nse practice paper 2026-27 class xi

Financial Markets Management (Class XI)

Comprehensive Assessment Test — 50 Multiple Choice Questions

Examination Rules:
1. All questions are mandatory. Select exactly one choice per question.
2. Click the "Submit Test" button at the bottom of the page to lock your answers and compute your total score.

Test Submission Evaluation

1. What is defined as employing savings instead of keeping them idle to obtain future returns?

• A) Speculation
• B) Investment
• C) Inflation hedging
• D) Diversification

Correct Answer: B) Investment

2. Which rate of return reflects the final value after subtracting the effects of inflation?

• A) Nominal rate of return
• B) Gross rate of return
• C) Real rate of return
• D) Compounded yield

Correct Answer: C) Real rate of return

3. Which of the following is NOT one of the three golden rules for all investors outlined in the text?

• A) Invest early
• B) Invest regularly
• C) Invest for long term and not short term
• D) Maximize exposure to speculative assets

Correct Answer: D) Maximize exposure to speculative assets

4. What is interest?

• A) Ownership dividend paid to equities
• B) An amount charged to the borrower for the privilege of using the lender's money
• C) Fee paid to SEBI for regulatory functions
• D) Premium for taking equity risks

Correct Answer: B) An amount charged to the borrower for the privilege of using the lender's money

5. Which of the following is considered a macroeconomic factor that helps determine interest rates?

• A) Demand for money and inflation rate
• B) Scheme portfolio turnover
• C) Exit load variations
• D) Dematerialization processing times

Correct Answer: A) Demand for money and inflation rate

6. Which option stands as a prominent short-term financial investment option?

• A) Public Provident Fund (PPF)
• B) Equity Linked Savings Scheme (ELSS)
• C) Money Market or Liquid Funds
• D) Sovereign Gold Bonds

Correct Answer: C) Money Market or Liquid Funds

7. What is the standard maturity period for the Post Office Monthly Income Scheme?

• A) 3 years
• B) 5 years
• C) 6 years
• D) 15 years

Correct Answer: C) 6 years

8. What is the maturity period of a Public Provident Fund (PPF) account?

• A) 5 years
• B) 10 years
• C) 12 years
• D) 15 years

Correct Answer: D) 15 years

9. Company Fixed Deposits are considered what type of borrowings?

• A) Short-term to medium-term borrowings at a fixed rate of interest
• B) Permanent ownership capital instruments
• C) Risk-free sovereign bonds
• D) Leveraged cash-derivative margin placements

Correct Answer: A) Short-term to medium-term borrowings at a fixed rate of interest

10. Debentures that can be fully converted to equity shares at the option of the holder on maturity are known as:

• A) Non-convertible debentures
• B) Partly convertible debentures
• C) Convertible debentures
• D) Sovereign debentures

Correct Answer: C) Convertible debentures

11. According to the Securities Contract (Regulation) Act, 1956 [SCRA], a Stock Exchange is defined as:

• A) A bank that handles demat account statements
• B) Any body of individuals constituted for assisting, regulating, or controlling the business of buying, selling, or dealing in securities
• C) A department under the Reserve Bank of India
• D) An association tracking only commodity indices

Correct Answer: B) Any body of individuals constituted for assisting, regulating, or controlling the business of buying, selling, or dealing in securities

12. What does a single share represent in a company?

• A) A standard contract of credit given to the board of directors
• B) An equal unit of small denomination into which the total equity capital is divided
• C) An option contract on indices
• D) A certificate of guaranteed monthly distribution

Correct Answer: B) An equal unit of small denomination into which the total equity capital is divided

13. In the Indian securities markets, the term "bond" is typically used for debt instruments issued by:

• A) Private corporate sectors exclusively
• B) Central and State governments and public sector organizations
• C) Depository Participants
• D) Foreign stock brokers

Correct Answer: B) Central and State governments and public sector organizations

14. What is a derivative?

• A) A primary share issue by a private firm
• B) A product whose value is derived from the value of one or more basic variables, called underlying
• C) A direct account opened with national depositories
• D) An investment limited solely to real estate gold funds

Correct Answer: B) A product whose value is derived from the value of one or more basic variables, called underlying

15. What is the name of the main well-diversified index of the National Stock Exchange (NSE)?

• A) Sensex
• B) CNX Midcap
• C) Nifty 50
• D) SCORES Index

Correct Answer: C) Nifty 50

16. A depository is highly similar to a bank, but instead of cash, its deposits are:

• A) Physical real estate papers
• B) Securities (viz. shares, bonds, units) held in electronic form
• C) Gold bars and physical jewelry
• D) Trade contract notes

Correct Answer: B) Securities (viz. shares, bonds, units) held in electronic form

17. What is dematerialization?

• A) Converting physical cash to company fixed deposits
• B) Converting physical certificates of an investor into an equivalent number of securities in electronic form
• C) Issuing bonus shares at the time of maturity
• D) Shifting debt assets into equity asset classes

Correct Answer: B) Converting physical certificates of an investor into an equivalent number of securities in electronic form

18. Under the Securities Contracts Regulation Act (SCRA), 1956, "Securities" include which of the following?

• A) Shares, scrips, bonds, debentures, derivatives, and units of mutual funds
• B) Only physical land assets
• C) Savings account deposits with national banks
• D) Commodities listed under physical spot warehouses

Correct Answer: A) Shares, scrips, bonds, debentures, derivatives, and units of mutual funds

19. Which authority serves as the primary statutory regulator for protecting investor interests and regulating the securities market in India?

