Series XXI-A
Portfolio Management Services (PMS) Distributors
50 questionsPass mark 60%Negative marking 10% / wrong answer
NISM Series XXI-A practice questions
150 questions. Each answer is explained.
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Learn these topics
Practise one unit at a time
- Investments11 questions
- Introduction to Securities Markets7 questions
- Investing in Stocks15 questions
- Investing in Fixed Income Securities8 questions
- Derivatives7 questions
- Collective Investment Vehicles8 questions
- Role of Portfolio Managers15 questions
- Operational Aspects of Portfolio Managers20 questions
- Portfolio Management Process22 questions
- Performance Measurement and Evaluation of Portfolio Managers15 questions
- Taxation7 questions
- Regulatory, Governance and Ethical Aspects of Portfolio Managers15 questions
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 10% · 0.1 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
NISM Series XXI-A Portfolio Management Services (PMS) Distributors
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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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.
5 sample questions with answers
The other 145 are on the unit pages above, written out the same way.
Q1An analyst uses a nominal risk-free rate of 6% and adds a 4 percentage-point risk premium. Under this stated model, what required return results?
Option A. 6.24%
Why it is wrong: This treats 4% as a percentage increase in the six-percent rate rather than a four-point premium.
Option B. 4%
Why it is wrong: This omits the risk-free component of the required return.
Option C. 10% — Correct answer
Option D. 2%
Why it is wrong: Subtracting the premium would reduce the return required for bearing risk.
Answer: C. A risk premium is additional required compensation for exposure beyond the selected risk-free reference. The question specifies an additive model, so no further compounding convention is needed. Required return = 6% + 4 percentage points = 10%. This is a required return, not a promised realised return. Remember: Keep a percentage-point premium distinct from a percentage change in a rate.
Hint, shown before you answer in practice mode: Common mistake: Treating the required return as a guaranteed outcome.
XXI-A-006easynumerical
Q2A share has a P/E of 24 and forecast annual earnings growth of 12%. Using the PEG convention with growth entered as the whole percentage number, what is the PEG ratio?
Option A. 200.00
Why it is wrong: This substitutes growth as a decimal even though the convention requires 12.
Option B. 288.00
Why it is wrong: This multiplies P/E and the growth number instead of dividing.
Option C. 2.00 — Correct answer
Option D. 0.50
Why it is wrong: This reverses the numerator and denominator.
Answer: C. PEG relates an earnings multiple to an assumed growth rate. Its value depends on the convention and credibility of the growth forecast. Use PEG = P/E ÷ growth expressed as a whole percentage number. Substitute 24 ÷ 12 = 2.00. A computed PEG does not establish that the growth forecast will be achieved. Remember: State and follow the growth-unit convention in PEG calculations.
Hint, shown before you answer in practice mode: Common mistake: Using 0.12 instead of 12 under the whole-percentage convention.
XXI-A-026mediumnumerical
Q3A share is bought for ₹1,000 together with a put of strike ₹1,000 costing ₹25. At expiry the share is ₹800. What is the combined net profit or loss per share, ignoring costs and financing?
Option A. A loss of ₹225
Why it is wrong: This counts the share loss and premium but ignores the put’s payoff.
Option B. A profit of ₹175
Why it is wrong: This counts the put payoff less premium while omitting the loss on the share.
Option C. A loss of ₹25 — Correct answer
Option D. No profit or loss
Why it is wrong: This offsets the share loss with the put payoff but omits the premium.
Answer: C. A protective put can limit downside from the combined position, but the option premium still affects the net result. Share profit = ₹800 − ₹1,000 = −₹200. Put payoff = max(₹1,000 − ₹800, 0) = ₹200. Combined result = −₹200 + ₹200 − ₹25 = −₹25 per share. The protection is not free. Remember: Calculate all legs and the premium when evaluating a hedged position.
Hint, shown before you answer in practice mode: Common mistake: Looking only at the profitable hedge leg.
XXI-A-045hardconceptual
Q4On ₹100 lakh for one year, gross profit is ₹12 lakh. Contract H charges 20% only on profit above an 8% hurdle. Contract S charges 20% on all profit once that hurdle is exceeded. No other condition applies. How much more fee does S charge?
Option A. ₹1.60 lakh — Correct answer
Option B. ₹0
Why it is wrong: The two expressly defined fee bases are different once the hurdle is exceeded.
Option C. ₹0.80 lakh
Why it is wrong: This is H’s fee, not the difference between the two fees.
Option D. ₹2.40 lakh
Why it is wrong: This is S’s total fee, not its excess over H.
Answer: A. Hurdle terminology is not enough without the contract’s fee-base definition. These supplied methods charge on different profit amounts. H fee = (₹12 lakh − ₹8 lakh) × 20% = ₹0.80 lakh. S fee = ₹12 lakh × 20% = ₹2.40 lakh because the hurdle was crossed. Difference = ₹2.40 lakh − ₹0.80 lakh = ₹1.60 lakh. Remember: Compare fee formulas, not just the headline percentage and hurdle rate.
Hint, shown before you answer in practice mode: Common mistake: Assuming that every contract with the same hurdle has the same fee outcome.
XXI-A-082hardnumerical
Q5Which statement correctly distinguishes the Sharpe and Treynor measures?
Option A. Both always use the same denominator and therefore give identical rankings.
Why it is wrong: Total volatility and beta are different measures, so rankings can differ.
Option B. Sharpe uses total standard deviation, while Treynor uses beta. — Correct answer
Option C. Treynor removes the need to examine unsystematic risk in a concentrated portfolio.
Why it is wrong: A beta-based measure does not show all idiosyncratic risk in a concentrated holding.
Option D. Sharpe uses only downside deviations, while Treynor uses total standard deviation.
Why it is wrong: The usual Sharpe measure uses total standard deviation, and Treynor uses beta.
Answer: B. Risk-adjusted measures answer different questions depending on their risk denominator. Sharpe assesses excess return relative to total variation in portfolio returns. Treynor uses market-related risk through beta, which is especially important to interpret alongside the portfolio’s diversification and the investor’s wider holdings. Remember: Choose and interpret the denominator rather than treating all risk-adjusted ratios as interchangeable.
Hint, shown before you answer in practice mode: Common mistake: Using a beta-based ratio as the complete risk assessment of a concentrated portfolio.
XXI-A-121mediumconceptual
NISM Series XXI-A practice: common questions
Are these the real NISM Series XXI-A exam questions?
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.
How many practice questions are there for NISM Series XXI-A?
150 at the moment, across 12 practice topics, with one page per unit. It is a practice set, not a copy of the paper: the real NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors Certification Examination has 100 questions.
Where are all the questions and answers?
On the 12 practice topics listed above. There are 5 in full. Each unit's page has the rest, with all four options, the correct answer and why each other option is wrong.
Does negative marking apply to NISM Series XXI-A?
Yes. NISM takes off 10% of a question's marks for a wrong answer. On a 1-mark question that is 0.1 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.
How do I book the NISM Series XXI-A exam?
You register and pay on NISM's own website, nism.ac.in. The steps and the fee change from time to time, so read them there on the day you book.
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.
See the exam these questions follow
The Portfolio Management Services (PMS) Distributors exam page shows the question count, the time, the pass mark and the marking rule.
Open the NISM Series XXI-A exam page