Capital Market Module Practice Book Sample

Roots Institute of Financial Markets
RIFM
Practice Book
Capital Market (Dealers) Module

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Thanks for choosing RIFM as your guide to help you in NCFM Certification.
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Our Team
Deep Shikha Malhotra CFPCM
 M.Com., B.Ed.
 AMFI Certified for Mutual Funds
 IRDA Certified for Life Insurance
 IRDA Certified for General Insurance
 PG Diploma in Human Resource Management
CA. Ravi Malhotra

 B.Com.
 FCA
 DISA (ICA)
 CERTIFIED FINANCIAL PLANNERCM
Vipin Sehgal CFPCM

 B.Com.
 NCFM Diploma in Capital Market (Dealers) Module
Neeraj Nagpal CFPCM

 B.Com.
NCFM Diploma in :
 Capital Market (Dealers) Module
 Derivatives Market (Dealers) Module
 Commodities Market Module
Kavita Malhotra
 B.Com.
Certification in following Modules of CFPCM Curriculum (FPSB India)
 Risk Analysis & Insurance Planning
 Retirement Planning & Employees Benefits
 Investment Planning
 Tax Planning & Estate Planning
 Advanced Financial Planning

Index
Contents Page No
Chapter 1 Trading 1-22

Chapter 2 Clearing and Settlement 23-43
Chapter 3 Trading Membership 43-66
Chapter 4 Legal Framework 68-78
Chapter 5 An Overview of the Indian Securities Market 79-83
Chapter 6 Fundamental Valuation Concept 84-92
Sample Paper 1 93-101
Answer Table Sample Papers 122

Chapter 1
Trading
1. The first ticker window, by default, displays all the _____________ traded in the future & option
segment.
A. Derivatives contract.
B. Nifty securities.
C. Mid cap Securities.
D. Nifty junior stocks.
2. The ticker selection facility is confined to the securities of ______________ segment only.
A. Derivative market.
B. Capital market.
C. Commodity market.
D. Auction market.
3. The message window enables the user to view messages broadcast by the__________ such as
corporate actions, any market news etc.
A. Exchange.
B. RBI.
C. GOVT.
D. CRISIL.
4. The one line market information displayed in the market watch screen is for current best price
orders available in the _______________ .
A. Odd lot book.
B. RETDEBT book.
C. Regular lot book.
D. Auction order book
5. One of the best features of NEAT software is that the user has the facility to set up___ securities in
the market watch.
A. 100
B. 150
C. 500
D. 400
6. The purpose of market by price is to enable the user to view ________________ in the market
aggregated at each price & are displayed in order of best prices.
a) Outstanding orders.
b) Outstanding auctions.
c) Outstanding buyers.
d) Outstanding sellers.
72. It is mandatory for trading memebr to enter the counterparty trading member ID in
_________________ Book

a) Special Term Book
b) Odd Lot Book
c) Negotiated Trade Book
d) Any Order Book
73. Which of the following activities the user can carry out during
Open Phase in the normal market on the NEAT system
a) Inquiry of different screens only
b) Order Entry, Order Modification and Order Cancelation only
c) Both of the above
d) None of the above
74. Order cancellation is not allowed for those___________________ that have not resulted as an
alert.
a) Negotiated Trade Orders
b) Auction Orders
c) RETDEBT Orders
d) All of the Above
75. Consider the following buy orders:

1) 100 shares @ Rs. 35 at time 9:30 a.m.
2) 500 shares @ Rs. 35.05 at time 9:43 a.m.
Which order will be executed first.
a) First Order
b) Second Order
c) Same Priority
d) Cann't say
76. A sell order in the stop loss book gets triggered when the last traded price in the normal market
reaches or falls______________ the trigger price of the order.
a) Below
b) Above
a) Cann't say
77. Which of the following is not the participant in the auction market?
a) Initiator
b) Administrator
c) Compititor
d) Solcitor
78. After the competitor period ends, the ______________ for that auction starts.
a) solicitor period
b) order matching
c) order entry
d) Cann't Say
79. A)If the auction market is not open for trading, the user can enter an auction order.

