Public Offer of 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
- Characteristics of Other Securities10
- Basics of Mutual Funds10
- SEBI – Role and Regulations10
- 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 | 5 of 100 marks (5%) |
Source: March 2025 Annexure I, Unit 7: Public Offer of 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 Public Offer of Securities, with answers
Q1What is an initial public offer, commonly called an IPO, in the equity market?
Option A. A restricted offer of share options only to employees
Why it is wrong: An employee-only option offer is not a public equity offer.
Option B. An unlisted company’s first public offer of shares — Correct answer
Option C. An exchange sale between holders of already listed shares
Why it is wrong: An ordinary exchange sale is a secondary-market transaction rather than an IPO.
Option D. A listed company’s later public offer of shares
Why it is wrong: A later public offer by an already listed company is an FPO rather than an IPO.
Answer: B. An IPO is an unlisted company’s first public offer of shares, which may include fresh shares, shares sold by existing holders, or both. Remember: An IPO is a first public offer, not every transaction in a company’s shares.
Hint, shown before you answer in practice mode: Identify the event that introduces the company’s shares to public investors through an initial offer. Common mistake: Calling the first share purchase made by any investor an IPO.
II-A-061easyconceptual
Q2What is a further public offer, commonly called an FPO, by an already listed company?
Option A. A bonus allotment to eligible holders
Why it is wrong: A bonus allotment is not a further public offer for subscription.
Option B. Its first public offer while unlisted
Why it is wrong: A first public offer while the company is unlisted is an IPO.
Option C. A later public offer of its shares — Correct answer
Option D. A rights offer only to existing holders
Why it is wrong: A rights offer is a different issuance route from an FPO.
Answer: C. An FPO is a later public offer of shares by an already listed company. Remember: An FPO follows listing and is distinct from ordinary exchange trading.
Hint, shown before you answer in practice mode: The company is already listed and is making another offer to the public. Common mistake: Treating every later exchange purchase as participation in an FPO.
II-A-062easyconceptual
Q3Which feature distinguishes a public offer of shares from an offer restricted to identified private-placement investors?
Option A. A placement restricted to selected qualified institutional buyers
Why it is wrong: A placement to selected qualified institutional buyers is not an unrestricted public offer.
Option B. An invitation to the public under the offer process — Correct answer
Option C. A grant offered only to employees under an option scheme
Why it is wrong: An employee option scheme has a restricted eligible group.
Option D. An entitlement offered only to existing holders in a rights issue
Why it is wrong: A rights entitlement is addressed to eligible existing holders rather than constituting the public-offer process described.
Answer: B. A public offer invites the public to participate under its prescribed offer process, unlike an offer to identified private-placement investors. Remember: The audience and legal offer process help distinguish public and private issuance.
Hint, shown before you answer in practice mode: Compare who is invited to participate rather than the eventual market price. Common mistake: Classifying an offer solely by how many shares are involved.
II-A-063easyconceptual
Q4In the offer-for-sale portion of an IPO, who normally receives the proceeds from the shares sold, before allocated costs?
Option A. The depository as its own income
Why it is wrong: A depository does not own the sale proceeds.
Option B. The stock exchange as listing revenue
Why it is wrong: Listing revenue is distinct from the consideration paid to selling shareholders.
Option C. The selling shareholders — Correct answer
Option D. The issuing company as fresh share capital
Why it is wrong: The company receives fresh-issue proceeds, not automatically the proceeds of another holder’s sale.
Answer: C. The selling shareholders receive the proceeds of their existing shares because this portion is an offer for sale rather than a fresh issue. Remember: Offer-for-sale proceeds and fresh-issue proceeds have different recipients.
Hint, shown before you answer in practice mode: Track whose existing shares are being sold in this part of the offer. Common mistake: Assuming the entire IPO amount goes to the company.
II-A-064mediumconceptual
Q5A company freshly issues 3 lakh ₹10-face-value shares at ₹120 each. What are the gross fresh-issue proceeds?
Option A. ₹3.6 crore — Correct answer
Option B. ₹36 lakh
Why it is wrong: ₹36 lakh understates the multiplication by a factor of ten.
Option C. ₹3.3 crore
Why it is wrong: ₹3.3 crore counts only the ₹110 premium per share rather than the full issue price.
Option D. ₹30 lakh
Why it is wrong: ₹30 lakh is the nominal capital at ₹10 per share, not the gross proceeds.
Answer: A. Gross fresh-issue proceeds are ₹3.6 crore. Calculation: 3,00,000 shares × ₹120 = ₹3,60,00,000 = ₹3.6 crore. Remember: Gross proceeds equal the subscribed quantity multiplied by the issue price.
Hint, shown before you answer in practice mode: Use the full subscription price, not only the nominal value of each share. Common mistake: Using an assumed face value instead of the stated subscription price.
II-A-065mediumnumerical
Q6For this example only, an offer reserves 12% of 5 lakh shares for an eligible category. How many shares are reserved?
Option A. 60,000 shares — Correct answer
Option B. 50,000 shares
Why it is wrong: 50,000 shares applies 10% rather than the stated 12%.
