Characteristics of Other Securities
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 Equity Shares10
- Characteristics of Debt 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 | 3 of 100 marks (3%) |
Source: March 2025 Annexure I, Unit 4: Characteristics of Other Securities
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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 Other Securities, with answers
Q1What does an equity warrant normally give its holder under the stated issue terms?
Option A. A right to subscribe on agreed terms — Correct answer
Option B. An immediate right to shareholder voting
Why it is wrong: An unexercised warrant does not by itself give the voting rights of an allotted ordinary share.
Option C. An unconditional right to cash interest
Why it is wrong: An equity warrant does not itself promise cash interest.
Option D. An obligation to subscribe at expiry
Why it is wrong: A warrant gives an exercise right rather than an unavoidable subscription obligation.
Answer: A. An equity warrant normally gives a right to subscribe for shares on the terms set for exercise. Remember: A warrant is a right governed by its exercise terms.
Hint, shown before you answer in practice mode: Distinguish an exercisable right from an obligation or a guaranteed outcome. Common mistake: Treating an optional exercise right as a guaranteed profit.
II-A-031easyconceptual
Q2What does a depository receipt generally represent for an investor in an overseas market?
Option A. A deposit owed by an overseas bank
Why it is wrong: A depository receipt is not simply a bank deposit despite the similar wording.
Option B. A loan owed by a company promoter
Why it is wrong: The receipt is not a personal loan to the company’s promoter.
Option C. An interest in underlying company shares — Correct answer
Option D. A repayment guarantee from a foreign government
Why it is wrong: Issuing a receipt does not create a foreign-government repayment guarantee.
Answer: C. A depository receipt generally represents an interest in underlying company shares held through a depositary arrangement. Remember: A depository receipt gives exposure to underlying shares through a separate instrument.
Hint, shown before you answer in practice mode: Think about a marketable receipt backed by securities held through a depositary arrangement. Common mistake: Confusing a securities receipt with a bank deposit receipt.
II-A-032easyconceptual
Q3Which pairing correctly matches the primary assets of a Real Estate Investment Trust (REIT) and an Infrastructure Investment Trust (InvIT)?
Option A. Money-market instruments and equity indices, respectively
Why it is wrong: These describe different types of investment exposure rather than the defining trust assets.
Option B. Infrastructure and real estate, respectively
Why it is wrong: This pairing reverses the two asset categories.
Option C. Corporate deposits and government bonds, respectively
Why it is wrong: Deposits and government bonds are not the defining asset pairing for REITs and InvITs.
Option D. Real estate and infrastructure, respectively — Correct answer
Answer: D. A REIT primarily concerns real estate assets, while an InvIT concerns infrastructure assets. Remember: A REIT and an InvIT differ principally in their underlying asset focus.
Hint, shown before you answer in practice mode: Match each trust structure with its principal asset category. Common mistake: Interchanging real estate trusts and infrastructure trusts.
II-A-033easyconceptual
Q4Ten ₹1,000 debentures convert fully at ₹50 per share of ₹10 face value. How many shares are received?
Option A. 20 shares
Why it is wrong: 20 shares is the conversion entitlement of only one debenture.
Option B. 10,000 shares
Why it is wrong: 10,000 is the rupee amount converted, not the share quantity.
Option C. 1,000 shares
Why it is wrong: 1,000 shares divides by face value instead of the stated conversion price.
Option D. 200 shares — Correct answer
Answer: D. The investor receives 200 shares. Amount converted = 10 × ₹1,000 = ₹10,000. Shares = ₹10,000 ÷ ₹50 = 200. Remember: Conversion quantity depends on the amount converted and the conversion price.
Hint, shown before you answer in practice mode: First identify the total debt amount being converted. Common mistake: Forgetting to include every debenture in the holding.
II-A-034mediumnumerical
Q5How does an ordinary retail investor normally buy or sell listed exchange-traded fund units during market hours?
Option A. At a guaranteed price fixed by the regulator
Why it is wrong: The regulator does not guarantee a trading price.
Option B. Only through a company rights application
Why it is wrong: A rights application is not the normal route for trading ETF units.
Option C. At exchange-traded prices through a broker — Correct answer
Option D. Only at the issuer’s original face value
Why it is wrong: Face value does not fix the exchange trading price.
Answer: C. Listed exchange-traded fund units normally trade through a broker at exchange prices, which can differ from net asset value. Remember: An ETF’s exchange price need not exactly equal its net asset value.
Hint, shown before you answer in practice mode: The way the instrument trades is part of its name. Common mistake: Assuming every trade occurs at the last published net asset value.
II-A-035mediumconceptual
Q6An unhedged foreign-currency bond requires USD 10,000 repayment. The exchange rate rises from ₹80 to ₹85 per dollar. What is the extra rupee cost?
Option A. ₹5,000
Why it is wrong: ₹5,000 understates the stated dollar exposure by a factor of ten.
Option B. ₹8,50,000
Why it is wrong: ₹8,50,000 is the new total rupee payment, not the increase.