B) If the quantity entered exceeds Warning Quantity Percentage, the system asks the user for
confirmation of the order.
C) Any order with a price outside the Day Min/Max range is not allowed.
a) A and B are correct
b) B and C are correct
c) C and A are Correct
d) all are correct
80. The user is ___________ to modify any auction orders.

a) not allowed
b) allowed
c) allowed only once
d) allowed any no of times
81. consider the following sell orders:

Which Order will be executed first.
a) First
b) Second
c) Same Priority
d) Cann't Say
82. Bhav copy files downloaded are ddmmxxxx.ms and ddmmxxxx.md where xxxx is the _________.
a) user id
b) year
c) any
d) cann't say
83. A) If the remaining order quantity is less than or equal to the original disclosed quantity, the
disclosed order quantity is set as equal to remaining order quantity.
B) If the remaining order quantity is more than the original disclosed quantity, the disclosed order
quantity is set to the original disclosed quantity.
a) A is Correct
b) B is Correct
c) Both are Correct
d) Both are Incorrect
84. Order quantities should not exceed__________shares in Limited Physical market.

a) 200
b) 300
c) 400
d) 500
85. Only the last _________ bhavcopy files are stored in the reports directory.
a) one
b) seven
c) ten
d) three sixty five
86. Once the market closes, the details of trading activities done by the user are generated as trade
reports. They are downloaded on the workstation of _____________
a) Corporate/Branch manager
b) dealer/corporate manager
c) dealer/Branch manager
d) Dealer only
79. A)If the auction market is not open for trading, the user can enter an auction order.
B) If the quantity entered exceeds Warning Quantity Percentage, the system asks the user for
confirmation of the order.
C) Any order with a price outside the Day Min/Max range is not allowed.
a) A and B are correct
b) B and C are correct
c) C and A are Correct
d) all are correct
80. The user is ___________ to modify any auction orders.

a) not allowed
b) allowed
c) allowed only once
d) allowed any no of times
81. consider the following sell orders:

Which Order will be executed first.
a) First
b) Second
c) Same Priority
d) Cann't Say
82. Bhav copy files downloaded are ddmmxxxx.ms and ddmmxxxx.md where xxxx is the _________.
a) user id
b) year
c) any
d) cann't say

Answers Ch 1 Capital Market
1 A 16 B 31 A 46 C 61 D 76 A 91 C 106 B 121 B
2 B 17 A 32 B 47 C 62 C 77 B 92 A 107 B 122 D
3 A 18 C 33 B 48 D 63 A 78 A 93 B 108 C 123 B
4 C 19 D 34 B 49 A 64 B 79 B 94 A 109 A 124 B
5 C 20 D 35 B 50 B 65 D 80 A 95 C 110 B 125 C
6 A 21 B 36 B 51 A 66 A 81 A 96 D 111 B 126 C
7 A 22 D 37 C 52 D 67 B 82 A 97 D 112 C 127 C
8 A 23 D 38 A 53 D 68 C 83 C 98 D 113 C 128 D
9 A 24 A 39 D 54 B 69 D 84 D 99 A 114 C 129 C
10 B 25 B 40 B 55 B 70 C 85 B 100 C 115 A 130 C
11 D 26 B 41 C 56 B 71 A 86 A 101 A 116 D 131 D
12 C 27 B 42 A 57 B 72 C 87 D 102 B 117 D 132 D
13 D 28 A 43 C 58 B 73 C 88 D 103 D 118 C 133 B
14 B 29 C 44 D 59 D 74 A 89 C 104 A 119 A 134 A
15 C 30 B 45 B 60 C 75 B 90 D 105 C 120 D 135 B

Chapter 3
Trading Membership
1. The ---------------- has provided uniform regulation for the admission of members in the stock
exchange.
(a) Capital issues (control) act, 1947
(b) Depopsitories Act,1996
(c) Companies Act,1956
(d) Securities Contract Regulation Act1956
2. A member / broker registered with the recognized stock exchange has to applllllly to the --------------
- for registration.
(a) NSE
(b) BSE
(c) SEBI
(d) OTCEI
3. The agreement between the broker & the sub broker is carried out on a non-judicial stamp paper of
Rs. ---------------- .
(a) 1000
(b)5000
(c) 10
(d) 100
4. Which of the following statement is true ?

