employer.
Hint, shown before you answer in practice mode: Common mistake: Assuming third-party payments are either always fine or never allowed.
X-A-234hardapplication
Q10An investment adviser wants to help clients buy funds on a stock exchange mutual fund platform. Which statement is correct?
Option A. The adviser can place direct-plan orders but may earn no commission on them — Correct answer
Option B. The adviser must use regular plans, as the platform offers only those
Why it is wrong: Direct plans can be bought on these platforms.
Option C. The adviser may keep the distribution commission as long as clients are told
Why it is wrong: An adviser may take no commission at all for this service.
Option D. The adviser should hold clients' units in its own name for convenience
Why it is wrong: Units must stay in each client's own name.
Answer: A. The adviser can transact direct plans for clients while earning no commission. SEBI lets registered advisers use exchange platforms for direct plans. Its rules bar any commission or referral fee for implementation services. Remember: An adviser may implement advice through direct plans, but may not earn commission on them.
Hint, shown before you answer in practice mode: Common mistake: Thinking disclosure makes commission acceptable for an adviser.
X-A-235hardregulatory
Q11Why would an investment adviser use transaction feeds from registrars or exchange platforms for its clients' folios?
Option A. To place trades in client folios whenever needed, without asking the clients first
Why it is wrong: Feeds give information only. They give no authority to trade.
Option B. To keep each client's holdings record current for monitoring and review — Correct answer
Option C. To earn trail commission on the clients' direct-plan holdings
Why it is wrong: Direct plans pay no commission, and advisers may not take any.
Option D. To replace the account statements that clients receive
Why it is wrong: Clients still receive their own account statements.
Answer: B. Feeds keep the adviser's record of each client's holdings up to date. Accurate records help the adviser monitor portfolios and review advice. They give no right to trade for the client. Remember: Transaction feeds keep client holdings records up to date for monitoring.
Hint, shown before you answer in practice mode: Common mistake: Treating a data feed as authority to act on a client's account.
X-A-236mediumconceptual
Q12A client pledges mutual fund units to a bank for a loan, and a lien is marked on them. What can she do with the units while the lien stands?
Option A. She can redeem them freely, because the lien affects only dividend payouts
Why it is wrong: A lien blocks redemption as well.
Option B. She can switch them to another scheme, since a switch is not treated as a sale
Why it is wrong: A switch is a redemption followed by a purchase, so it is blocked too.
Option C. She cannot redeem, switch or transfer them until the lender releases the lien — Correct answer
Option D. She stops owning them, as they pass to the bank at once
Why it is wrong: A lien is a charge in the lender's favour. She remains the owner.
Answer: C. She cannot redeem, switch or transfer the units until the lien is released. A lien protects the lender's claim. She still owns the units, but their use is blocked. Remember: A lien blocks redemption, switch or transfer until release, but ownership stays with the investor.
Hint, shown before you answer in practice mode: Common mistake: Treating a switch as allowed because it is not a cash redemption.
X-A-237hardapplication
Q13A client must send ₹5 lakh to a fund collection account, settled on its own and in real time on a working day. Which payment system fits?
Option A. NEFT
Why it is wrong: NEFT settles payments in batches, not one by one in real time.
Option B. RTGS — Correct answer
Option C. A demand draft
Why it is wrong: A demand draft is a paper instrument that takes time to clear.
Option D. A post-dated cheque
Why it is wrong: A cheque goes through clearing and cannot settle in real time.
Answer: B. RTGS fits. It settles each payment individually and in real time, and suits large amounts. Remember: RTGS settles each payment individually in real time. NEFT settles in batches.
Hint, shown before you answer in practice mode: Common mistake: Treating NEFT as real-time settlement.
X-A-238easyconceptual
Q14Which record best shows that a piece of investment advice was suitable for the client?
Option A. A copy of the product brochure that was handed to the client at the meeting
Why it is wrong: A brochure describes the product, not why it suits this client.
Option B. The client's risk profile, the advice and why it suits that profile — Correct answer
Option C. The client's signed note saying that markets carry risk
Why it is wrong: A general risk note does not show that the advice fits the client.
Option D. The product's past returns on the date the advice was given
Why it is wrong: Past returns say nothing about suitability for this client.
Answer: B. Suitability is shown by linking the advice and its reasons to the client's risk profile. SEBI requires advisers to keep risk profiling and suitability records with the advice given.
Hint, shown before you answer in practice mode: Common mistake: Relying on a general risk note as proof that advice was suitable.
X-A-239hardapplication
Q15A client changes her surname after marriage. What should she do so that her investment records match?
Option A. Update her KYC with proof of the new name, so linked records change — Correct answer
Option B. Open new accounts in the new name and leave the old ones as they are
Why it is wrong: Splitting holdings across names causes mismatches. The records should be updated.
Option C. Nothing, because her PAN number has not changed
Why it is wrong: Her name on records must still match her documents.
Option D. Inform only her bank, as registrars copy bank records
Why it is wrong: Registrars and depositories do not take changes from her bank.
Answer: A. She updates her KYC with proof of the new name. The KYC update flows to the records linked to it. A change in name or address is handled through KYC. Remember: A name or address change is updated through KYC so every linked record matches.
Hint, shown before you answer in practice mode: Common mistake: Assuming an unchanged PAN means no update is needed.
X-A-240hardapplication
Operational Aspects of Investment Management: common questions
How many practice questions are there on Operational Aspects of Investment Management?
15 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 Operational Aspects of Investment Management?
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.
Key Regulations
15 questions on Key Regulations. Its quiz opens on that unit.
Open Key Regulations