Investor Services
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Question 1 of 10Practice · Series V-D — Mutual Fund - Specialized Investment Fund Distributors
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Learn these topics
More units in NISM Series V-D
- The Investment Landscape5
- Concept & Role of a Mutual Fund4
- Legal Structure of Mutual Funds in India3
- Legal and Regulatory Framework7
- Scheme Related Information7
- Fund Distribution and Channel Management Practices4
- Net Asset Value, Total Expense Ratio and Pricing of Units5
- Taxation3
- Risk, Return and Performance of Funds5
- Mutual Fund Scheme Performance5
- Mutual Fund Scheme Selection10
- Basics of Derivatives10
- Understanding Index5
- Introduction to Forwards and Futures15
- Introduction to Options13
- Strategies Using Equity Futures and Equity Options9
- Introduction to Interest Rate, Interest Rate Instruments and Fixed Income Markets6
- Interest Rate Derivatives2
- Exchange Traded Interest Rate Futures10
- Exchange Traded Interest Rate Options6
- Strategies Using Interest Rate Derivatives6
Exam format
| Questions | 150 · 1 mark each |
|---|---|
| Duration | 180 min · 3 hours |
| Pass mark | 60% · 90 of 150 marks |
| Negative marking | 10% · 0.1 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | 10 of 150 marks (6.7%) |
Source: July 2026 Annexure I, Chapter 9: Investor Services
NISM Series V-D Mutual Fund - Specialized Investment Fund Distributors
Exam rules read on NISM's site on 30 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 30 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 Investor Services, with answers
Q1For direct and regular plans of the same scheme, which difference is particularly relevant to investors?
Option A. The regular plan automatically guarantees principal because a distributor is involved
Why it is wrong: Plan type does not create a capital guarantee.
Option B. The direct plan must hold a completely unrelated investment mandate and portfolio
Why it is wrong: The plans belong to the same scheme. The direct/regular distinction is not a different investment objective.
Option C. A lower numerical NAV always identifies the cheaper plan for an investor to choose
Why it is wrong: NAV level is not a direct measure of expense or value.
Option D. The expense structures differ because the direct plan excludes distributor expenses — Correct answer
Answer: D. A direct plan excludes distributor expenses, so its expense ratio differs from that of the regular plan. Investors should also consider their need for support and their ability to select and monitor investments. Remember: Compare plan costs and service needs without treating NAV as a bargain indicator.
Hint, shown before you answer in practice mode: Focus on distribution expenses rather than the nominal price of a unit.
V-D-039easyconceptual
Q2Samar invests ₹6,000 on each of three dates at applicable NAVs of ₹20, ₹15 and ₹30. Ignore charges and taxes. What is the average acquisition cost per unit across all three purchases? Assumptions: Each stated NAV applies to that purchase. No deductions are made.
Option A. ₹20 — Correct answer
Option B. ₹21.67
Why it is wrong: This is the arithmetic average of the three NAVs, not total money divided by total units.
Option C. ₹15
Why it is wrong: This uses only the lowest purchase NAV.
Option D. ₹22.50
Why it is wrong: This averages only selected prices and ignores the actual unit quantities.
Answer: A. The purchases create 300, 400 and 200 units, for a total of 900. Average cost is ₹18,000/900 = ₹20 per unit. Periodic investing does not guarantee a profit. Remember: The average cost of equal-amount investments is quantity-weighted through the units acquired.
Hint, shown before you answer in practice mode: Find units bought on each date, add them, and divide total investment by total units.
V-D-040mediumnumerical
Q3An investor’s systematic withdrawal pays ₹5,000 at an applicable NAV of ₹25 per unit, with no exit load, tax or other deduction. How many units are redeemed? Assumptions: The cash withdrawal has no exit load, tax or other deduction.
Option A. 5,000 units
Why it is wrong: This treats the rupee amount as a unit quantity.
Option B. 200 units — Correct answer
Option C. Zero units
Why it is wrong: An SWP withdrawal normally requires redemption of units. It is not automatically an income distribution.
Option D. 125 units
Why it is wrong: This does not divide the withdrawal amount by the applicable NAV.
Answer: B. Units redeemed = ₹5,000/₹25 = 200. The investor’s remaining unit balance falls by that amount. Remember: An SWP is a withdrawal mechanism and can reduce invested capital.