(a) The broker has to abide by the code oofo conduct laid down by the SEBI.
(b) The code of conduct prevents the malpractice, manipulate & gives other statuory requirements .
(c) If a broker is involved in manipulation or price rigging or gives false information, his registration is
likely to be suspended.
(d) All of the above
5. According to the Rule 2(e) of SEBI (Stock Brokers & subbroler ) Rules, 1992, a stock broker means
a member of a recognized ----------------- .
(a) Stock Exchange
(b) University
(c) Bank
(d) Depository
6. A stock broker applies for registration to SEBI through a __________, of which he or she is
already a member.
(a) Bank
(b) Company
(c) Stock exchange
(d) Depository
7. A sub-Broker is a person who intermediates between Investor & ---------------.

(a) Bankers
(b) SEBI
(c) Stockbrokers
(d) Exchange
8. SEBI may grant a certificate to a stockbroker (as per SEBI Rules, 1992) subject to the following
conditions that:
(a) He holds the membership of any stock exchange
(b) He shall abide by the rules , regulations & byelaws of the stock exchange
(c) He shall pay the amount of fees for registration in the prescribed manner
9. The stock broker with whom the sub-broker is affiliated is responsible for :
(a) Ensuring the compliance bya sub-broker of the rules , Bye-laws & Regulations of the exchange.
(b) Inspecting that the subbrokers are registered and recognized.
(c) Reporting any default or delay in carrying out obligations by any of the subbrokers affiliated to
him.
(d) all of the above
10. A prospective trading member is admitted to --------- of the following combinations of the market
segments :
• Wholesale Debt Market segment
• Capital Market & the Futures and Options segment
• Capital Market segment ,the Wholesale Debt Marker segment
• Capital Market segment, Wholesale Debt market & the Future &
Options segment.
(a) all of the above

(b) any of the above
(c) None of the above
(D) Only one of the above
11. The net worth required for trading members on CM & F&O segment is Rs.---- lakh.
(a) 100
(b) 400
(c) 300
(d) 25
85. Trading members desirous of appointing sub-brokers are required to submit the following
documents to the Membership Department of the Exchange ___
(a) a Copy of sub-broker - broker agreement duly certified by the trading members
(b) Application form for registration as a sub-broker with Securities and Exchange Board of India
(c) Recommendation letter to be given by the trading member with whom the sub-broker is affiliated
86. ______ or an individual can become member of an exchange

(a) a corporate, a partnership firm
(b) Hindu Undivided Family
(c) An individual, a partnership firm, Hindu Undivided Family
(d) An individual, Hindu Undivided Family
87. A trading member on the NSE, has set the branch order value unlimited for his Chennai branch
and Rs. 1000 lakh for Kolkata branch. Chennai branch has two users 'X' and 'Y' with user order limits
of Rs. 250 lakh and Rs. 300 lakh respectively. Kolkata branch has one user 'Z' with user order value
limit of Rs. 550 lakh. The member applies for a new user at Kolkata. What is the maximum user order
value that can be set for the new user?
(a) Not more than Rs. 950 lakh
(b) Zero
(c) unlimited
(d) Rs. 450 lakh
88. Benefits of trading membership on the NSE includes access to a nationwide trading facility for
equities, derivatives, debt and hybrid instruments / products. True or false.
(a) false
(b) true
(c) true only equity trades
(d) true only for derivatives
89. If a client buys shares worth Rs. 1,90,000 and sells shares worth Rs.10,000 through a stock-
broker, then the maximum brokerage payable is _______.
(a) Rs. 4,000
(b) Rs. 5,000
(c) Rs. 2,000
(d) Rs. 6,000
90. ____________ is printed on the contract note issued by the trading member to the client? [ 2
Marks ]
(a) User ID
(b) Terminal ID
(c) Name of the Dealer who executed the trade
(d) Settlement number
91. A stock-broker shall not create false market either singly or in concert with others or indulge in
any act detrimental to the investors' interest or which leads to interference with the fair and smooth
functioning of the market. True or False.
(a) False
(b) Partially true
(c) True
(d) Only if he is a large stock broker
92. A stock broker meas a member of.......................

(a) A recognised stoc exchange
(b) AMFI
(c) SEBI
(d) Any of the above
93. To buy or Sell securities on NSEIL an investor should approach a SEBI registered................
(a) Trading member or sub broker
(b) Clearing member
(c) Custodian
94. A stockbroker is allowed to buy, sell or deal in securities......

