Introduction to Securities
5 questions. Each answer is explained.
Question 1 of 5Practice · 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
- 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
- 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 — Introduction to Securities and Characteristic of Equities 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 5 questions on Introduction to Securities, with answers
Q1What does an ordinary equity share represent?
Option A. A repayable loan
Why it is wrong: A loan makes the investor a creditor, not an owner.
Option B. Ownership in a company — Correct answer
Option C. A bank deposit
Why it is wrong: A deposit is a claim on a bank rather than a company share.
Option D. A tax payment
Why it is wrong: Tax is paid to government, not invested as ownership.
Answer: B. Equity shares represent an ownership claim in a company.
Hint, shown before you answer in practice mode: Think about who owns part of the business.
II-B-001easyconceptual
Q2Which payment may an equity investor receive from company profits?
Option A. Contractual coupon
Why it is wrong: Coupons normally belong to debt securities.
Option B. Deposit interest
Why it is wrong: Deposit interest arises from lending to a bank.
Option C. Dividend — Correct answer
Option D. Loan instalment
Why it is wrong: Instalments repay borrowings rather than distribute profits.
Answer: C. Dividends are distributions that a company may declare for shareholders.
Hint, shown before you answer in practice mode: Recall the name for profit distributions.
II-B-002easyconceptual
Q3Why are ordinary equity dividends considered uncertain?
Option A. They mature every year like a fixed deposit
Why it is wrong: Shares generally have no maturity repayment date.
Option B. They have a fixed coupon set at issue time
Why it is wrong: A fixed coupon is associated with debt.
Option C. They are paid before interest on company debt
Why it is wrong: Debt obligations normally rank ahead of discretionary equity payouts.
Option D. Companies need not declare a fixed dividend — Correct answer
Answer: D. Ordinary dividends depend on company decisions and available distributable profits.
Hint, shown before you answer in practice mode: Consider whether a shareholder has a fixed-payment contract.
II-B-003mediumconceptual
Q4A bondholder is primarily which type of claimant on the issuer?
Option A. Creditor — Correct answer
Option B. Co-owner
Why it is wrong: Ownership is the defining feature of ordinary equity.
Option C. Trustee
Why it is wrong: A trustee acts under a separate legal responsibility.
Option D. Scheme distributor
Why it is wrong: Distribution is a selling or service function, not a lender claim.
Answer: A. Bond investors lend to the issuer and become its creditors.
Hint, shown before you answer in practice mode: Compare borrowing with share capital.
II-B-004easyconceptual
Q5An instrument pays a coupon and may later turn into shares. How is it best described?
Option A. Demand deposit
Why it is wrong: A deposit does not ordinarily convert into company equity.
Option B. Convertible hybrid security — Correct answer
Option C. Non-convertible debenture
Why it is wrong: A non-convertible debenture cannot turn into shares.
Option D. Pure ordinary equity
Why it is wrong: Ordinary shares do not first promise debt coupons.
Answer: B. A convertible instrument combines debt-like payments with a right to convert into equity.
Hint, shown before you answer in practice mode: Look for a combination of debt and equity features.
II-B-005hardapplication
Introduction to Securities: common questions
How many practice questions are there on Introduction to Securities?
5 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 Introduction to 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-B exam is Introduction to Securities?
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 (Introduction to Securities and Characteristic of Equities 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.
Characteristic of Equities
7 questions on Characteristic of Equities. Its quiz opens on that unit.
Open Characteristic of EquitiesPaper Trading Try it on the practice trading desk