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Question 1 of 10Practice · Series VII — Securities Operations and Risk Management
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More units in NISM Series VII
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 50% · 50 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series VII Securities Operations and Risk Management
Exam rules read on NISM's site on 3 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 3 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 14 questions on Other Services Provided by Brokers, with answers
Q1An eligible BSDA has securities counted for its maintenance-charge band valued at ₹6.5 lakh throughout the relevant billing period. Under the revised BSDA framework, what is the maximum annual maintenance charge, excluding taxes?
Option A. ₹500
Why it is wrong: ₹500 is also above the specified ceiling.
Option B. Nil
Why it is wrong: The automatic nil-AMC band does not cover the stated ₹6.5 lakh value.
Option C. ₹250
Why it is wrong: ₹250 is above the specified ceiling.
Option D. ₹100 — Correct answer
Answer: D. ₹100 is the annual ceiling for the stated band, not a fee the DP must always charge. The ₹6.5 lakh value lies above ₹4 lakh and does not exceed ₹10 lakh. The AMC table caps the charge for that eligible BSDA band at ₹100 a year. Nil charges apply to the lower band. The December 2025 amendment changes specified eligibility and valuation provisions, not this AMC table. Eligibility and the relevant valuation band are expressly assumed in the question. Remember: Check BSDA eligibility, the value band and whether the question asks for a ceiling.
Hint, shown before you answer in practice mode: Common mistake: Using the nil-fee band for every BSDA, or treating the annual ceiling as a quarterly fee.
VII-038mediumregulatory
Q2How must a member hold a client’s funded shares under the margin trading facility?
Option A. By outright transfer to the member’s proprietary demat account
Why it is wrong: An outright proprietary transfer is not the required funded-stock pledge.
Option B. By pledge into the ordinary client margin-pledge account only
Why it is wrong: It omits the dedicated MTF-funded-stock account.
Option C. By transfer to the clearing member’s settlement pool until repayment
Why it is wrong: A settlement pool is not the prescribed long-term funded-stock holding arrangement.
Option D. By pledge into the Client Securities under Margin Funding Account — Correct answer
Answer: D. This answer identifies both the pledge form and the designated account. NSE’s MTF FAQ specifies a pledge from the respective client’s beneficial-owner account into the dedicated Client Securities under Margin Funding Account. The question concerns the funded shares. An ordinary settlement pool or an ordinary margin-pledge account is not a substitute for that designated arrangement. Remember: For funded MTF shares, identify the dedicated account as well as the pledge form.
Hint, shown before you answer in practice mode: Common mistake: Confusing funded shares, ordinary collateral and the broker’s proprietary securities.
VII-039mediumregulatory
Q3Under the ordinary PMS minimum-investment rule stated in SEBI’s investor guidance, what minimum applies to a new, non-accredited client of a standard discretionary PMS, excluding special routes?
Option A. ₹50 lakh — Correct answer
Option B. ₹10 lakh
Why it is wrong: Incorrect under the stated guidance. ₹10 lakh is not its ordinary PMS minimum.
Option C. ₹25 lakh
Why it is wrong: Incorrect for this source-scoped standard-PMS question. A separately described special route must not be treated as the ordinary rule.
Option D. ₹5 lakh
Why it is wrong: Incorrect under the stated guidance. ₹5 lakh is below the standard amount it identifies.
Answer: A. Provisionally correct. ₹50 lakh is the figure expressly stated in the inspected SEBI investor guidance. The inspected SEBI investor guidance states a standard PMS minimum investment of ₹50 lakh. The question excludes special routes. A September 2026 board decision describes a distinct PRIM approach, so its separate figure must not automatically be substituted into this ordinary-PMS question. This is a provisional source-scoped answer. The complete operative regulation and commencement of the approved 2026 changes must be checked before publication. Remember: Identify the client category, product route and operative regulatory version before using a minimum.
Hint, shown before you answer in practice mode: Common mistake: Treating a board-approved special-route figure as a universal replacement for standard PMS.