(a) Only on having a certificate or registration granted by SEBI.
(b) Only after passing the capital market Module of NCFM.
(c) No registration.
(d) Only after paying the fees for registration.
95. A person can a become a member of recognised Stock Exchange

(a) Only One
(b) only two
(c) five
(d) Any number of
96. Which of the following is NOT a market intermediary?

(a) Stock Broker
(b) Stock Exchange
(c) Professional Clearing member
97. Who cannot be trading members in capital market segment of NSEIL?

(a) Individual
(b) Hindu Undivided family
(c) Partnership
(d) Corporates
98 Base minimum capital is requirment of the excahnge is............

(a) Rs 25 lakh
(b) Rs 100 Lakh
(c) Rs. 125 lakh
(d) The subject to the minimum stipulated by SEBI
139. The Contract note does not contain.................

(a) Name of dominant shareholders
(b) Name of client shareholders
(c) SEBI registration
(d) None of the above
140. What is the maximum brokerage that can be charged by a sub-broker from his client?
(a) 1.50%
(b) 1.25%
(c) 2.5%
(d) 2.25%
141. Purchase/sale not is issued by the............

a) Authorised signatory
(b) Charted accountant
(c) Custodians
(d) Any of the aboe
142. A sub-broker shall isssue the purchase/sale note for purchase or sale ofd securities to a client
with in.......... of the excecution of trade.
(a)24 hours
(b) 48 hours
(c) 1 day
(d) 2 days
143. Every sub-broker shall make payments to his clients for the securities sold by his client with
in........... of pay-out.
(a)24 hours
(b) 48 hours
(c) 1 day
(d) 2 days
144. Every sub-broker shall deliver the securities purchased to his clients with in........... of pay-out.
(a)24 hours
(b) 48 hours
(c) 1 day
(d) 2 days
145. A client shall deliver the securities sold to the sub-broker

(a) On pay in day.
(b) on pay out day
(c) Immediately
146. A client shall make payment for securities

(a) On pay in day.
(b) on pay out day
(c) Immediately

Answer Ch3 Trading Membership
1 d 31 d 61 c 91 c 121 a
2 c 32 c 62 d 92 a 122 a
3 c 33 a 63 c 93 a 123 d
4 d 34 d 64 d 94 a 124 b
5 a 35 d 65 d 95 d 125 b
6 c 36 b 66 c 96 b 126 b
7 c 37 a 67 b 97 b 127 c
8 d 38 d 68 c 98 d 128 a
9 d 39 d 69 a 99 a 129 b
10 b 40 d 70 c 100 a 130 c
11 a 41 d 71 d 101 a 131 a
12 c 42 d 72 d 102 a 132 c
13 b 43 a 73 b 103 c 133 c
14 a 44 a 74 b 104 a 134 a
15 d 45 b 75 d 105 c 135 d
16 a 46 d 76 c 106 c 136 a
17 c 47 c 77 d 107 a 137 a
18 c 48 a 78 c 108 a 138 a
19 d 49 a 79 d 109 d 139 a
20 b 50 b 80 c 110 a 140 a
21 b 51 b 81 a 111 b 141 a
22 a 52 a 82 d 112 b 142 a
23 b 53 c 83 d 113 d 143 b
24 b 54 a 84 a 114 a 144 b
25 a 55 d 85 d 115 a 145 c
26 c 56 d 86 a 116 a 146 c
27 a 57 b 87 c 117 b 147 c
28 b 58 d 88 b 118 a
29 c 59 c 89 b 119 a
30 a 60 c 90 d 120 b

Chapter 5
An Overview of the Indian Securities Market
1. Which Act deal with Issue,Allotement and transfer of securities and various aspects relating to
company management?
(a) The Companies Act, 1956
(b) SC(R) Act 1956
(c) SEBI( Stock Broker and Sub-brokers) Regualtions 1992
2. Which of the following are the most preferred assets of the household sector?
(a) Stocks
(b) Bank Deposits
(c) Mutual Funds
(d) ULIPS
3. Which country has the highest number of companies listed on stock exchange?
(a) Chicago
(b) Nasdaq
(c) China
(d) India
4. In the securities market, the risk of investment in securities are borne by..................
(a) SEBI
(b) Investors
(c) Depository
(d) Stock exchange
5. Central Govt. finances about ...............% of its fiscal deficit by market borrowings.
(a) 60-70
(b) 70-80
(c) 50-60
(d) 80-90
6. .................% of financial savings of households is cancelled through securities market?

