NISM Investment Adviser Certification Exam: Indian Financial Markets
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Questions and Answers

What is a portfolio in the context of securities?

  • A type of investment strategy
  • A single security
  • A type of financial plan
  • A collection of multiple securities (correct)

    • What is the primary function of asset management companies?

  • To define the goals for investors to save money
  • To regulate the activities of the banking system
  • To offer advisory services to investors
  • To create and manage a portfolio of securities (correct)

    • What is the role of investment advisers and distributors?

  • To create and manage a portfolio of securities
  • To regulate the activities of the banking system
  • To help investors make a choice of securities based on their needs (correct)
  • To define the goals for investors to save money

    • What is the primary difference between asset management companies and portfolio managers?

    <p>Asset management companies offer securities, while portfolio managers do not</p> Signup and view all the answers

    Which ministry regulates the capital markets and its participants?

    <p>Ministry of Finance through its Department of Economic Affairs</p> Signup and view all the answers

    What is the primary regulation that defines the setting up of companies?

    <p>The Companies Act, 2013</p> Signup and view all the answers

    What is the role of the Ministry of Corporate Affairs?

    <p>To regulate the functioning of the corporate sector</p> Signup and view all the answers

    Who initiates discussions on reforms and oversees the implementation of law?

    <p>The Ministry of Finance</p> Signup and view all the answers

    What is the primary role of the secondary market?

    <p>To facilitate trading and price discovery of existing securities</p> Signup and view all the answers

    What is the primary function of a Mutual Fund?

    <p>To pool money from investors to invest in a diversified portfolio of securities</p> Signup and view all the answers

    What is the main aim of the regulators of financial markets?

    <p>To protect the interests of investors and maintain the integrity of the financial markets</p> Signup and view all the answers

    What is the purpose of the primary market?

    <p>To provide a platform for companies to raise capital</p> Signup and view all the answers

    What is the primary function of the money markets in the Indian financial market?

    <p>To facilitate the short-term lending and borrowing of funds</p> Signup and view all the answers

    What is the term for the process of investing a fixed amount of money at regular intervals, regardless of the market's performance?

    <p>Systematic Investment</p> Signup and view all the answers

    Which of the following market participants provides liquidity and stability in the financial markets?

    <p>Mutual funds, insurance companies, and pension funds</p> Signup and view all the answers

    What is the main benefit of investing in Mutual Funds?

    <p>Diversification of portfolio and professional management</p> Signup and view all the answers

    What is the role of banks and financial institutions in the financial markets?

    <p>To aid the actual transfer of funds between the participants and source funds for their activities</p> Signup and view all the answers

    What is the term for the entities that participate in the financial markets, such as investors, brokers, and regulators?

    <p>Market Participants</p> Signup and view all the answers

    Who is the licensing authority for insurance companies?

    <p>Insurance Regulatory and Development Authority of India</p> Signup and view all the answers

    In which market do securities are issued by the borrowing institutions directly to the lenders or investors?

    <p>Primary markets</p> Signup and view all the answers

    What is the primary function of the primary market?

    <p>To create financial assets</p> Signup and view all the answers

    What is the role of fund managers and financial advisors in the financial markets?

    <p>To advise and manage funds for investors</p> Signup and view all the answers

    What is the main objective of investors in the securities market?

    <p>To convert their surpluses and savings into financial assets that earn a return</p> Signup and view all the answers

    What is the key difference between retail investors and institutional investors?

    <p>Size of investment and sophistication of investing strategies</p> Signup and view all the answers

    What do the commodities markets and foreign exchange markets support?

    <p>The economic activity</p> Signup and view all the answers

    Who is the authority appointed under the Companies Act to register companies and ensure compliance with the law?

    <p>Registrar of Companies (RoC)</p> Signup and view all the answers

    Who are the primary participants in the securities market?

    <p>Investors and issuers</p> Signup and view all the answers

    What is the website to visit for registration and examination details for the NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination?