Option C. 4,40,000 shares
Why it is wrong: 4,40,000 shares is the unreserved balance, not the reserved portion.
Option D. 6,000 shares
Why it is wrong: 6,000 shares understates the percentage calculation by a factor of ten.
Answer: A. The reserved quantity is 60,000 shares. Calculation: 5,00,000 × 12% = 60,000 shares. Remember: Calculate a reservation from the applicable offer terms and total relevant quantity.
Hint, shown before you answer in practice mode: Apply the percentage specified in this case to the total offer quantity. Common mistake: Treating an example percentage as a universal regulatory reservation.
II-A-066mediumnumerical
Q7An investor tenders 500 shares into a buyback. Valid offers exceed the shares available for acceptance. Which assumption is NOT justified?
Option A. The investor should check the final acceptance result
Why it is wrong: Checking the acceptance result is necessary to know what was accepted.
Option B. Every tendered share must be accepted — Correct answer
Option C. Acceptance must follow the applicable offer process
Why it is wrong: Following the applicable offer process is the appropriate approach.
Option D. Tendering expresses willingness to sell into the offer
Why it is wrong: Tendering does communicate a willingness to sell under the offer terms.
Answer: B. Assuming every tendered share must be accepted is unsafe because an oversubscribed tender offer can result in partial acceptance under its applicable rules. Remember: Tendering shares does not guarantee acceptance of the whole quantity.
Hint, shown before you answer in practice mode: Distinguish submitting shares from receiving confirmed acceptance. Common mistake: Recording a full buyback sale before the acceptance result is known.
II-A-067mediumapplication
Q8A public-offer document has completed the regulatory review process. What should an investor NOT infer from that fact alone?
Option A. The investment is guaranteed to be profitable — Correct answer
Option B. The investor should read the stated risk factors
Why it is wrong: Reading risk factors remains necessary after regulatory review.
Option C. The offer remains subject to its disclosed terms
Why it is wrong: The disclosed offer terms still matter.
Option D. The investor must assess the company’s business risks
Why it is wrong: Investors still need to assess business risk.
Answer: A. The investor should not infer guaranteed profitability because regulatory review does not remove the business and market risks of an investment. Remember: Regulatory review is not a promise of investment returns.
Hint, shown before you answer in practice mode: Distinguish regulatory processing from an assurance about investment performance. Common mistake: Reading a regulatory process as an investment recommendation.
II-A-068mediumconceptual
Q9An IPO includes 2 lakh fresh shares and 1 lakh existing shares sold at ₹150 each. How much goes to the company and sellers before costs?
Option A. ₹3 crore to the company and ₹1.5 crore to sellers — Correct answer
Option B. ₹4.5 crore to the company and ₹0 to sellers
Why it is wrong: ₹4.5 crore incorrectly treats the entire offer as fresh capital.
Option C. ₹1.5 crore to the company and ₹3 crore to sellers
Why it is wrong: The allocations reverse the fresh-issue and offer-for-sale quantities.
Option D. ₹3 crore to the company and ₹3 crore to sellers
Why it is wrong: ₹3 crore for sellers uses the fresh-issue quantity twice.
Answer: A. The company receives ₹3 crore and sellers receive ₹1.5 crore before costs. Fresh issue = 2,00,000 × ₹150 = ₹3 crore. Offer for sale = 1,00,000 × ₹150 = ₹1.5 crore. Remember: A mixed IPO must be separated into fresh issuance and existing-share sales.
Hint, shown before you answer in practice mode: Separate the two portions of the offer before allocating proceeds. Common mistake: Allocating all offer proceeds using only the total IPO size.
II-A-069hardnumerical
Q10Before an offer, a company has 8 lakh shares and a promoter holds 4 lakh. It issues 2 lakh fresh shares to others. What is the promoter’s percentage afterward?
Option A. 60%
Why it is wrong: 60% would require the promoter to own more shares than stated.
Option B. 40% — Correct answer
Option C. 50%
Why it is wrong: 50% is the pre-issue ownership percentage.
Option D. 25%
Why it is wrong: 25% divides the new issue by the old total and does not measure promoter ownership.
Answer: B. The promoter’s holding becomes 40%. Total shares after the issue = 8 lakh + 2 lakh = 10 lakh. Promoter percentage = 4 lakh ÷ 10 lakh × 100 = 40%. Remember: Fresh issuance can dilute an existing holder’s percentage ownership.
Hint, shown before you answer in practice mode: The promoter keeps the same holding while the company’s total share count increases. Common mistake: Using the pre-issue total shares after new shares have been allotted.
II-A-070hardnumerical
Public Offer of Securities: common questions
How many practice questions are there on Public Offer of 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 Public Offer of 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 Public Offer of Securities?
NISM's published syllabus outline gives it 5 of the paper's 100 marks, or 5% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: March 2025 Annexure I, Unit 7: Public Offer of 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.
Modes of allotment of shares other than Public Offers
10 questions on Modes of allotment of shares other than Public Offers. Its quiz opens on that unit.
Open Modes of allotment of shares other than Public OffersPaper Trading Try it on the practice trading desk