(a) less than 20
(b) Less than 5
(c) Less than 10
(d) Less than 15
7. Which of the following states has largest number of Investors?

(a) Haryana
(b) Kerala
(c) Maharastra
(d) Karnataka
8. The authority regulatingt the issue of shares by companies in the primary markets is the..................
(a) Securities and exchange Board of India
(b) Companies Act 1956
(c) Department of companies Affairs
(d) Department of Economic Affairs
9. Which of the following is true about primary market

(a) Primary market refer to the direct solicitation of fumds from the public bby companies
(b) Primary market refers to a market where securities are traded after being initially offered to the
public
(a) A is true
(b) B is true
(c) Both are true
(d) None of the above true
10. Which of the following does not issue securities in the primary market?
(a) Stock exchange
(b) Public Companies
(c) Govt. Comapnies
(d) None of the baove
11. In terms of the companies Act 1956 an issue becomes public if it result in allotment to more
than...........persons
(a) 50
(b) 10
(c) 100
(d) 500
12. ...................announces the auction of goverenment securities.

(a) SEBI
(b) RBI
(c) General Govt.

Answer Ch5 An overview of Indian Securities
Market
1 A 13 B 25 A
2 B 14 A 26 A
3 D 15 A 27 B
4 B 16 B 28 A
5 C 17 C 29 C
6 A 18 B 30 D
7 C 19 D 31 D
8 A 20 D 32 D
9 A 21 D
10 A 22 A
11 A 23 A
12 B 24 D

Chapter 6
Fundamental Valuation Concepts
1. How much would we pay for Rs. 121.67, to be received five years in future ,if our
opportunity cost were 4% ?
(a) 100
(b) 121.67
(c) 112
(d) 105
2. Rahul is supposed to receive Rs. 90000 from chandra aftre 3 years. If the interest
rate is 8% , what is the present value of the amount due from chandra?
(a) 81444.9
(b) 71444.9
(c) 86444.9
(d) 9144.9
3. Mr. Desai has decided to deposit Rs. 100,000 in the bank annually. If the bank has a
Policy of continuous compounding and the prevailing interest rate is 11.5% how much
would his deposit grow up to in 2 years.?
(a) 166,141.11
(b) 171,507.54
(c) 185,570.7
(d) 224,871.26
4. What is the present value of Rs. 6000 receivable aftre two years at a discount rate of
5% under continuous discounting?
(a) Rs. 5429.02
(b) Rs. 6000
(c) Rs. 5700
(d) Rs. 6300
5. What is the present value of Rs. 10000 receivable after 1 years discounting at 10%
p.a.?
(a) 11000
(b) 10000
(c) 9000
(d) 9090.9
6. The Future value of Rs. 10000 investment done today, which gives an annual rate of
return of 20% per annum , after one year should be.............
(a) Rs. 12200
(b) Rs. 12500
(c) Rs. 12000
(d) Rs. 12640

51. Mr. Desai has decided to deposit Rs. 100,000 in the bank annually. If the bank has
a policy of continuous compounding and the prevailing interest rate is 11.5% how much
would his deposit grow upto in 2 years?
(a) 166,141.11
(b) 171,507.54
(c) 185,570.7
(d) 224,871.26
52. Assume that a security with a beta of 1.5 is being considered for investment at a
time when the risk-free rate of return is 8 % p.a. and the market return is expected to be
20% p.a. The expected/required return can be calculated by substituting the given data
into the CAPM equation is.................
(a) 14%
(b) 26%
(c) 18%
53. Assume that a security with a beta of 1.5 is being considered for investment at a
time when the risk-free rate of Premium is 8 % p.a. and the market return is expected to
be 12% p.a. The expected/required return can be calculated by substituting the given
data into the CAPM equation is_____________
(a) 14%
(b) 26%
(c) 18%

Answer Ch6 Fundamental
Valuation Concepts
1 A 27 B
2 B 28 D
3 D 29 B
4 A 30 C
5 D 31 A
6 C 32 A
7 A 33 B
8 B 34 A
9 C 35 C
10 B 36 B
11 D 37 B
12 B 38 B
13 D 39 B
14 D 40 A
15 A 41 C
16 C 42 B
17 B 43 D
18 B 44 C
19 A 45 B
20 B 46 D
21 A 47 D
22 A 48 B
23 B 49 C
24 A 50 B
25 C 51 D
26 C 52 B
53 A

