Corporate Actions
7 questions. Each answer is explained.
Question 1 of 7Practice · Series XV — Research Analyst
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Learn these topics
More units in NISM Series XV
- Introduction to Research Analyst Profession2
- Introduction to Securities Market3
- Terminology in Equity and Debt Markets3
- Fundamentals of Research7
- Economic Analysis7
- Industry Analysis12
- Company Analysis – Business and Governance9
- Company Analysis – Financial Analysis16
- Valuation Principles13
- Fundamental analysis of commodities9
- Fundamentals of Risk and Return10
- Qualities of a Good Research Report7
- Legal and Regulatory Environment15
- Technical Analysis22
- Case Study - Valuation8
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 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 XV Research Analyst
Exam rules read on NISM's site on 3 October 2026. Exam pattern revised on 20 January 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 7 questions on Corporate Actions, with answers
Q1A company announces a 1:2 bonus issue. An investor owns 600 shares immediately before the entitlement is applied. Ignoring market-price movements, how many shares would the investor hold after receiving the bonus?
Option A. 600
Why it is wrong: This ignores the bonus shares.
Option B. 1,200
Why it is wrong: 1,200 shares would correspond to doubling the holding, such as a 1:1 bonus.
Option C. 800
Why it is wrong: A 1:2 ratio does not add only 200 shares to a holding of 600.
Option D. 900 — Correct answer
Answer: D. A 1:2 bonus issue means one additional share for every two shares held. On 600 existing shares, the investor receives 300 bonus shares and therefore holds 900 shares after the issue. Remember: A bonus issue increases the number of shares held according to the announced ratio. It does not by itself create proportional ownership out of nothing.
Hint, shown before you answer in practice mode: Common mistake: Confusing a 1:2 bonus with a 2:1 or 1:1 bonus.
XV-052easynumerical
Q2Which statement best describes a rights issue?
Option A. New shares are offered first to eligible existing shareholders in a specified entitlement ratio, on stated terms — Correct answer
Option B. The company compulsorily repurchases shares from all shareholders in proportion to their holdings, at a fixed price
Why it is wrong: That describes a compulsory repurchase, not a rights issue.
Option C. Existing shareholders automatically receive free shares in a fixed ratio, without paying anything for them
Why it is wrong: That describes a bonus issue.
Option D. The face value of each share is reduced while the number of shares rises proportionately, with no new money raised
Why it is wrong: That describes the economic structure of a stock split.
Answer: A. In a rights issue, eligible existing shareholders receive rights entitlements to subscribe for additional shares in a specified ratio and on stated terms. It is different from a bonus issue because subscription normally requires payment. Remember: Rights issues raise capital by giving eligible existing owners a first opportunity to subscribe according to an entitlement ratio.
Hint, shown before you answer in practice mode: Common mistake: Confusing rights shares, which normally require subscription payment, with free bonus shares.
XV-053easyconceptual
Q3A profitable company uses surplus cash to buy back and extinguish some of its outstanding shares. If net profit is unchanged immediately after the buyback, which mechanical effect is most likely?
Option A. Shares outstanding rise and EPS must fall
Why it is wrong: A buyback reduces, rather than increases, shares outstanding.
Option B. Shares outstanding fall and EPS may rise — Correct answer
Option C. Revenue automatically increases by the amount spent on the buyback
Why it is wrong: The cash outflow is not operating revenue.
Option D. Debt automatically becomes zero
Why it is wrong: A buyback does not automatically eliminate debt.
Answer: B. A buyback reduces the number of outstanding shares when the repurchased shares are extinguished. If net profit is unchanged, earnings are spread over fewer shares, so EPS may mechanically increase. This does not by itself prove that shareholder value has increased. Remember: Buybacks alter capital structure and share count. Assess value creation separately from the mechanical EPS effect.
Hint, shown before you answer in practice mode: Common mistake: Assuming a higher post-buyback EPS automatically means the buyback created economic value.
XV-054mediumconceptual
Q4A company has declared a dividend. An investor buys the share on the ex-dividend date. Which statement is generally correct for that declared dividend?
Option A. The buyer receives twice the declared dividend
Why it is wrong: There is no doubling of dividend entitlement.