VII-040easyregulatory
Q4An IPO applicant has ₹30,000 blocked under ASBA. Shares worth ₹12,000 are allotted. Ignoring other account activity, what happens to the blocked amount after allotment is processed?
Option A. ₹30,000 is debited and no amount is released
Why it is wrong: It charges the full application value despite a smaller allotment.
Option B. ₹12,000 is debited and ₹18,000 is unblocked — Correct answer
Option C. ₹18,000 is debited and ₹12,000 is unblocked
Why it is wrong: It reverses the paid and unused amounts.
Option D. ₹30,000 is debited and ₹18,000 remains blocked
Why it is wrong: It charges too much and also wrongly retains a block after processing.
Answer: B. The debit matches the allotment and the unused ₹18,000 is released. The allotment requires payment of ₹12,000, so that is the amount debited. Unused application amount = ₹30,000 − ₹12,000 = ₹18,000. Its block is released. The unused ₹18,000 did not need to leave the bank account. Describing it as money first paid away and later returned misunderstands the block mechanism. Remember: Under ASBA, separate the initial blocked amount from the final allotment debit.
Hint, shown before you answer in practice mode: Common mistake: Treating blocked bank funds as money already transferred to the issuer.
VII-045mediumnumerical
Q5Which allotment choice is described for investors on NSE’s MF Invest Platform?
Option A. Only demat allotment
Why it is wrong: It excludes the non-demat option offered by the platform.
Option B. Only non-demat allotment
Why it is wrong: It excludes the demat option offered by the platform.
Option C. Either demat or non-demat allotment — Correct answer
Option D. Only printed unit certificates
Why it is wrong: It substitutes a printed-certificate-only restriction that the description does not impose.
Answer: C. This answer states both supported allotment choices. The inspected platform description expressly offers a demat or non-demat allotment choice. Neither single-mode answer captures that stated choice. Remember: Check the platform’s stated holding choices rather than assuming demat-only allotment.
Hint, shown before you answer in practice mode: Common mistake: Assuming every product distributed through exchange infrastructure must be held only in demat form.
VII-067easyconceptual
Q6A portfolio manager carries out transactions according to the client’s specific investment decisions. The client retains the final buy-or-sell decision, while the manager executes it. Which service is described?
Option A. Discretionary portfolio management
Why it is wrong: The manager would have investment decision-making discretion, which the stem withholds.
Option B. Non-discretionary portfolio management — Correct answer
Option C. Advisory-only portfolio service
Why it is wrong: It omits the manager’s execution role described in the scenario.
Option D. Custody-only securities service
Why it is wrong: Custody alone does not describe the portfolio-transaction service in the stem.
Answer: B. The client decides and the manager carries out those decisions. The client controls the investment decision, so the manager does not have discretion to choose it. The manager still implements the decision. In the advisory-only distinction used by the source, the investor executes independently. Remember: Ask separately who decides and who executes.
Hint, shown before you answer in practice mode: Common mistake: Calling any service without manager discretion advisory-only even when the manager implements the client’s decisions.
VII-070mediumapplication
Q7An investor submits an IPO application through a participating bank’s ASBA facility. Which institution places the application-amount block in the investor’s bank account?
Option A. The stock exchange directly in its trading system
Why it is wrong: The exchange’s order system does not itself hold the investor’s bank-account balance.
Option B. The registrar in the company’s shareholder register
Why it is wrong: Allotment administration is not the bank-account blocking function.
Option C. The participating bank maintaining that account — Correct answer
Option D. The broker in its own client ledger
Why it is wrong: A broker ledger entry is not the block in the investor’s bank account.
Answer: C. The ASBA block is placed in the investor’s account through the participating bank. The application uses the bank’s ASBA route. The money remains in the investor’s bank account while blocked. The participating bank places that block. An exchange order, registrar record or broker ledger is not a substitute for it. Remember: In the bank-ASBA route, distinguish the bank block from the IPO order and allotment records.
Hint, shown before you answer in practice mode: Common mistake: Assuming the broker or exchange physically holds the blocked application money.
VII-092easyapplication
Q8A broker’s research report estimates a company’s value using its cash flows, debt, profitability and industry outlook. Which approach primarily underlies the report?