Hint, shown before you answer in practice mode: Divide the required cash amount by the applicable value of one unit.
V-D-041easynumerical
Q4A valid systematic transfer plan moves money periodically from a source mutual-fund scheme to a destination scheme. Which description best explains each transfer?
Option A. A redemption from the source scheme and a purchase in the destination scheme — Correct answer
Option B. A guaranteed payment of investment profit without using principal
Why it is wrong: Transfers can include invested capital and do not guarantee profit.
Option C. A change only to the investor’s postal address
Why it is wrong: That is a non-financial service request, not an investment transfer.
Option D. A movement of units at the same NAV with no transaction in either scheme
Why it is wrong: Each scheme has its own units and applicable transaction price.
Answer: A. An STP involves an outflow through redemption in the source and investment in the destination. Applicable loads, tax consequences and transaction rules should be considered for the actual transfer. Remember: Automation does not remove the economic nature of the underlying transactions.
Hint, shown before you answer in practice mode: Treat the two schemes as separate investments with separate unit balances.
V-D-042mediumconceptual
Q5An investor holds 1,000 units. Immediately before an IDCW payout, NAV is ₹30. The scheme pays ₹2 per unit and there is no other asset-price movement, cost or tax. What is the investor’s combined unit value and cash immediately after the payout? Assumptions: No movement or deduction other than the stated distribution occurs.
Option A. ₹28,000 in total
Why it is wrong: This omits the cash received.
Option B. ₹30,000: ₹28,000 in units plus ₹2,000 cash — Correct answer
Option C. ₹32,000: ₹30,000 in units plus ₹2,000 cash
Why it is wrong: This ignores the decline in scheme assets caused by the payout.
Option D. ₹2,000 in total
Why it is wrong: This omits the remaining value of the units.
Answer: B. NAV falls to ₹28 under the stated assumptions. The 1,000 units are then worth ₹28,000, and adding ₹2,000 cash leaves total wealth of ₹30,000. Remember: A distribution is not additional wealth created merely by paying it out.
Hint, shown before you answer in practice mode: The distribution moves value out of the scheme into the investor’s cash balance.
V-D-043mediumregulatory
Q6What is the central purpose of the know-your-client process when opening or maintaining a mutual-fund investment relationship?
Option A. Calculating the investor’s taxable capital gain on every redemption from the scheme
Why it is wrong: Tax calculation is distinct from establishing and verifying client identity.
Option B. Selecting the most suitable scheme for the investor’s goals and risk appetite
Why it is wrong: Suitability requires a separate assessment of goals, needs and risk. Identity verification alone does not select a scheme.
Option C. Establishing and verifying the investor’s identity and relevant required information — Correct answer
Option D. Determining the applicable NAV for each purchase and redemption in the folio
Why it is wrong: Transaction pricing depends on its applicable rules, not just the identity-verification process.
Answer: C. KYC supports identification and verification using the information and documents required for the investor category. It is distinct from selecting the appropriate investment or promising returns. Remember: Identity checks and investment suitability are complementary controls.
Hint, shown before you answer in practice mode: Identify the client before processing a relationship or transaction.
V-D-044easyconceptual
Q7An investor-service team receives an email asking to change a folio’s redemption bank account. Under the firm’s stated control, the request must be verified using the registered contact and prescribed supporting evidence. The email asks staff to skip those checks because the request is urgent. What should staff do? Assumptions: This question applies an expressly supplied internal control and does not assert a statutory documentation list.
Option A. Change the account immediately if the email contains the correct investor name
Why it is wrong: Knowing a name does not authenticate the instruction.
Option B. Use the new phone number in the same email as the only verification source
Why it is wrong: That does not independently verify the requester against the registered details.
Option C. Complete the required verification before implementing the change — Correct answer
Option D. Accept urgency as a substitute for all evidence
Why it is wrong: Urgency does not satisfy the stated control.
Answer: C. Staff should follow the stated bank-change process and verify the authority for the request. The controls help reduce the risk of directing redemption money to an unauthorised account. Remember: Sensitive changes require verified authority, even under time pressure.
Hint, shown before you answer in practice mode: The verification channel should not depend only on unverified information in the request.