Sample Question Paper 1
Q:11 Securities and funds pay out takes place on ______ working days after the trade date. [ 2 Marks
]
(a) ‘T+3’
(b) ‘T+1’
(c) ‘T+2’
(d) within 24 hours of sale
Q:12 NSE has implemented ______________ in compulsory rolling settlement with effect from July
02, 2001. [ 1 Mark ]
(a) securities-based market-wide circuit breakers
(b) index-based market-wide circuit breakers
(c) market-wide based securities-wise circuit breakers
(d) none of the above
Q:13 The c lients introduced by an authorised person to a trading member, would be required to
deliver securities and make payments directly in the trade name of the trading member. True or
False? [ 1 Mark ]
(a) True
(b) False
Q:14 Security wise User Order Quantity Limit (SUOQL) can be modified anytime during trading hours.
True or False? [ 2 Marks ]
(a) True
(b) False
Q:15 ______ can be traded in the Limited Physical Market? [ 1 Mark ]

(a) Illiquid shares
(b) Futures and Options
(c) Odd lots
(d) Government Securities
Q:16 Securities Delivered Statement: This statement provides information on ______? [ 1 Mark ]
(a) Delivering centre
(b) Total number of shares to deliver for each security
(c) Quantity delivered and quantity of shares delivered short
Q:17 If a client buys shares worth Rs. 5,25,000 and sells shares worth Rs. 4,75,000 through a broker,
then the maximum brokerage payable to broker is ___. [ 2 Marks ]
(a) Rs. 25,000

(b) Rs. 15,000
(c) Rs. 10,000
(d) Rs. 20,000
Q:18 An advertisement released by a trading member can contain a recommendation regarding
purchase or sale of any particular share or security of any company. True or False? [ 2 Marks ]
(a) True
(b) False
Q:19 No payment for transaction in which a Trading Member is taking position as a principal will be
allowed to be made from the client’s account? [ 2 Marks ]
(a) True, unless his clients approves the payment
(b) True
(c) True, only if his clients are making payments on time
(d) False
Q:20 The Trading Members shall keep the dematerialised securities of Constituents in a separate
beneficiary account distinct from the beneficiary account maintained for holding their own
dematerialised securities. True or False? [1 Mark ]
(a) True
(b) False
Q:21 A portfolio contains securities with the expected return as follows:- Security Probability Return
A 30 10
B 40 12
C 30 15
What will be the expected return of the portfolio? [ 1 Mark ]
(a) 12.80
(b) 23
(c) 12.30
(d) 14.70
Q:53 Which of the following do not issue securities in the primary market? [ 1 Mark ]
(a) FIIs
(b) State Goverments
(c) Companies
Q:54 Auction Square Up Debit Statement: This report gives details of unauctioned deliveries that are
squared-up by the Exchange. True or False? [ 2 Marks ]
(a) True
(b) False
Q:55 A trading member shall be deemed guilty of un-businesslike conduct for any of the following or
similar acts or omissions namely: [ 2 Marks ]
(a) if it transacts its own business or the business of its constituent in fictitious names
(b) If it makes a fictitious transaction
(c) circulates or causes to be circulated, any rumours;

Sample Paper 1
1 D 31 A
2 D 32 A
3 A 33 A
4 C 34 C
5 C 35 A
6 D 36 B
7 D 37 D
8 C 38 A
9 A 39 D
10 C 40 D
11 C 41 B
12 B 42 D
13 A 43 B
14 A 44 C
15 C 45 B
16 D 46 D
17 A 47 A
18 B 48 B
19 B 49 C
20 A 50 C
21 C 51 B
22 D 52 B
23 D 53 A
24 A 54 A
25 C 55 D
26 D 56 D
27 A 57 D
28 C 58 A
29 A 59 A
30 A 60 B

Sample Questions Paper 3
Q:18 A trading member may face disciplinary proceedings for not complying with the ___________
(a) Code of Advertisement
(b) Code of payment
(c) Code of Disciplinary rules
(d) (A) and (B)
Q:19 Is it not compulsory for a trading member to maintain a separate bank account for the Clients?
(a) True, unless his clients request for opening a bank account
(b) True
(c) True, only if his clients are not his relatives
(d) False
Q:20 An advertisement issued by a trading member shall contain__________.

