The Investment Landscape
5 questions. Each answer is explained.
Question 1 of 5Practice · Series V-D — Mutual Fund - Specialized Investment Fund Distributors
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Learn these topics
More units in NISM Series V-D
- 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
- Investor Services10
- 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 | 5 of 150 marks (3.3%) |
Source: July 2026 Annexure I, Chapter 1: Investment Landscape
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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 5 questions on The Investment Landscape, with answers
Q1A family needs ₹4 lakh for an unavoidable school payment in four months. It already has a separate emergency reserve. Which factor should carry the greatest weight when choosing an investment for this ₹4 lakh?
Option A. Ability to preserve the required amount and make it available by the payment date — Correct answer
Option B. The highest return achieved by a sector fund last year, regardless of how much it can fall
Why it is wrong: A past sector return does not ensure money will be available without loss in four months.
Option C. The longest lock-in available, because being unable to withdraw forces saving discipline
Why it is wrong: A lock-in extending beyond the payment date conflicts with the stated cash need.
Option D. The lowest quoted NAV among equity schemes, since a lower NAV means the units are cheaper
Why it is wrong: NAV level does not measure suitability for a near-term liability.
Answer: A. The investment must fit a short, fixed horizon and an essential payment. Liquidity and the risk of a shortfall matter more here than seeking the highest uncertain return. Remember: An investment is suitable only if its risk and liquidity fit the goal.
Hint, shown before you answer in practice mode: Start with the amount and the non-negotiable date of the goal.
V-D-001mediumapplication
Q2An investment grows by 8% over one year while the cost of the investor’s consumption basket rises by 6%. What is the exact real return, rounded to two decimals? Assumptions: Both rates cover the same one-year period. Taxes and fees are ignored.
Option A. 14.00%
Why it is wrong: Adding inflation to nominal return overstates purchasing-power growth.
Option B. 2.00%
Why it is wrong: This is the subtraction approximation, not the exact inflation-adjusted result.
Option C. 7.55%
Why it is wrong: This divides the nominal percentage by the inflation growth factor without first comparing total growth factors.
Option D. 1.89% — Correct answer
Answer: D. Real return = (1.08/1.06 − 1) × 100 = 1.8868%, or 1.89%. The result measures the change in purchasing power, not just the rupee balance. Remember: Use growth factors for an exact inflation adjustment.
Hint, shown before you answer in practice mode: Divide the investment growth factor by the inflation growth factor, then subtract one.
V-D-002hardnumerical
Q3Dev rejects a suitable portfolio review because selling a poorly performing fund would make its loss feel “real”, even though the original investment reason no longer applies. Which behavioural bias most directly explains his response?
Option A. Herd behaviour
Why it is wrong: No decision to copy other investors is described.
Option B. Recency bias
Why it is wrong: The decisive clue is discomfort about recognising a loss, not overweighting only the most recent information.
Option C. Overconfidence
Why it is wrong: The case centres on the pain of a realised loss, not excessive confidence in forecasting skill.
Option D. Loss aversion — Correct answer
Answer: D. Dev is allowing the pain of realising a loss to dominate a fresh assessment of the investment. The decision should instead consider future suitability and alternatives. Remember: Past purchase price should not replace a current suitability assessment.
Hint, shown before you answer in practice mode: Focus on the unusually strong discomfort from recognising a loss.
V-D-003easyapplication
Q4Nila says she enjoys high-risk investments, but her income is unstable and she may need most of her savings within six months. What should a distributor conclude?
Option A. Any fund with many investors must automatically meet her liquidity needs as well
Why it is wrong: Popularity does not establish a match to her cash needs or risk capacity.
Option B. Income stability has no relevance once the investor signs the account opening form
Why it is wrong: Risk profiling must consider financial circumstances, not merely obtain a signature.
Option C. Her willingness to take risk is high, but her financial capacity to bear losses may be low — Correct answer
Option D. Her stated enthusiasm proves that all aggressive schemes are suitable for her savings
Why it is wrong: Willingness does not remove cash-flow needs or limited ability to absorb a loss.
Answer: C. Risk profiling considers both attitude and ability to bear loss. Nila’s uncertain income and near-term need constrain the risk her savings can reasonably support. Remember: A high risk appetite does not automatically create high loss-bearing capacity.
Hint, shown before you answer in practice mode: Separate emotional comfort with risk from the consequences of losing money.
V-D-004mediumapplication
Q5A ₹10 lakh portfolio contains ₹7 lakh in equity funds and ₹3 lakh in debt funds. The investor’s target is 60% equity and 40% debt. With no new money, taxes or charges, what transfer restores the target? Assumptions: Values remain constant during the transfer. Taxes and charges are ignored.
Option A. Move ₹2 lakh from equity funds to debt funds
Why it is wrong: This creates a 50:50 allocation rather than 60:40.
Option B. Add ₹1 lakh to equity while leaving debt unchanged
Why it is wrong: The case permits no new money, and this would move away from the target.
Option C. Move ₹1 lakh from debt funds to equity funds
Why it is wrong: This increases the already excessive equity weight.
Option D. Move ₹1 lakh from equity funds to debt funds — Correct answer
Answer: D. Target equity is 60% × ₹10 lakh = ₹6 lakh. Moving the ₹1 lakh excess to debt leaves ₹6 lakh equity and ₹4 lakh debt. Remember: Rebalancing restores a chosen allocation rather than chasing the latest winner.
Hint, shown before you answer in practice mode: Calculate the desired equity amount using total portfolio value.
V-D-005easynumerical
The Investment Landscape: common questions
How many practice questions are there on The Investment Landscape?
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 22 practice topics for NISM Series V-D, which has 150 questions in total.
Are these real NISM Series V-D questions on The Investment Landscape?
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 The Investment Landscape?
NISM's published syllabus outline gives it 5 of the paper's 150 marks, or 3.3% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: July 2026 Annexure I, Chapter 1: Investment Landscape
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.
Concept & Role of a Mutual Fund
4 questions on Concept & Role of a Mutual Fund. Its quiz opens on that unit.
Open Concept & Role of a Mutual FundPaper Trading Try it on the practice trading desk