Option B. The buyer is normally entitled to that declared dividend
Why it is wrong: Buying on the ex-dividend date is generally too late for entitlement to that dividend.
Option C. The buyer is normally not entitled to that declared dividend — Correct answer
Option D. The dividend becomes a liability of the stock exchange to the buyer
Why it is wrong: The stock exchange does not become liable to pay the issuer’s dividend.
Answer: C. When a share trades ex-dividend, a buyer purchasing on the ex-dividend date generally does not acquire entitlement to the dividend that has already gone ex. The market price may adjust, but the price adjustment is not guaranteed to equal the dividend exactly. Remember: The ex-dividend date separates trades that carry the declared dividend entitlement from those that do not.
Hint, shown before you answer in practice mode: Common mistake: Assuming the buyer on the ex-date still receives the dividend because the record date may be later.
XV-055mediumconceptual
Q5Which statement most accurately distinguishes a stock split from a bonus issue?
Option A. A stock split always raises fresh cash, whereas a bonus issue always creates new debt
Why it is wrong: Neither action is, by itself, a fresh-cash capital raising transaction.
Option B. A stock split changes the company’s operating profit, whereas a bonus issue does not
Why it is wrong: Neither action mechanically changes operating profit.
Option C. A bonus issue reduces the number of shares outstanding, whereas a stock split increases it
Why it is wrong: A bonus issue normally increases, not decreases, shares outstanding.
Option D. A stock split subdivides shares and cuts face value, whereas a bonus issue allots extra shares — Correct answer
Answer: D. A stock split changes the denomination and number of shares by subdividing existing shares, with a proportionate reduction in face value per share. A bonus issue allots additional shares to eligible shareholders in a stated ratio. Neither action by itself changes the operating profit of the business. Remember: Both actions can increase share count, but the corporate mechanics are different.
Hint, shown before you answer in practice mode: Common mistake: Treating a bonus issue and stock split as identical merely because both can lower the quoted price per share mechanically.
XV-056hardconceptual
Q6A conglomerate separates one division into a separately listed company and eligible shareholders receive shares in the new entity according to the approved scheme. This transaction is best described as a:
Option A. Demerger — Correct answer
Option B. Stock split
Why it is wrong: A stock split changes share denomination and count without separating a business.
Option C. Cash dividend
Why it is wrong: A cash dividend distributes cash rather than a business division.
Option D. Rights issue
Why it is wrong: A rights issue raises capital by offering shares to existing shareholders.
Answer: A. A demerger or spin-off separates a business undertaking from an existing company into another entity under the applicable scheme, often resulting in shareholders holding interests in the separated businesses. Remember: Corporate actions can alter the organisational perimeter of a business, not just the number of shares.
Hint, shown before you answer in practice mode: Common mistake: Confusing a separation of business assets with a change in share denomination.
XV-083mediumconceptual
Q7A company carries out a 10-for-1 share consolidation: every 10 existing shares of face value ₹1 each become 1 share of face value ₹10. Ignoring fractional issues and market movements, what happens to an investor holding 1,000 shares?
Option A. The investor holds 10,000 shares after consolidation
Why it is wrong: That would be the direction of a subdivision/split, not a consolidation.
Option B. The investor holds 100 shares after consolidation — Correct answer
Option C. The investor still holds 1,000 shares with face value ₹10 each
Why it is wrong: The number of shares changes.
Option D. The investor receives ₹10,000 cash automatically
Why it is wrong: Consolidation is not automatically a cash distribution.
Answer: B. Under a 10-for-1 consolidation, every 10 old shares become one new share. Therefore 1,000 shares become 100 shares. The face value per share rises proportionately, so the aggregate nominal amount represented by the holding is unchanged by the consolidation itself. Remember: Share consolidation reduces share count while increasing denomination per share proportionately.
Hint, shown before you answer in practice mode: Common mistake: Reversing consolidation and stock split mechanics.
XV-084mediumnumerical
Corporate Actions: common questions
How many practice questions are there on Corporate Actions?
7 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 16 practice topics for NISM Series XV, which has 150 questions in total.
Are these real NISM Series XV questions on Corporate Actions?
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 XV?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 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.
Valuation Principles
13 questions on Valuation Principles. Its quiz opens on that unit.
Open Valuation Principles