Mutual Fund Products
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
- 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 | 25 of 100 marks (25%) |
That figure belongs to one published unit covered under these headings — Mutual Fund Products and Structure and Constituents of Mutual Funds and Operational Concepts of Mutual Funds — 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 9 to 11 (Structure and Constituents of Mutual Funds to Operational Concepts of Mutual Funds): 25%
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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 Mutual Fund Products, with answers
Q1Which plan generally excludes embedded distributor commission?
Option A. Direct plan — Correct answer
Option B. Dividend payout option
Why it is wrong: Payout choice does not define distributor commission.
Option C. Interval liquidity window
Why it is wrong: An interval window concerns redemption access, not commission.
Option D. Regular plan
Why it is wrong: Regular plans ordinarily include distribution-related expense components.
Answer: A. A direct plan does not include the distribution commission associated with a regular plan.
Hint, shown before you answer in practice mode: Think about how the investor accesses the scheme.
II-B-080easyconceptual
Q2Which document describes a particular scheme's investment objective and key features in detail?
Option A. Depository transaction password
Why it is wrong: A password is authentication data, not a fund disclosure.
Option B. Scheme Information Document — Correct answer
Option C. Individual investor PAN card
Why it is wrong: PAN documents identify a taxpayer, not fund terms.
Option D. Bank reconciliation report
Why it is wrong: Reconciliation reports are internal operating records.
Answer: B. The Scheme Information Document sets out the scheme's features, objective and principal terms.
Hint, shown before you answer in practice mode: Think about the scheme-specific offer information.
II-B-081easyconceptual
Q3What is the main purpose of the Riskometer for a mutual fund scheme?
Option A. Fix the scheme's next NAV for all investors
Why it is wrong: Risk categories do not fix daily NAV.
Option B. Guarantee a minimum return to the scheme's investors
Why it is wrong: Risk communication is not return insurance.
Option C. Communicate the scheme's disclosed risk level — Correct answer
Option D. List every individual investor holding the scheme
Why it is wrong: Investor lists are confidential records.
Answer: C. The Riskometer presents the scheme's risk classification to help investors understand risk exposure.
Hint, shown before you answer in practice mode: Consider how risk is shown to prospective investors.
II-B-082easyconceptual
Q4A fund mainly invests in shares of listed companies. Which broad category best describes it?
Option A. Infrastructure trust
Why it is wrong: A trust is a different product structure.
Option B. Debt-oriented mutual fund
Why it is wrong: Debt funds principally hold debt instruments.
Option C. Money-market-only scheme
Why it is wrong: Money-market schemes focus on short-term debt assets.
Option D. Equity-oriented mutual fund — Correct answer
Answer: D. An equity-oriented mutual fund primarily invests in equity securities within its disclosed mandate.
Hint, shown before you answer in practice mode: Focus on the dominant investment asset class.
II-B-083mediumconceptual
Q5Which scheme mainly invests in fixed-income securities?
Option A. Debt mutual fund — Correct answer
Option B. Commodity futures contract
Why it is wrong: A derivatives contract is not a debt fund.
Option C. Equity growth fund
Why it is wrong: Equity funds primarily invest in shares.
Option D. Property operating trust
Why it is wrong: Property trusts are different structures.
Answer: A. A debt fund principally invests in debt or money-market instruments according to its objective.
Hint, shown before you answer in practice mode: Think about bonds and other borrowing instruments.
II-B-084mediumconceptual
Q6Which scheme combines equity and fixed-income exposure according to its mandate?
Option A. Pure equity index fund
Why it is wrong: A pure equity index fund follows an equity benchmark.
Option B. Hybrid mutual fund — Correct answer
Option C. Treasury bill
Why it is wrong: A bill is an individual short-term debt instrument.
Option D. Corporate rights issue
Why it is wrong: A rights issue is a share issuance process.
Answer: B. A hybrid fund combines asset classes such as equity and debt under its disclosed strategy.
Hint, shown before you answer in practice mode: Look for a mixed-asset investment approach.
II-B-085mediumconceptual
Q7Which scheme is normally offered for subscription and redemption continuously at applicable NAV?
Option A. Closed-ended scheme during its defined term
Why it is wrong: A closed-ended fund does not ordinarily allow ongoing direct redemption.
Option B. Fixed-maturity bond
Why it is wrong: A bond is a separate debt instrument.
Option C. Open-ended scheme — Correct answer
Option D. Preference share
Why it is wrong: A preference share is not a fund subscription structure.
