Characteristic of Equities
7 questions. Each answer is explained.
Question 1 of 7Practice · Series II-B — Registrars to an Issue and Share Transfer Agents - Mutual Fund
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Learn these topics
More units in NISM Series II-B
- Introduction to Securities5
- Characteristics of Debt Securities7
- Characteristics of Other Securities5
- SEBI- Role and Regulations6
- Basics of Registrars and Transfer Agents12
- Registrars and Transfer Agents Regulations12
- Basics of Mutual Funds14
- Structure and Constituents of Mutual Funds11
- Mutual Fund Products12
- Operational Concepts of Mutual Funds14
- Investors in Mutual Funds10
- Banking Operations in Mutual Funds12
- Financial Transactions12
- Non-Financial Transactions11
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 | 20 of 100 marks (20%) |
That figure belongs to one published unit covered under these headings — Characteristic of Equities and Introduction to Securities and Characteristics of Debt Securities and Characteristics of Other Securities and SEBI- Role and Regulations — so the marks belong to the whole group. They are quoted together because no source divides them among its headings.
Source: March 2025 Annexure I, Units 1 to 5 (Introduction to Securities to SEBI- Role and Regulations): 20%
NISM Series II-B Registrars to an Issue and Share Transfer Agents - Mutual Fund
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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 7 questions on Characteristic of Equities, with answers
Q1Which right is normally associated with an ordinary equity shareholder?
Option A. First claim over secured creditors
Why it is wrong: Secured creditors rank ahead of equity on liquidation.
Option B. Fixed maturity repayment
Why it is wrong: Ordinary shares have no fixed repayment maturity.
Option C. Voting on eligible company resolutions — Correct answer
Option D. Guaranteed annual return
Why it is wrong: Equity does not promise a guaranteed return.
Answer: C. Ordinary equity typically carries voting rights on matters requiring shareholder approval.
Hint, shown before you answer in practice mode: Think about participation in company decisions.
II-B-006easyconceptual
Q2A share has face value ₹10 and a declared 20% dividend. What is its dividend per share?
Option A. ₹20
Why it is wrong: That multiplies the dividend rate by 100 rather than 10.
Option B. ₹0.20
Why it is wrong: That uses ₹1 instead of ₹10 as the base.
Option C. ₹10
Why it is wrong: That is the face value, not 20% of it.
Option D. ₹2 — Correct answer
Answer: D. Dividend per share equals ₹10 × 20% = ₹2.
Hint, shown before you answer in practice mode: Use the face value when interpreting the stated dividend percentage.
II-B-007mediumnumerical
Q3A new share has ₹10 face value and sells for ₹75. What is the share premium?
Option A. ₹65 — Correct answer
Option B. ₹85
Why it is wrong: The face value must be subtracted rather than added.
Option C. ₹10
Why it is wrong: That is the nominal value, not the premium.
Option D. ₹75
Why it is wrong: That is the entire issue price, not the premium.
Answer: A. Share premium equals the issue price ₹75 less face value ₹10, giving ₹65.
Hint, shown before you answer in practice mode: Separate nominal capital from the amount paid above it.
II-B-008mediumnumerical
Q4What is the main purpose of a rights issue offered to existing shareholders?
Option A. Automatically convert the company's bonds into new equity
Why it is wrong: Conversion is a different corporate transaction.
Option B. Give them an opportunity to maintain proportionate ownership — Correct answer
Option C. Promise them a risk-free return on the new shares they buy
Why it is wrong: Shareholding involves investment risk.
Option D. Cancel every existing share and replace it with a new class
Why it is wrong: A rights issue adds the opportunity to subscribe to shares.
Answer: B. A rights issue lets eligible existing owners subscribe to additional shares before dilution.
Hint, shown before you answer in practice mode: Think about dilution when new shares are issued.
II-B-009easyconceptual
Q5Which characteristic generally distinguishes preference shares from ordinary equity?
Option A. Automatic first claim over creditors in every situation
Why it is wrong: Creditors normally rank ahead of shareholders.
Option B. Guaranteed voting control over the company's board
Why it is wrong: Preference shares do not universally grant full ordinary voting rights.
Option C. Preference in specified dividends or capital repayment — Correct answer
Option D. Freedom from every investment risk faced by shareholders
Why it is wrong: Preference shares still carry issuer and market risks.
Answer: C. Preference shares generally have priority over ordinary equity for specified payouts or repayment.
Hint, shown before you answer in practice mode: Recall the order of claims within share capital.
II-B-010mediumconceptual
Q6Which term refers to the maximum share capital a company's constitutional documents permit?
Option A. Share premium account
Why it is wrong: Share premium records amounts received above nominal value.
Option B. Paid-up share capital
Why it is wrong: Paid-up capital reflects amounts paid on shares issued.
Option C. Market capitalisation
Why it is wrong: Market capitalisation depends on share price and shares outstanding.
Option D. Authorised share capital — Correct answer
Answer: D. Authorised capital represents the company's permitted share-capital limit.
Hint, shown before you answer in practice mode: Think about the legal ceiling, not money already received.
II-B-011mediumconceptual
Q7A company buys back part of its outstanding equity. What happens to the number of outstanding shares, assuming cancellation?
Option A. It decreases — Correct answer
Option B. It changes only with coupon payments
Why it is wrong: Coupons concern debt and do not govern share count.
Option C. It rises automatically
Why it is wrong: Buying back and cancelling shares reduces shares outstanding.
Option D. It becomes equal to authorised capital
Why it is wrong: Authorised capital is a separate limit.
Answer: A. Cancelling repurchased shares reduces the outstanding share count.
Hint, shown before you answer in practice mode: Track shares that remain with investors after cancellation.
II-B-012mediumapplication
Characteristic of Equities: common questions
How many practice questions are there on Characteristic of Equities?
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 15 practice topics for NISM Series II-B, which has 150 questions in total.
Are these real NISM Series II-B questions on Characteristic of Equities?
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-B exam is Characteristic of Equities?
NISM's published syllabus outline gives it 20 of the paper's 100 marks, or 20% of the exam. That figure covers one published unit taught here under more than one heading (Characteristic of Equities and Introduction to Securities and Characteristics of Debt Securities and Characteristics of Other Securities and SEBI- Role and Regulations). So it is the marks for the group, not for this page alone. No source splits it, so it is not split here. The published unit it comes from: March 2025 Annexure I, Units 1 to 5 (Introduction to Securities to SEBI- Role and Regulations): 20%
Does negative marking apply to NISM Series II-B?
No. NISM applies no negative marking to Series II-B. 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
7 questions on Characteristics of Debt Securities. Its quiz opens on that unit.
Open Characteristics of Debt SecuritiesPaper Trading Try it on the practice trading desk