Characteristics of Equity Shares
10 questions. Each answer is explained.
Question 1 of 10Practice · Series II-A — Registrars to an Issue and Share Transfer Agents - Corporate
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Learn these topics
More units in NISM Series II-A
- Introduction to Securities10
- Characteristics of Debt Securities10
- Characteristics of Other Securities10
- Basics of Mutual Funds10
- SEBI – Role and Regulations10
- Public Offer of Securities10
- Modes of allotment of shares other than Public Offers10
- Processes related to Public Offering of Shares10
- Roles and Responsibilities in a Public Issue10
- Depository Services10
- Processes Related to Depositories10
- Investor Interface with the R&T Agent10
- Secondary Market Transactions10
- Client Servicing10
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 50% · 50 of 100 marks |
| Negative marking | None · a wrong answer costs nothing beyond the mark |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | 6 of 100 marks (6%) |
Source: March 2025 Annexure I, Unit 2: Characteristic of Equity Shares
NISM Series II-A Registrars to an Issue and Share Transfer Agents - Corporate
Exam rules read on NISM's site on 31 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 31 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 10 questions on Characteristics of Equity Shares, with answers
Q1Which term describes the nominal amount assigned to one share in the company’s capital records?
Option A. Market value
Why it is wrong: Market value is the price at which the share trades.
Option B. Face value — Correct answer
Option C. Trading turnover
Why it is wrong: Trading turnover measures the value or volume traded, not nominal capital per share.
Option D. Issue premium
Why it is wrong: Issue premium is the issue price above face value.
Answer: B. Face value is the nominal amount assigned to a share in the company’s capital records. Remember: Face value and market price measure different things.
Hint, shown before you answer in practice mode: The amount in the capital record need not equal the exchange price. Common mistake: Using the share’s trading price as its face value.
II-A-011easyconceptual
Q2Which action is a normal ownership right associated with ordinary voting equity shares?
Option A. Directing every company employee personally
Why it is wrong: Share ownership does not give each holder direct authority over every employee.
Option B. Demanding a daily dividend payment
Why it is wrong: Equity ownership does not promise daily dividends.
Option C. Fixing the stock exchange closing price
Why it is wrong: Shareholders cannot individually set the exchange closing price.
Option D. Voting on eligible shareholder resolutions — Correct answer
Answer: D. Voting on eligible shareholder resolutions is a normal right of ordinary voting equity holders. Remember: Voting rights let shareholders participate in specified company decisions.
Hint, shown before you answer in practice mode: Ownership rights operate through formal company decision-making processes. Common mistake: Confusing shareholder rights with day-to-day management powers.
II-A-012easyconceptual
Q3Which investor is an institutional investor rather than an individual public shareholder?
Option A. A pension fund — Correct answer
Option B. An individual retired teacher
Why it is wrong: An individual retired teacher investing personally is not an institution.
Option C. An individual salaried worker
Why it is wrong: An individual salaried worker investing personally is not an institution.
Option D. An individual shopkeeper
Why it is wrong: An individual shopkeeper investing personally is not an institution.
Answer: A. A pension fund is an institutional investor because it invests pooled retirement assets through an institution. Remember: Institutional investors invest through organised investment entities.
Hint, shown before you answer in practice mode: Distinguish an investment institution from a person investing personal savings. Common mistake: Classifying an investor only by the size of a personal investment.
II-A-013easyconceptual
Q4A company issues 20,000 shares at ₹35 each with ₹10 face value. What is the total securities premium?
Option A. ₹2,00,000
Why it is wrong: ₹2,00,000 is the nominal share capital, not the premium.
Option B. ₹5,00,000 — Correct answer
Option C. ₹7,00,000
Why it is wrong: ₹7,00,000 is the whole issue amount, including face value.
Option D. ₹9,00,000
Why it is wrong: ₹9,00,000 adds nominal capital to the whole issue amount and double counts it.
Answer: B. The securities premium is ₹5,00,000. Premium per share = ₹35 − ₹10 = ₹25. Total premium = 20,000 × ₹25 = ₹5,00,000. Remember: Issue proceeds contain nominal capital and any premium.
Hint, shown before you answer in practice mode: Only the part of the issue price above nominal value forms the premium. Common mistake: Calling the full issue price a premium.
II-A-014mediumnumerical
Q5A company has 80,000 issued shares of ₹10 each, with ₹8 paid per share. What is its paid-up capital?
Option A. ₹8,00,000
Why it is wrong: ₹8,00,000 is the full nominal amount if every share were fully paid.
Option B. ₹1,60,000
Why it is wrong: ₹1,60,000 is the unpaid portion of the nominal capital.
Option C. ₹6,40,000 — Correct answer
Option D. ₹5,12,000
Why it is wrong: ₹5,12,000 applies the 80% paid proportion twice instead of using ₹8 once per share.
Answer: C. Paid-up capital is ₹6,40,000. Calculation: 80,000 shares × ₹8 paid per share = ₹6,40,000. Remember: Paid-up capital counts the nominal amount paid on issued shares.
Hint, shown before you answer in practice mode: Use the amount actually paid per issued share, not the maximum nominal amount. Common mistake: Multiplying issued shares by face value when the shares are only partly paid.
II-A-015mediumnumerical
Q6A declared dividend is 40% of ₹5 face value. What gross dividend is payable on 750 fully paid shares?