• A) Department of Company Affairs (DCA)
• B) Reserve Bank of India (RBI)
• C) Securities and Exchange Board of India (SEBI)
• D) National Stock Exchange (NSE)

Correct Answer: C) Securities and Exchange Board of India (SEBI)

20. The securities market is divided into two interdependent segments, which are:

• A) Cash market and Spot exchange market
• B) Primary market and Secondary market
• C) Money market and Bank Fixed Deposit segment
• D) Arbitrage segment and Quant segment

Correct Answer: B) Primary market and Secondary market

21. What primary role is served by the Primary Market?

• A) To enable trading of previously issued security units
• B) To provide a channel for issuers to raise capital by selling new securities
• C) To act as a platform for settling index derivatives
• D) To declare quarterly corporate dividend percentages

Correct Answer: B) To provide a channel for issuers to raise capital by selling new securities

22. What is meant by the Face Value of an equity share?

• A) The final trading closing price on an exchange
• B) The nominal or stated amount assigned to a security by the issuer
• C) The net value computed at the end of each session after costs
• D) The total capital divided by book ratios

Correct Answer: B) The nominal or stated amount assigned to a security by the issuer

23. When an unlisted company makes either a fresh issue of securities or an offer for sale to the public for the first time, it is an:

• A) Rights Issue
• B) Initial Public Offer (IPO)
• C) Preferential Issue
• D) Follow on Public Offer (FPO)

Correct Answer: B) Initial Public Offer (IPO)

24. What is a prospectus?

• A) A standard contract note given by a trading member
• B) An offer document containing all material details of the issue to help investors make an informed choice
• C) An account statement issued by NSDL or CDSL
• D) A certificate issued after dematerialization

Correct Answer: B) An offer document containing all material details of the issue to help investors make an informed choice

25. What is an issue where a listed company offers fresh securities to its existing shareholders in a fixed ratio based on a record date?

• A) Public Issue
• B) Initial Public Offer
• C) Rights Issue
• D) Private Placement

Correct Answer: C) Rights Issue

26. A global finance vehicle that allows an Indian issuer to raise capital simultaneously across markets outside the US is a:

• A) American Depository Receipt (ADR)
• B) Global Depository Receipt (GDR)
• C) Foreign Currency Convertible Bond (FCCB)
• D) Sovereign Bond

Correct Answer: B) Global Depository Receipt (GDR)

27. What defines a Foreign Currency Convertible Bond (FCCB)?

• A) A bond issued inside India in domestic currency
• B) A bond issued by an Indian company expressed in foreign currency, where principal and interest are payable in foreign currency, convertible to equity
• C) A non-convertible debt paper tracked by RBI
• D) A post office deposit scheme meant for non-residents

Correct Answer: B) A bond issued by an Indian company expressed in foreign currency, where principal and interest are payable in foreign currency, convertible to equity

28. Secondary Market refers to:

• A) The market segment dedicated exclusively to unlisted startups
• B) A market where securities are traded after being initially offered to the public in the primary market and/or listed on a Stock Exchange
• C) The segment controlled directly by corporate management without brokers
• D) Post office term deposits

Correct Answer: B) A market where securities are traded after being initially offered to the public in the primary market and/or listed on a Stock Exchange

29. Who are the primary intermediaries leading a company through a public issue process in the primary market?

• A) Trading sub-brokers
• B) Merchant Bankers
• C) Custodians
• D) Registrar and Transfer Agents

Correct Answer: B) Merchant Bankers

30. What web portal has been designed by SEBI for online registration and tracking of investor grievances against listed companies or intermediaries?

• A) NCFM Portal
• B) Nifty Grievance Portal
• C) SEBI SCORES
• D) AMFI Redressal Link

Correct Answer: C) SEBI SCORES

31. Companies whose potential for growth in sales and earnings are excellent and grow faster than others in the market are termed:

• A) Value Stocks
• B) Growth Stocks
• C) Gilt Assets
• D) Arbitrage shares

Correct Answer: B) Growth Stocks

32. What is the main characteristic behavior of "Growth Stock" companies regarding profits?

• A) They distribute 100% of profits as regular monthly income
• B) They usually pay little or no dividends and prefer to reinvest profits for business expansions
• C) They are backed entirely by fixed post-office interest declarations
• D) They trade only in derivative segments

Correct Answer: B) They usually pay little or no dividends and prefer to reinvest profits for business expansions

33. Stocks that have been overlooked by other investors and may carry a "hidden value" are known as:

• A) Growth Stocks
• B) Value Stocks
• C) Sectoral funds
• D) Liquid assets

Correct Answer: B) Value Stocks

34. Spreading investments across various types of assets and markets to reduce the adverse risk impact of a single class is called:

• A) Churning
• B) Speculation
• C) Diversification
• D) Reinvestment

Correct Answer: C) Diversification

35. Which of the following is NOT one of the standard core features of a debt instrument?

• A) Maturity
• B) Coupon
• C) Principal
• D) Voting rights

Correct Answer: D) Voting rights

36. What does the "Coupon" of a debt paper represent?

• A) The conversion ratio to equity shares
• B) The rate of interest that the borrower will pay on the Face Value
• C) The fee charged by professional fund trustees
• D) The exit penalty charge upon premature surrender

Correct Answer: B) The rate of interest that the borrower will pay on the Face Value

37. What is Credit Risk or Risk of Default in debt investments?

• A) The risk that stock markets close due to a pandemic
• B) The situation where a borrower fails to pay regular interest and/or return the principal on maturity
• C) The fluctuation of Net Asset Value due to equity changes
• D) The risk associated with global depository receipts

Correct Answer: B) The situation where a borrower fails to pay regular interest and/or return the principal on maturity

38. Which process is conducted by professional agencies like CRISIL or ICRA to show precise credit risk levels of a borrower?

• A) Portfolio Turnover calculation
• B) Credit Rating
• C) Stress testing of equity assets
• D) Arbitrage execution

Correct Answer: B) Credit Rating

39. What is the fundamental relationship between interest rates and bond prices?

• A) As interest rates go up, bond prices go up proportionately
• B) As interest rates go up, bond prices come down
• C) Bond prices remain completely unaffected by interest rate cycles
• D) Bond prices vary only when dividends are announced

Correct Answer: B) As interest rates go up, bond prices come down

40. What is a Mutual Fund?

• A) A regional bank branch operating local accounts
• B) A professionally managed collective investment scheme that pools money from many investors to buy diverse securities
• C) A platform handling solely non-convertible private debentures
• D) A central governmental planning department

Correct Answer: B) A professionally managed collective investment scheme that pools money from many investors to buy diverse securities

41. How is the Net Asset Value (NAV) of a mutual fund scheme calculated?

• A) Total face value plus interest coupons earned
• B) Value of all shares/securities held by the fund minus expenses, divided by number of units issued
• C) The initial face amount printed on the NFO form
• D) Total asset value multiplied by the portfolio turnover ratio

Correct Answer: B) Value of all shares/securities held by the fund minus expenses, divided by number of units issued

42. An abridged version of the offer document that must accompany every mutual fund application form is called:

• A) Riskometer Statement
• B) Key Information Memorandum (KIM)
• C) Certificate of Electronic Registration
• D) Trustee Release Form

Correct Answer: B) Key Information Memorandum (KIM)

43. Funds that invest strictly in stocks from a single sector or related industries are called:

• A) Diversified large-cap funds
• B) Sectoral Funds
• C) Arbitrage Funds
• D) Multi-cap funds

Correct Answer: B) Sectoral Funds

44. Which equity mutual funds provide tax exemption benefits to investors under Section 80C of the Income Tax Act?

• A) Sectoral Funds
• B) Index Funds
• C) Equity Linked Savings Schemes (ELSS)
• D) Quant Funds

Correct Answer: C) Equity Linked Savings Schemes (ELSS)

45. What are Fixed Maturity Plans (FMP) in mutual funds?

• A) Open-ended equity funds tracking volatile segments
• B) Essentially close-ended debt schemes where securities maturities coincide with the scheme maturity
• C) Speculative gold futures derivative portfolios
• D) High-exposure real estate infrastructure funds

Correct Answer: B) Essentially close-ended debt schemes where securities maturities coincide with the scheme maturity

46. Mutual funds that invest exclusively in debt instruments issued by the government are known as:

• A) Balanced Funds
• B) Gilt Funds
• C) Monthly Income Plans
• D) Arbitrage funds

Correct Answer: B) Gilt Funds

47. What is the name of the industry association for the Mutual Fund Industry in India?

• A) SEBI
• B) NSDL
• C) Association of Mutual Funds in India (AMFI)
• D) CRISIL

Correct Answer: C) Association of Mutual Funds in India (AMFI)

48. What pictorial, five-level risk depiction tool is used to label mutual fund product risk profiles?

• A) Nifty Index Graph
• B) Riskometer
• C) Rating Metric Chart
• D) Yield Curve Matrix

Correct Answer: B) Riskometer

49. What methodology allows an investor to invest a fixed sum of money regularly (e.g., monthly) into a mutual fund scheme?

• A) Systematic Withdrawal Plan (SWP)
• B) Systematic Investment Plan (SIP)
• C) Systematic Transfer Plan (STP)
• D) Dividend Payout Plan

Correct Answer: B) Systematic Investment Plan (SIP)

50. A method that allows investors to periodically withdraw a fixed amount from their accumulated mutual fund portfolio is called:

• A) Systematic Investment Plan (SIP)
• B) Systematic Withdrawal Plan (SWP)
• C) Systematic Transfer Plan (STP)
• D) Dividend Reinvestment Option

Correct Answer: B) Systematic Withdrawal Plan (SWP)