Option A. Fundamental analysis — Correct answer
Option B. Technical analysis
Why it is wrong: This primarily studies price and trading-volume behaviour rather than the inputs described.
Option C. Order-book liquidity analysis
Why it is wrong: Available bid and offer depth is not the company-finance assessment described.
Option D. Short-term price-momentum analysis
Why it is wrong: Recent price movement is not the basis of the stated cash-flow and business valuation.
Answer: A. The report studies business finances and economic drivers of value. Cash flows, debt and profitability describe the company’s finances. Industry outlook adds business context. Using these to estimate value is fundamental analysis, not analysis primarily based on price charts or volumes. Remember: Company finances and business value point to fundamental research.
Hint, shown before you answer in practice mode: Common mistake: Calling every report containing numbers a technical-analysis report.
VII-093easyapplication
Q9Under a hypothetical MTF agreement, ₹2,00,000 is funded for 8 chargeable days. A principal repayment of ₹80,000 then leaves ₹1,20,000 funded for 12 more chargeable days. At simple interest of 18.25% per year on a 365-day basis, what total interest is due, ignoring charges?
Option A. ₹2,000
Why it is wrong: It charges ₹2,00,000 for all 20 days and ignores the repayment.
Option B. ₹1,200
Why it is wrong: It applies ₹1,20,000 to all 20 days, including the first eight.
Option C. ₹1,280
Why it is wrong: It treats the ₹80,000 repayment as the principal outstanding during the last 12 days.
Option D. ₹1,520 — Correct answer
Answer: D. This answer calculates interest separately on each outstanding principal and its chargeable days. Daily rate = 18.25% ÷ 365 = 0.05% = 0.0005. First period interest = ₹2,00,000 × 0.0005 × 8 = ₹800. Second period interest = ₹1,20,000 × 0.0005 × 12 = ₹720. Total interest = ₹800 + ₹720 = ₹1,520. The rate and day-count terms are hypothetical, not a prescribed MTF tariff. Remember: Split the timeline whenever the funded principal changes.
Hint, shown before you answer in practice mode: Common mistake: Charging the original balance after repayment, or using the repayment amount as the remaining balance.
VII-094hardnumerical
Q10An investor redeems 1,500 mutual fund units at an applicable NAV of ₹32.40. The purchase NAV was ₹30. For this redemption, assume a 0.75% exit load on the full redemption value. Ignoring taxes and other deductions, what amount is payable?
Option A. ₹48,600.00
Why it is wrong: It omits the exit load.
Option B. ₹48,573.00
Why it is wrong: It deducts 0.75% only from the ₹3,600 gain, giving a deduction of ₹27.
Option C. ₹48,235.50 — Correct answer
Option D. ₹364.50
Why it is wrong: It reports only the load amount, not the net proceeds.
Answer: C. This answer deducts the load on the full applicable redemption value. Gross redemption value = 1,500 × ₹32.40 = ₹48,600. Exit load = ₹48,600 × 0.0075 = ₹364.50. Net proceeds = ₹48,600 − ₹364.50 = ₹48,235.50. The purchase NAV is not the load base. Remember: Use the scheme’s stated load base and distinguish the deduction from the net payout.
Hint, shown before you answer in practice mode: Common mistake: Treating exit load as a tax calculated only on profit.
VII-119mediumnumerical
Q11An investor holds 500 shares of A and 200 shares of B in one demat account. The investor wants a debit freeze on only 100 shares of A. Which scope is available under the investor’s freeze right?
Option A. Only a freeze of the entire demat account
Why it is wrong: It unnecessarily restricts the available scope to the full account.
Option B. A freeze of the specified 100 shares of A — Correct answer
Option C. Only a freeze of all 500 shares of A
Why it is wrong: It wrongly requires every share of A to be included.
Option D. A freeze of all shares of both A and B
Why it is wrong: It extends the freeze to an unrelated holding.
Answer: B. This answer matches the recognised specific-quantity facility. CDSL’s charter recognises freezing a demat account, specific securities or a specific quantity. The requested scope is the 100 specified shares of A. The question does not request freezing the remaining A shares or B. Remember: Choose the freeze scope that matches the investor’s instruction.