V-D-045mediumapplication
Q8For this fictional transaction exercise, a fund’s stated rule assigns the day’s NAV only when both a valid application and usable funds arrive by 3:00 p.m.. Otherwise the next business day’s NAV applies once both conditions are met. A valid application arrives Monday at 2:45 p.m. and usable funds at 3:15 p.m. Monday’s NAV is ₹20 and Tuesday’s is ₹22. Both are business days. Which NAV applies? Assumptions: The 3:00 p.m. rule is supplied solely for this exercise. Actual applicable-NAV rules must be checked for the scheme and transaction type.
Option A. An average NAV of ₹21
Why it is wrong: The supplied rule does not average NAVs across the two days.
Option B. Monday’s ₹20 NAV because the application arrived before 3:00 p.m.
Why it is wrong: The stated rule requires usable funds by the same cut-off as well.
Option C. Tuesday’s ₹22 NAV — Correct answer
Option D. Whichever NAV gives the investor more units
Why it is wrong: The applicable NAV follows the rule, not a choice made after prices are known.
Answer: C. The application meets the Monday cut-off, but usable funds do not. Under the rule supplied for the exercise, Tuesday’s ₹22 NAV applies. Remember: A transaction can depend on more than the timestamp of the application.
Hint, shown before you answer in practice mode: Test the application condition and the usable-funds condition separately.
V-D-046hardconceptual
Q9A folio was opened for a minor under a guardian, and the investor has now reached majority. What is the most appropriate service approach before relying on the old operating arrangement?
Option A. Record the investor as a new unrelated person and discard the earlier folio and transaction history
Why it is wrong: Continuity of ownership and the audit trail should be preserved.
Option B. Complete the applicable status, KYC, bank and operating-authority updates through the authorised process — Correct answer
Option C. Treat all existing units as cancelled automatically when the investor reaches the age of majority
Why it is wrong: A status change does not by itself mean the investment ceases to exist.
Option D. Assume the guardian’s authority remains unchanged for life and keep operating the folio as before
Why it is wrong: The change in investor status requires the relevant authority and records to be reviewed.
Answer: B. The service team should follow the process applicable when a minor becomes an adult. Updating the records and authority avoids treating the former guardian arrangement as automatically sufficient. Remember: Maintain accurate investor status and operating instructions without losing transaction history.
Hint, shown before you answer in practice mode: A change in legal status can require changes to who operates the folio and how.
V-D-047mediumconceptual
Q10An investor holds 1,000 units at a pre-distribution NAV of ₹25. The scheme distributes ₹2 per unit and immediately reinvests the full distribution at the ex-distribution NAV. No market movement, tax or charge occurs. What is the total unit holding after reinvestment, rounded to two decimals? Assumptions: The full distribution is reinvested at the ex-distribution NAV with no tax, charge or market movement.
Option A. 1,200.00 units
Why it is wrong: This does not divide the ₹2,000 distribution by the applicable reinvestment NAV.
Option B. 1,080.00 units
Why it is wrong: This reinvests the distribution at the old ₹25 NAV rather than the ex-distribution ₹23 NAV.
Option C. 1,086.96 units — Correct answer
Option D. 1,000.00 units
Why it is wrong: This ignores the newly purchased units from reinvestment.
Answer: C. The ex-distribution NAV is ₹25 − ₹2 = ₹23. Reinvesting ₹2,000 buys 86.9565 units, bringing the total to 1,086.96 units. Total value remains ₹25,000 before rounding. Remember: Reinvestment changes the number of units, while the payout itself does not create wealth.
Hint, shown before you answer in practice mode: First reduce NAV by the distribution, then divide the distribution cash by that new NAV.
V-D-048hardnumerical
Investor Services: common questions
How many practice questions are there on Investor Services?
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 22 practice topics for NISM Series V-D, which has 150 questions in total.
Are these real NISM Series V-D questions on Investor Services?
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 V-D exam is Investor Services?
NISM's published syllabus outline gives it 10 of the paper's 150 marks, or 6.7% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: July 2026 Annexure I, Chapter 9: Investor Services
Does negative marking apply to NISM Series V-D?
Yes. NISM takes off 10% of a question's marks for a wrong answer. On a 1-mark question that is 0.1 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. 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.
Risk, Return and Performance of Funds
5 questions on Risk, Return and Performance of Funds. Its quiz opens on that unit.
Open Risk, Return and Performance of FundsPaper Trading Try it on the practice trading desk