Financial Transactions
12 questions. Each answer is explained.
Question 1 of 10Practice · 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
- Characteristic of Equities7
- 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
- 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 | 30 of 100 marks (30%) |
That figure belongs to one published unit covered under these headings — Financial Transactions and Investors in Mutual Funds and Banking Operations in Mutual Funds and Non-Financial Transactions — 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 12 to 15 (Investors in Mutual Funds to Non-Financial Transactions): 30%
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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 12 questions on Financial Transactions, with answers
Q1What is an additional purchase in a mutual fund?
Option A. A new investment into an existing investor folio or holding — Correct answer
Option B. Redeeming all previously held units in the existing folio
Why it is wrong: Redemption is withdrawal, not purchase.
Option C. Changing the folio address only, without any new money
Why it is wrong: Address changes are non-financial transactions.
Option D. Opening a new bank account without making an investment
Why it is wrong: Bank opening is not a purchase.
Answer: A. An additional purchase adds investment to an existing eligible mutual fund holding or folio.
Hint, shown before you answer in practice mode: Distinguish investing again from opening a fresh relationship.
II-B-128easyconceptual
Q2An investor buys units worth ₹12,000 at NAV ₹30 with no charges. How many units are allotted?
Option A. 12,000
Why it is wrong: That ignores the per-unit purchase price.
Option B. 400 — Correct answer
Option C. 360
Why it is wrong: That uses a higher unstated NAV.
Option D. 600
Why it is wrong: That divides by ₹20 instead of ₹30.
Answer: B. Allotted units equal ₹12,000 ÷ ₹30 = 400.
Hint, shown before you answer in practice mode: Calculate units by amount divided by NAV.
II-B-129mediumnumerical
Q3What does redemption mean in an open-ended mutual fund?
Option A. Issuing new company preference shares to the investor
Why it is wrong: That is a corporate financing transaction.
Option B. Subscribing for additional units in the same scheme
Why it is wrong: Subscriptions are purchases, not redemptions.
Option C. Selling units back under the scheme's redemption terms — Correct answer
Option D. Changing the investor's phone number in the folio records
Why it is wrong: Contact changes do not sell units.
Answer: C. Redemption is the cancellation or purchase-back of units under the scheme's applicable conditions.
Hint, shown before you answer in practice mode: Think about converting fund units into a payout.
II-B-130easyconceptual
Q4An investor redeems 250 units at NAV ₹40 with no exit load or taxes assumed. What is the gross value?
Option A. ₹40,000
Why it is wrong: That incorrectly multiplies by 1,000 units.
Option B. ₹6,250
Why it is wrong: That uses ₹25 per unit rather than ₹40.
Option C. ₹8,000
Why it is wrong: That values only 200 units.
Option D. ₹10,000 — Correct answer
Answer: D. Gross value is 250 × ₹40 = ₹10,000.
Hint, shown before you answer in practice mode: Multiply units redeemed by the relevant NAV.
II-B-131mediumnumerical
Q5What is an exit load?
Option A. A charge that may apply when scheme units are redeemed under stated conditions — Correct answer
Option B. The credit rating given to the AMC by a rating agency after its annual review
Why it is wrong: An AMC rating is unrelated to redemption charges.
Option C. The amount the investor invested at purchase, before any gain or loss
Why it is wrong: Investment principal is not an exit load.
Option D. A guaranteed dividend percentage paid to unit holders who stay invested
Why it is wrong: Exit load is a charge, not income.
Answer: A. Exit load is a scheme charge that may apply to eligible redemptions under disclosed conditions.
Hint, shown before you answer in practice mode: Think about costs triggered by withdrawal.
II-B-132easyconceptual
Q6A redemption has gross value ₹8,000 and a stated 1% exit load. Ignoring other deductions, what is paid?
Option A. ₹8,080
Why it is wrong: Exit load is deducted, not added.
Option B. ₹7,920 — Correct answer
Option C. ₹7,200
Why it is wrong: That represents a 10% deduction.
Option D. ₹8,000
Why it is wrong: That ignores the stated exit load.
Answer: B. Exit load is ₹8,000 × 1% = ₹80, so the amount is ₹7,920.
Hint, shown before you answer in practice mode: Compute the percentage of the gross value and subtract.
II-B-133mediumnumerical
Q7What is the purpose of a Systematic Investment Plan?
Option A. Redeem units automatically every month from the investor's folio
Why it is wrong: Periodic redemptions describe SWP.
Option B. Move units between different schemes of the fund house periodically
Why it is wrong: That resembles STP.