Hint, shown before you answer in practice mode: Common mistake: Assuming demat freezing is always all-or-nothing.
VII-120easyapplication
Q12An investor makes three mutual fund purchases of ₹2,000 each at applicable NAVs of ₹20, ₹25 and ₹40. All money buys units and there are no deductions. What is the average acquisition cost per unit, rounded to two decimals?
Option A. ₹28.33
Why it is wrong: It is the unweighted arithmetic mean of the three NAVs.
Option B. ₹20.00
Why it is wrong: It uses only the first purchase’s NAV.
Option C. ₹40.00
Why it is wrong: It uses only the last purchase’s NAV.
Option D. ₹26.09 — Correct answer
Answer: D. This answer divides total invested money by total acquired units. Units from the first purchase = ₹2,000 ÷ ₹20 = 100. Units from the second purchase = ₹2,000 ÷ ₹25 = 80. Units from the third = ₹2,000 ÷ ₹40 = 50. Total units = 100 + 80 + 50 = 230. Total amount invested = 3 × ₹2,000 = ₹6,000. Average acquisition cost = ₹6,000 ÷ 230 = ₹26.086956… per unit, rounded to ₹26.09. This is an accounting calculation for stated purchases, not a claim that periodic investment guarantees a profit. Remember: Aggregate units bought at each NAV before calculating the average acquisition cost.
Hint, shown before you answer in practice mode: Common mistake: Averaging NAVs directly when equal cash buys different quantities.
VII-143hardnumerical
Q13Physical certificates name joint holders R and S, while their demat account names the same holders in the order S and R. They want to dematerialise the certificates without changing the holders. Which facility addresses this order mismatch?
Option A. Transmission
Why it is wrong: Transmission concerns succession or operation of law, not this sequence mismatch.
Option B. Rematerialisation
Why it is wrong: Rematerialisation converts electronic holdings to physical certificates, the opposite direction.
Option C. Transposition-cum-demat — Correct answer
Option D. Off-market transfer to a new owner
Why it is wrong: The scenario expressly says the owners are not changing.
Answer: C. This answer addresses the sequence of the same names together with dematerialisation. The names are the same but their sequence differs. There is no death or new owner in the scenario. CDSL describes transposition-cum-demat for reconciling the order of the same holders while dematerialising certificates, subject to the required documentation. Remember: A changed order of the same joint-holder names is a transposition issue.
Hint, shown before you answer in practice mode: Common mistake: Confusing a sequence change with a transfer to different owners.
VII-144easyapplication
Q14In a book-built public issue, what information is gathered to help determine the issue price?
Option A. Investor bids showing demand at different permitted prices — Correct answer
Option B. Only the price of the first trade executed after listing
Why it is wrong: It uses an event after listing instead of the issue bidding process.
Option C. Only the face value of each share as stated in the offer document
Why it is wrong: Face value alone does not describe demand-based price discovery.
Option D. Only the company’s last declared dividend per share
Why it is wrong: A dividend figure alone does not represent the order book of issue bids.
Answer: A. The demand in bids is the information built into the book. Investor bids indicate quantities demanded at permitted prices during the issue process. The collected demand informs price discovery. The first secondary-market trade happens after the issue-pricing stage and is not the input described. This identifies the process, not a guarantee of allotment or a formula promising a particular listing price. Remember: Book building connects investor bids with issue-price discovery.
Hint, shown before you answer in practice mode: Common mistake: Confusing the price discovered during an issue with the first secondary-market trading price.
VII-145mediumconceptual
Other Services Provided by Brokers: common questions
How many practice questions are there on Other Services Provided by Brokers?
14 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 8 practice topics for NISM Series VII, which has 150 questions in total.
Are these real NISM Series VII questions on Other Services Provided by Brokers?
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.
Does negative marking apply to NISM Series VII?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 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.
Try a paper on all of NISM Series VII
This is the last unit of Securities Operations and Risk Management. The series page runs one quiz across every unit.
Open the NISM Series VII practice page