(a) the photographs of the directors the trading member
(b) the signatures of the directors of the trading member
(c) addresses of the directors of the trading member
(d) Name and/or his logo, code of National Stock Exchange membership
Q:21 A portfolio contains securities with the expected return as follows:- Security Probability Return
A 20 10
B 30 12
C 50 15
What will be the expected return of the portfolio?
(a) 8.1
(b) 56
(c) 13.10
(d) 3.10
Q:22 A variant of counter party risk is _________

(a) Value at Risk
(b) Liquidity Risk
(c) Market Risk
(d) (A) and (C)
Q:23 What does 'S' indicate as an activity in the 'Activity Log' screen in the NEAT system?
(a) Sell order
(b) Stop loss order
(c) Trade Modified
(d) Order Cancelled
Q:24 NSE's Certification in Financial Markets (NCFM) is an ______.

(a) on-line examination mandatory to take up membership on the NSE
(b) on-line examination but not mandatory to take up membership on
the NSE

(c) on-line examination to become an arbitrator of NSE
(d) on-line examination to become a director of brokers of NSE
Q:25 There are ____ Securities Appellate Tribunal(s) in India?

(a) 1
(b) 3
(c) 0
(d) 2
Q:26 If ______ attempts are made by a user to log on with an incorrect password, then that user is
automatically disabled.
(a) 2
(b) 5
(c) 4
(d) 3
Q:27 Bank Pass Book shall be preserved for a period of _____ years by the stock broker as per the
Securities Contracts (Regulation) Rules, 1957
(a) 7
(b) 5
(c) 10
(d) 6
Q:28 The Depository transfers the securities from the pool accounts of members/custodians to the
________________.
(a) pool account of the clearing agency
(b) settlement account of the clients
(c) delivery Account
(d) settlement account of the clearing agency
Q:29 A depository is an entity where the securities of an investor are held in a(n) ___________?
(a) physical form
(b) electronic or physical form
(c) electronic form
(d) none of the above
Q:43 Rahul is supposed to receive Rs. 90,000 from Chandra after 3 years. If the interest rate is 8%,
what is the present value of the amount due from Chandra?
(a) 81,444.9
(b) 71,444.9
(c) 86,444.9
(d) 91,444.9
Q:44 The user is not allowed to modify any auction orders. True or false?
(a) false
(b) true, only if they are another user’s orders.
(c) true, only if the price of the order is above Rs. 500
(d) true
Q:45 The daily obligation report is downloaded at the ___________to each Clearing Member?
(a) beginning of the trading day
(b) end of the month
(c) end of the trading day
(d) beginning of the month
Q:46 The detailed outstanding orders screen is split into First Line and _________?
(a) Second Line.
(b) Detail Line.
(c) Next Line.
(d) Following Line.
Q:47 What does 'SPD' indicate as a message code in 'Full Message window' in the NEAT system?
(a) Security Suspension/De-suspension
(b) There is no such message code as 'SPD' in the Full Message Window
(c) All messages related to suspension for trading of listed securities only
(d) All messages related to securities only

Sample Paper 3
1 D 31 D
2 B 32 D
3 B 33 A
4 C 34 B
5 C 35 C
6 C 36 B
7 C 37 B
8 D 38 C
9 A 39 D
10 C 40 D
11 C 41 D
12 D 42 B
13 D 43 B
14 D 44 D
15 C 45 C
16 C 46 B
17 C 47 A
18 A 48 B
19 D 49 A
20 D 50 C
21 C 51 B
22 B 52 B
23 A 53 D
24 A 54 C
25 A 55 D
26 D 56 D
27 B 57 D
28 D 58 D
29 C 59 C
30 C 60 B

Roots Institute of Financial Markets (RIFM)
“Every effort has been made to avoid any errors or omission in this book. In spite of this error may creep in.
Any mistake, error or discrepancy noted may be brought to our notice, which, shall be taken care of in the
next printing. It is notified that neither the publisher nor the author or seller will be responsible for any
damage or loss of action to anyone of any kind, in any manner, therefrom.
ROOTS Institute of Financial Markets, its directors, author(s), or any other persons involved in the preparation
of this publication expressly disclaim all and any contractual, tortuous, or other form of liability to any person
(purchaser of this publication or not) in respect of the publication and any consequences arising from its use,
including any omission made, by any person in reliance upon the whole or any part of the contents of this
publication.
No person should act on the basis of the material contained in the publication without considering and taking
professional advice.