Option C. ₹8,00,000
Why it is wrong: ₹8,00,000 is the original rupee equivalent, not the increase.
Option D. ₹50,000 — Correct answer
Answer: D. The extra rupee cost is ₹50,000. Exchange-rate increase = ₹85 − ₹80 = ₹5 per dollar. Additional cost = USD 10,000 × ₹5 = ₹50,000. Remember: An unhedged foreign-currency obligation can become costlier when the rupee weakens.
Hint, shown before you answer in practice mode: Only the change in rupees per dollar creates the additional cost. Common mistake: Reporting the total repayment instead of the additional currency cost.
II-A-036mediumnumerical
Q7A person places money in a company fixed deposit rather than buying its ordinary shares. Which claim normally follows?
Option A. A permanent right to manage the company
Why it is wrong: A depositor does not acquire a permanent management right.
Option B. A proportionate ordinary voting ownership claim
Why it is wrong: Ordinary voting ownership follows share ownership, not merely a company deposit.
Option C. A contractual repayment and interest claim — Correct answer
Option D. A right to every future bonus share
Why it is wrong: Bonus shares are not automatically owed to company depositors.
Answer: C. A company fixed deposit normally creates a contractual repayment and interest claim, rather than ordinary equity ownership. Remember: A company deposit is a credit exposure, not an ordinary equity stake.
Hint, shown before you answer in practice mode: Identify whether the investor is lending to the company or contributing ownership capital. Common mistake: Assuming every investment in a company creates shareholder rights.
II-A-037mediumconceptual
Q8Which description best fits an Alternative Investment Fund rather than a personal trading account?
Option A. A privately pooled fund with a defined investment policy — Correct answer
Option B. A public issue of a single company’s ordinary shares
Why it is wrong: A public issue of one company’s shares is not an AIF pooled-fund structure.
Option C. A bank deposit forming part of the bank’s deposit liabilities
Why it is wrong: A bank deposit is a claim on a bank, not an AIF unit or interest.
Option D. An exchange account used for personal investment trades
Why it is wrong: A personal trading account does not become an AIF merely by holding investments.
Answer: A. An Alternative Investment Fund is a privately pooled investment vehicle that invests under a defined policy for its investors. Remember: An AIF is a pooled structure, not simply any alternative way to invest.
Hint, shown before you answer in practice mode: Look for pooling and a defined investment policy, not merely the word investment. Common mistake: Calling an individual’s unusual portfolio an AIF.
II-A-038mediumconceptual
Q9A warrant bought for ₹12 permits purchase of one share for ₹80. At exercise, the share is worth ₹105. What is the net benefit before transaction costs?
Option A. ₹13 — Correct answer
Option B. ₹25
Why it is wrong: ₹25 is the exercise benefit before deducting the warrant purchase cost.
Option C. ₹37
Why it is wrong: ₹37 adds the warrant cost instead of deducting it.
Option D. ₹93
Why it is wrong: ₹93 subtracts the warrant cost but omits the exercise payment.
Answer: A. The net benefit is ₹13 per warrant. Share value less exercise price = ₹105 − ₹80 = ₹25. Less warrant cost = ₹25 − ₹12 = ₹13. Remember: Total warrant economics include both purchase cost and exercise cost.
Hint, shown before you answer in practice mode: Consider both the exercise payment and the amount already paid for the warrant. Common mistake: Treating the amount paid for the warrant as free.
II-A-039hardnumerical
Q10Two funds follow the same index. One trades on an exchange and the other accepts eligible purchases at an applicable net asset value. Which comparison is sound?
Option A. The exchange-traded fund cannot hold index constituents
Why it is wrong: An ETF can hold securities used to track its index.
Option B. The non-exchange route guarantees the index’s return
Why it is wrong: An index fund can have expenses and tracking differences and does not guarantee the benchmark return.
Option C. Trading method can differ despite the shared benchmark — Correct answer
Option D. Their quoted transaction prices must always be identical
Why it is wrong: Exchange prices can differ from net asset value, so identical transaction prices are not assured.
Answer: C. Trading method can differ despite a shared benchmark because an ETF trades on an exchange while a conventional index fund uses its applicable net asset value. Remember: Compare the trading structure separately from the investment benchmark.
Hint, shown before you answer in practice mode: Sharing a benchmark does not make every trading and pricing feature identical. Common mistake: Assuming two index-tracking products work identically in every respect.
II-A-040hardapplication
Characteristics of Other Securities: common questions
How many practice questions are there on Characteristics of Other Securities?
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 Other Securities?
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 Other Securities?
NISM's published syllabus outline gives it 3 of the paper's 100 marks, or 3% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: March 2025 Annexure I, Unit 4: Characteristics of Other Securities
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.
Basics of Mutual Funds
10 questions on Basics of Mutual Funds. Its quiz opens on that unit.
Open Basics of Mutual FundsPaper Trading Try it on the practice trading desk