Option A. ₹15,000
Why it is wrong: ₹15,000 shifts the correct amount by one decimal place.
Option B. ₹3,750
Why it is wrong: ₹3,750 is the total face value of the holding.
Option C. ₹300
Why it is wrong: ₹300 applies 40% to the number of shares instead of to their face value.
Option D. ₹1,500 — Correct answer
Answer: D. The gross dividend is ₹1,500. Dividend per share = 40% × ₹5 = ₹2. Total dividend = 750 × ₹2 = ₹1,500, before any applicable tax deduction. Remember: A dividend percentage stated on face value is not a percentage of market price.
Hint, shown before you answer in practice mode: Find the dividend on one share before applying the holding size. Common mistake: Using market price to calculate a face-value-based dividend.
II-A-016mediumnumerical
Q7An investor holds 900 shares before a bonus issue of one new share for every three held. What is the new holding?
Option A. 300 shares
Why it is wrong: 300 shares is only the bonus entitlement.
Option B. 1,200 shares — Correct answer
Option C. 1,800 shares
Why it is wrong: 1,800 shares assumes a one-for-one bonus instead of one for three.
Option D. 2,700 shares
Why it is wrong: 2,700 shares multiplies the old holding by the denominator of the ratio.
Answer: B. The new holding is 1,200 shares. Bonus shares = 900 ÷ 3 = 300. Total holding = 900 + 300 = 1,200 shares. Remember: Bonus shares are added to shares already held.
Hint, shown before you answer in practice mode: Add the bonus entitlement to the original holding. Common mistake: Reporting only the new bonus shares as the total holding.
II-A-017mediumnumerical
Q8An investor holds 240 shares of ₹10 face value. Each splits into five ₹2 shares. What happens to the holding?
Option A. 48 shares with ₹96 total face value
Why it is wrong: 48 shares treats a split as a five-for-one consolidation.
Option B. 1,200 shares with ₹12,000 total face value
Why it is wrong: ₹12,000 incorrectly keeps the old face value after increasing the share count.
Option C. 1,200 shares with ₹2,400 total face value — Correct answer
Option D. 240 shares with ₹480 total face value
Why it is wrong: 240 shares keeps the old quantity after reducing face value.
Answer: C. The investor holds 1,200 shares with total face value of ₹2,400. New quantity = 240 × 5 = 1,200. Total face value = 1,200 × ₹2 = ₹2,400. Remember: A stock split preserves the holding’s total face value.
Hint, shown before you answer in practice mode: A split changes the number and face value per share, not total nominal capital. Common mistake: Assuming a split by itself creates extra nominal capital.
II-A-018mediumnumerical
Q9An investor holds 1,000 shares at ₹180 each. Five shares are consolidated into one. Assuming no other change, what is the adjusted holding?
Option A. 1,000 shares at ₹900 each
Why it is wrong: 1,000 shares at ₹900 increases value while failing to reduce the share count.
Option B. 200 shares at ₹180 each
Why it is wrong: 200 shares at ₹180 reduces theoretical value without any other stated change.
Option C. 5,000 shares at ₹36 each
Why it is wrong: 5,000 shares at ₹36 describes the opposite action, a five-for-one split.
Option D. 200 shares at ₹900 each — Correct answer
Answer: D. The adjusted holding is 200 shares at a theoretical ₹900 each. Quantity = 1,000 ÷ 5 = 200. Price = ₹180 × 5 = ₹900, leaving theoretical value at ₹1,80,000. Remember: A consolidation reduces quantity and proportionately raises the theoretical price.
Hint, shown before you answer in practice mode: Preserve the theoretical total value while applying the consolidation ratio. Common mistake: Applying the split rule to a consolidation.
II-A-019hardnumerical
Q10A company has 10 lakh shares. It buys back and cancels 2 lakh. An investor keeps 40,000 shares. What is the investor’s new ownership percentage?
Option A. 4%
Why it is wrong: 4% is the ownership percentage before the cancellation.
Option B. 20%
Why it is wrong: 20% is the proportion of company shares bought back, not this investor’s holding.
Option C. 8%
Why it is wrong: 8% mistakes the remaining share count for a percentage calculation.
Option D. 5% — Correct answer
Answer: D. The new ownership percentage is 5%. Remaining shares = 10 lakh − 2 lakh = 8 lakh. Ownership = 40,000 ÷ 8,00,000 × 100 = 5%. Remember: Cancellation can increase a continuing holder’s percentage without increasing their share count.
Hint, shown before you answer in practice mode: The investor’s share count stays the same while total outstanding shares fall. Common mistake: Keeping the old outstanding-share denominator after a buyback.
II-A-020hardnumerical
Characteristics of Equity Shares: common questions
How many practice questions are there on Characteristics of Equity Shares?
10 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 15 practice topics for NISM Series II-A, which has 150 questions in total.
Are these real NISM Series II-A questions on Characteristics of Equity Shares?
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 much of the NISM Series II-A exam is Characteristics of Equity Shares?
NISM's published syllabus outline gives it 6 of the paper's 100 marks, or 6% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: March 2025 Annexure I, Unit 2: Characteristic of Equity Shares
Does negative marking apply to NISM Series II-A?
No. NISM applies no negative marking to Series II-A. A wrong answer costs nothing beyond the mark you did not earn, so a blank is never better than an attempt. 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.
Characteristics of Debt Securities
10 questions on Characteristics of Debt Securities. Its quiz opens on that unit.
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