Answer: C. An open-ended mutual fund generally permits ongoing subscriptions and redemptions under its terms.
Hint, shown before you answer in practice mode: Think about ongoing unit entry and exit.
II-B-086easyconceptual
Q8What is the main purpose of a Key Information Memorandum?
Option A. Substitute for the investor's bank statement and passbook
Why it is wrong: Bank records show payments, not scheme disclosures.
Option B. Guarantee a stated return to investors at maturity
Why it is wrong: A summary does not guarantee performance.
Option C. Replace an RTA's transaction ledger for the scheme
Why it is wrong: Fund disclosures cannot replace transaction records.
Option D. Provide a concise summary of important scheme details — Correct answer
Answer: D. The Key Information Memorandum summarises important information about the scheme for investors.
Hint, shown before you answer in practice mode: Think about a shorter investor-facing summary.
II-B-087easyconceptual
Q9An investor selects a scheme without reviewing its investment objective. Which risk arises?
Option A. The selected scheme may not match the investor's intended exposure — Correct answer
Option B. The investment automatically becomes tax-free for the investor
Why it is wrong: Tax treatment does not depend on skipping disclosures.
Option C. The registrar sets the investor's risk appetite on their behalf
Why it is wrong: An RTA does not choose investor objectives.
Option D. The scheme guarantees the advertised benchmark return to the investor
Why it is wrong: A benchmark is not a performance guarantee.
Answer: A. Ignoring the investment objective can lead to selecting a product with unsuitable underlying exposure.
Hint, shown before you answer in practice mode: Match the product mandate to the intended purpose.
II-B-088mediumapplication
Q10Which document contains additional general information about the mutual fund and service arrangements?
Option A. An equity order book of the exchange
Why it is wrong: Order books show trading orders.
Option B. Statement of Additional Information — Correct answer
Option C. An individual investor's nomination form
Why it is wrong: Nomination concerns succession to investor units.
Option D. A bank ATM receipt for a cash withdrawal
Why it is wrong: ATM receipts are not mutual fund disclosure documents.
Answer: B. The Statement of Additional Information contains broader information about the mutual fund organisation and operations.
Hint, shown before you answer in practice mode: Distinguish general fund information from scheme-specific terms.
II-B-089hardconceptual
Q11Two plans share the same scheme portfolio but charge different expense rates. What primarily explains different NAV paths?
Option A. The registrar assigns random prices to each plan every day
Why it is wrong: NAV comes from valuation and expense accounting.
Option B. The higher-expense plan gets guaranteed extra income from the AMC
Why it is wrong: Expenses do not create guaranteed returns.
Option C. Different plan-level expenses reduce net returns by different amounts — Correct answer
Option D. Every plan must buy different securities from the shared scheme portfolio
Why it is wrong: Plans ordinarily share an underlying scheme portfolio.
Answer: C. Plans holding the same portfolio may have different NAV progression because their expenses differ.
Hint, shown before you answer in practice mode: Think about identical assets with different deductions.
II-B-090hardapplication
Q12An interval scheme permits repurchases only in stated windows. Which feature should an investor check first?
Option A. Guaranteed equal NAV throughout the year for all units
Why it is wrong: NAV varies as underlying values change.
Option B. The sponsor's personal shareholdings only, not the scheme terms
Why it is wrong: Investor liquidity comes from scheme terms.
Option C. Daily guaranteed access regardless of the stated windows
Why it is wrong: Interval funds restrict transactions to stated intervals.
Option D. Disclosed liquidity windows and transaction conditions — Correct answer
Answer: D. An interval fund's specified subscription and redemption windows control practical liquidity.
Hint, shown before you answer in practice mode: Consider when money can actually be withdrawn.
II-B-091hardapplication
Mutual Fund Products: common questions
How many practice questions are there on Mutual Fund Products?
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 Mutual Fund Products?
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 Mutual Fund Products?
NISM's published syllabus outline gives it 25 of the paper's 100 marks, or 25% of the exam. That figure covers one published unit taught here under more than one heading (Mutual Fund Products and Structure and Constituents of Mutual Funds and Operational Concepts of Mutual Funds). 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 9 to 11 (Structure and Constituents of Mutual Funds to Operational Concepts of Mutual Funds): 25%
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.
Operational Concepts of Mutual Funds
14 questions on Operational Concepts of Mutual Funds. Its quiz opens on that unit.
Open Operational Concepts of Mutual FundsPaper Trading Try it on the practice trading desk