    <p><a href="http://www.nism.ac.in">www.nism.ac.in</a></p> Signup and view all the answers

    What determines the type of securities issued by an issuer?

    <p>Issuer's short-term and long-term need for capital</p> Signup and view all the answers

    What is the purpose of regulatory control and supervision in the securities market?

    <p>To ensure the smooth functioning of the securities market</p> Signup and view all the answers

    What characterizes institutional investors?

    <p>They have specialized knowledge and skills in investing</p> Signup and view all the answers

    Who regulates the Indian banking system and conducts monetary, forex and credit policies?

    <p>Reserve Bank of India</p> Signup and view all the answers

    Who is responsible for designing the structure of funds and constituents in the National Pension System (NPS)?

    <p>PFRDA</p> Signup and view all the answers

    What is the primary function of the Securities and Exchange Board of India (SEBI)?

    <p>To facilitate the growth and development of the capital markets</p> Signup and view all the answers

    What is the role of institutions such as mutual funds, insurance companies, and pension funds in the proper pricing of financial assets?

    <p>They can source and evaluate information better</p> Signup and view all the answers

    What is the primary function of the securities or capital markets in the Indian financial market?

    <p>To enable longer-term transfer of funds using debt and equity instruments</p> Signup and view all the answers

    What is the role of financial intermediaries in the securities market?

    <p>To facilitate interaction between investors and borrowers</p> Signup and view all the answers

    Who regulates the futures and forward trading in commodities in India?

    <p>Forward Markets Commission</p> Signup and view all the answers

    What is the role of investment advisers and distributors?

    <p>To help investors make a choice of securities based on their needs and risk tolerance</p> Signup and view all the answers

    Who oversees the activities of the banking system, insurance, and pension sectors?

    <p>Ministry of Finance</p> Signup and view all the answers

    Study Notes

    Registration and Examination

    • To find out more and register for the NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination, visit www.nism.ac.in.

    Indian Financial Markets

    • The Indian financial market consists of the money markets and securities or capital markets.
    • The money markets deal with short-term lending and borrowing of funds.
    • The securities or capital markets enable longer-term transfer of funds using debt and equity instruments.

    Structure of Financial Markets in India

    • The financial market structure consists of the primary markets where securities are issued by borrowing institutions directly to lenders or investors.
    • The secondary markets provide investors with options to exit or reallocate their resources by dealing amongst themselves.

    Participants in Financial Markets

    • Market participants include banks, financial institutions, brokers, dealers, custodians, depositories, and depository participants.
    • Institutional investors, such as mutual funds, insurance companies, and pension funds, provide funds in the markets and provide liquidity and stability.

    Regulatory Framework

    • Regulators of financial markets include the Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), and Pension Fund Regulatory and Development Authority (PFRDA).
    • The Ministry of Finance regulates the banking system, insurance, and pension sectors.
    • The Ministry of Corporate Affairs regulates the functioning of the corporate sector.
    • The RBI regulates the money market segment of the securities market and manages the government's borrowing program.
    • The SEBI is the chief regulator of securities markets in India.

    Mutual Funds

    • A mutual fund is a type of investment vehicle that pools money from various investors to invest in a diversified portfolio of securities.
    • Mutual funds are regulated by SEBI.
    • Mutual fund products include equity, debt, and hybrid funds.

    Investment Products

    • Investment products include mutual funds, insurance products, and pension funds.
    • Investment advisers and distributors work with investors to help them make a choice of securities based on their needs, time horizon, return expectation, and ability to bear risk.

    Regulatory Control and Supervision

    • The entire process of issuance, subscription, and transaction in securities is subject to regulatory control and supervision.
    • Regulators ensure that the interests of investors are protected.

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    Related Documents

    NISM-Series-XA Investment Adviser (Level 1) Workbook PDF

    Description

    This quiz covers the basics of the Indian financial market, including the money markets and securities or capital markets, as well as the registration process for the NISM-Series-X-A Certification Examination.

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