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NCFM Modules Practice Books (about 500 Questions per Module)
Cost Rs. 600 Per Module
1. FINANCIAL MARKETS : A BEGINNERS MODULE
2. SECURITIES MARKET (BASIC) MODULE
3. CAPITAL MARKET (DEALERS) MODULE
4. DERIVATIVES MARKET (DEALERS) MODULE
5. COMMODITIES MARKET MODULE
6. INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
7. OPTION TRADING STRATEGIES
NISM Modules Practice Books (about 500 Questions per Module)

1. MUTUAL FUND DISTRIBUTORS CERTIFICATION EXAMINATION
2. CURRENCY DERIVATIVES CERTIFICATION EXAMINATION
CFP Certification Modules ---Study Notes (Detailed Study notes as per FPSB
syllabus) Cost Rs. 1000 Per Module
1. INTRODUCTION TO FINANCIAL PLANNING
2. INVESTMENT PLANNING
3. RISK ANALYSIS OF FINANCIAL PLANNING
4. RETIREMENT PLANNING
5. TAX PLANNING
CFP Certification Modules ---Practice Books (about 800 Questions per Module)
1. INTRODUCTION TO FINANCIAL PLANNING
2. INVESTMENT PLANNING
3. RISK ANALYSIS OF FINANCIAL PLANNING
4. RETIREMENT PLANNING
5. TAX PLANNING
Advance Financial Planning Module---

Practice Book & Study Notes (Cost Rs. 5000/-)
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We are constantly engaged in providing a unique educational solution through continuous

Wish you Luck……………

Faculty and content team, RIFM

Roots Institute of Financial Markets

CA. Ravi Malhotra

Vipin Sehgal CFPCM

Neeraj Nagpal CFPCM

Roots Institute of Financial Markets

Chapter 1 Trading 1-22

Sample Paper 1 93-101

Sample Paper 2 102-112

Sample Paper 3 113-121

Answer Table Sample Papers 122

Roots Institute of Financial Markets

Roots Institute of Financial Markets

75. Consider the following buy orders:

Roots Institute of Financial Markets

80. The user is ___________ to modify any auction orders.

81. consider the following sell orders:

84. Order quantities should not exceed__________shares in Limited Physical market.

80. The user is ___________ to modify any auction orders.

81. consider the following sell orders:

Roots Institute of Financial Markets

Roots Institute of Financial Markets

4. Which of the following statement is true ?

7. A sub-Broker is a person who intermediates between Investor & ---------------.

Roots Institute of Financial Markets

(a) all of the above

86. ______ or an individual can become member of an exchange

92. A stock broker meas a member of.......................

94. A stockbroker is allowed to buy, sell or deal in securities......

95. A person can a become a member of recognised Stock Exchange

96. Which of the following is NOT a market intermediary?

97. Who cannot be trading members in capital market segment of NSEIL?

98 Base minimum capital is requirment of the excahnge is............

139. The Contract note does not contain.................

141. Purchase/sale not is issued by the............

145. A client shall deliver the securities sold to the sub-broker

146. A client shall make payment for securities

Roots Institute of Financial Markets

Roots Institute of Financial Markets

6. .................% of financial savings of households is cancelled through securities market?

7. Which of the following states has largest number of Investors?

9. Which of the following is true about primary market

12. ...................announces the auction of goverenment securities.

Roots Institute of Financial Markets

Roots Institute of Financial Markets

Roots Institute of Financial Markets

Roots Institute of Financial Markets

Roots Institute of Financial Markets

Q:15 ______ can be traded in the Limited Physical Market? [ 1 Mark ]

(a) Rs. 25,000

Roots Institute of Financial Markets

Roots Institute of Financial Markets

Q:20 An advertisement issued by a trading member shall contain__________.

Q:22 A variant of counter party risk is _________

Q:24 NSE's Certification in Financial Markets (NCFM) is an ______.

Roots Institute of Financial Markets

Q:25 There are ____ Securities Appellate Tribunal(s) in India?

Roots Institute of Financial Markets