Option C. Make investments periodically according to chosen instructions — Correct answer
Option D. Guarantee a fixed percentage return on each instalment invested
Why it is wrong: SIPs do not guarantee performance.
Answer: C. A SIP invests specified amounts periodically under the investor's authorised instructions.
Hint, shown before you answer in practice mode: Think about scheduled additions to a fund.
II-B-134mediumconceptual
Q8What does a Systematic Withdrawal Plan normally do?
Option A. Subscribe for new units automatically each period
Why it is wrong: That is a purchase or SIP pattern.
Option B. Convert the fund holding to a bank deposit
Why it is wrong: An SWP does not change product type.
Option C. Make the fund's NAV constant for the investor
Why it is wrong: Withdrawals do not freeze NAV.
Option D. Redeem a scheduled amount or units periodically — Correct answer
Answer: D. An SWP provides planned periodic withdrawals through redemptions from the scheme.
Hint, shown before you answer in practice mode: Think about regular money coming out of a holding.
II-B-135mediumconceptual
Q9What does a Systematic Transfer Plan do?
Option A. Periodically move a specified value between eligible schemes — Correct answer
Option B. Withdraw cash to the investor's bank every period
Why it is wrong: That describes a withdrawal rather than a scheme transfer.
Option C. Guarantee higher returns by switching
Why it is wrong: Transfers do not assure performance.
Option D. Convert fund units into company shares automatically each month
Why it is wrong: An STP is between eligible mutual fund schemes.
Answer: A. An STP processes scheduled transfers between eligible schemes using redemption and purchase legs.
Hint, shown before you answer in practice mode: Think about repeated transactions across two schemes.
II-B-136mediumconceptual
Q10An investor switches from one fund scheme to another. Which processing principle applies?
Option A. Apply one NAV to both schemes without any separate exit or entry
Why it is wrong: Each scheme follows its own NAV and transaction terms.
Option B. Record an exit leg and an entry leg using applicable scheme terms — Correct answer
Option C. Cancel the investor's PAN as part of the switch
Why it is wrong: Tax identification does not expire because of a switch.
Option D. Treat the switch as only an address correction
Why it is wrong: A switch changes investment holdings and is financial.
Answer: B. A switch normally combines a redemption from the source scheme with a purchase in the destination scheme.
Hint, shown before you answer in practice mode: Think about selling one holding and buying another.
II-B-137mediumapplication
Q11A switch request reaches the RTA on time, but required funds for the destination purchase are delayed. What must be checked?
Option A. The investor's preferred destination NAV
Why it is wrong: NAV depends on scheme and funds rules.
Option B. The RTA's advertising schedule
Why it is wrong: Advertising has no bearing on switch processing.
Option C. The applicable NAV and settlement rules for each leg — Correct answer
Option D. Only the source scheme's previous year's return
Why it is wrong: Past performance does not decide transaction eligibility.
Answer: C. Switch legs must follow their respective redemption, purchase, settlement and applicable NAV conditions.
Hint, shown before you answer in practice mode: Treat a switch as two linked but distinct transaction legs.
II-B-138hardapplication
Q12An investor disputes a missing SWP instalment. Which RTA evidence is most useful?
Option A. A different investor's folio statement with a similar SWP
Why it is wrong: Another investor's private data is irrelevant.
Option B. The highest market NAV of the past year for the scheme
Why it is wrong: Historical highs do not establish whether the SWP ran.
Option C. The fund's unrelated marketing budget for the current year
Why it is wrong: Marketing expenditure does not verify payouts.
Option D. Registered SWP mandate, redemption records and bank payout status — Correct answer
Answer: D. The RTA should trace the registered SWP schedule, unit redemption and resulting payment status.
Hint, shown before you answer in practice mode: Trace the authorised instruction through redemption to payment.
II-B-139hardapplication
Financial Transactions: common questions
How many practice questions are there on Financial Transactions?
12 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 Financial Transactions?
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 Financial Transactions?
NISM's published syllabus outline gives it 30 of the paper's 100 marks, or 30% of the exam. That figure covers one published unit taught here under more than one heading (Financial Transactions and Investors in Mutual Funds and Banking Operations in Mutual Funds and Non-Financial Transactions). 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 12 to 15 (Investors in Mutual Funds to Non-Financial Transactions): 30%
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.
Non-Financial Transactions
11 questions on Non-Financial Transactions. Its quiz opens on that unit.
Open Non-Financial TransactionsPaper Trading Try it on the practice trading desk