Securities Markets Foundation

Syllabus and chapter weightage

Weightages are taken from the official syllabus table published in the NISM workbook, so you can see exactly where the marks are.

Every chapter can be read free, no account needed — tap a chapter to open its plain-English Foundation lesson.

Sample questions

5 questions from the chapter tests, one per chapter. Pick your answer before you open the explanation.

1. Question 1 · Chapter 1: Understanding Securities Markets and Performance

   The term "securities" is defined in which statute?

   1. A.The SEBI Act, 1992
   2. B.Section 2(h) of the Securities Contracts (Regulation) Act, 1956
   3. C.The Companies Act, 2013
   4. D.The Depositories Act, 1996
   Show the answer

   Answer: B. Section 2(h) of the Securities Contracts (Regulation) Act, 1956

   The term "securities" has been defined in Section 2(h) of the Securities Contracts (Regulation) Act, 1956.

   The SCRA definition is deliberately wide, covering shares, scrips, stocks, bonds, debentures, debenture stock, derivatives, collective investment scheme units, security receipts under the SARFAESI Act, mutual fund units, units of pooled investment vehicles, certificates of a special purpose distinct entity, government securities, and rights or interest in securities.

   Note also that the SCRA, 1956 is administered by SEBI, and provides for the direct and indirect control of virtually all aspects of securities trading and the running of stock exchanges.

2. Question 2 · Chapter 2: Securities: Types, Features and Concepts of Asset Allocation and Investing

   Which of the following is ranked last both in terms of profit sharing and in receiving liquidation proceeds?

   1. A.Lenders
   2. B.Employees
   3. C.Government creditors
   4. D.Equity shareholders
   Show the answer

   Answer: D. Equity shareholders

   Equity shareholders are ranked last on both counts. Profits reach them only after every cost, including interest and tax; and on liquidation the proceeds go first to government, lenders and employees, then to preference shareholders, and only the residual amount, if any, reaches equity shareholders.

   That is why equity is called a residual claim and why it is also called risk capital — the equity investor accepts that the business may succeed or fail, with no fixed return promised.

   Lenders, employees and government creditors all rank ahead, which is exactly why their returns are lower and more certain.

3. Question 3 · Chapter 3: Primary Markets

   A retail investor in a public issue is an investor who:

   1. A.Is not an institutional investor
   2. B.Invests not more than ₹2 lakh in a single issue
   3. C.Applies for at least 100 shares
   4. D.Does not have a demat account
   Show the answer

   Answer: B. Invests not more than ₹2 lakh in a single issue

   The workbook defines individual investors by the amount invested: Retail Individual Investors invest not more than ₹2 lakh in a single issue, and Non-Institutional Buyers (NIBs) invest more than ₹2 lakh.

   Option A is the loose everyday meaning, but it would also cover an HNI applying for ₹50 lakh, who is a non-institutional buyer, not a retail investor.

   Option C invents a share-count rule. Option D is wrong in a more basic way — every applicant needs a demat account, since shares are credited to the beneficiary demat account of successful applicants.

4. Question 4 · Chapter 4: Secondary Markets

   Which statement about secondary market transactions is correct?

   1. A.They provide additional capital to the issuing company
   2. B.They do not result in additional capital to the issuer, as funds are only exchanged between investors
   3. C.They are settled directly between buyer and seller without any intermediary
   4. D.They are restricted to securities issued in the primary market
   Show the answer

   Answer: B. They do not result in additional capital to the issuer, as funds are only exchanged between investors

   Transactions in the secondary market do not result in additional capital to the issuer as funds are only exchanged between investors.

   Option D is also wrong: the secondary market trades securities issued in the primary market as well as those that were not issued in the primary market, such as privately placed debt or equity securities and derivatives of primary securities created and traded by financial intermediaries.

   The secondary market's job is stated precisely: to support the capital raising function of the primary market by providing liquidity, price identification, information-signalling, and acting as a barometer of economic activity.

5. Question 5 · Chapter 5: Mutual Funds

   A scheme has 6,000 units outstanding. Its portfolio is worth ₹72,000, income earned is ₹3,000 and expenses are ₹600. What is the NAV per unit?

   1. A.₹12.00
   2. B.₹12.40
   3. C.₹12.50
   4. D.₹11.90
   Show the answer

   Answer: B. ₹12.40

   The net assets are calculated by adding income earned and deducting expenses incurred from the current market value of the portfolio.

   72,000 + 3,000 − 600 = ₹74,400

   The net assets divided by the number of outstanding units give the Net Asset Value of the fund.

   74,400 ÷ 6,000 = ₹12.40

   The workbook notes the result: the NAV of the fund has moved up from ₹10 per unit to ₹12.40 per unit.

   Two points that follow. The NAV of a fund is calculated every business day so that the investors know the value of their investments, and investors buy and sell units at a price based on NAV.

Frequently asked questions

What is the passing mark for NISM Series XII?

You need 60% to pass NISM-Series-XII: Securities Markets Foundation. On a 100-mark paper that is 60 marks.

Is there negative marking in NISM Series XII?

There is no negative marking, so never leave a question blank — an uncertain guess costs you nothing.

How long is the NISM Series XII exam?

The exam runs for 120 minutes and carries 100 marks in total.

How long is the NISM Series XII certificate valid?

NISM certifications are generally valid for 3 years from the date of passing, after which they must be renewed. Confirm the current position on nism.ac.in before your certificate lapses.