These twelve come from where NISM Series XII puts its marks — the four 20-mark chapters. Attempt each before reading the answer.
1. Who issues securities
Which of these entities issue securities: private companies, the Government, financial institutions?
Answer: all of them. An issuer is any entity raising money by selling a claim on itself. The Government is in fact the largest single issuer in the Indian market, through treasury bills and dated securities.
2. Primary against secondary
An investor buys listed shares from another investor on the exchange. Which market is that?
Answer: the secondary market. The company receives nothing. Money reaches the issuer only in the primary market, when securities are first issued.
3. Book building
How is the final price set in a book built issue?
Answer: discovered from the bids received within the price band. In a fixed price issue the price is stated upfront in the prospectus instead.
4. Bidding at cut-off
What does a retail investor agree to by bidding "at cut-off price"?
Answer: to accept whatever price is finally discovered within the band. It maximises the chance of allotment without having to judge the level, and the facility is available to retail individual investors only.
5. ASBA
Under ASBA, what happens to the application money while the issue is open?
Answer: it stays blocked in the applicant's own bank account. Nothing is transferred, so the applicant keeps earning interest and no refund is needed for an unallotted amount — the block is simply released.
6. Oversubscribed allotment
The retail portion is subscribed 6.4 times. How is allotment decided?
Answer: in a fair and transparent manner, typically by lot on the minimum bid lot — so small applicants are treated even-handedly rather than by the size of their application or how early they applied.
7. Impact cost
Do investors prefer stocks with higher or lower impact cost?
Answer: lower. Impact cost is the cost of moving the price against yourself while executing, and it falls as liquidity rises. A liquid counter with many buyers and sellers has a low impact cost. This one is often set as a True/False and the intuition runs backwards, so read it carefully.
8. Order matching
On what basis are orders matched on an exchange?
Answer: price priority, then time priority. The better-priced order executes first; among equal prices, the earlier one wins.
9. Rolling settlement
Under T+1 rolling settlement, when does Monday's trade settle?
Answer: Tuesday, the next trading day. Each day's trades settle separately, and a shorter cycle reduces the period over which counterparty risk accumulates.
10. NAV
A scheme has net assets of Rs 1,500 crore and 50 crore units. What is the NAV per unit?
Answer: Rs 30. Net assets divided by units outstanding. Note that a high or low NAV says nothing about whether a scheme is cheap or dear.
11. Futures against options
A futures contract obliges the buyer to do what?
Answer: buy the underlying at the agreed price on the agreed date. A future is a firm obligation on both sides. Only an option gives one side the right to walk away — and the option buyer's maximum loss is the premium paid.
12. Hedging
What does hedging with derivatives actually achieve?
Answer: it offsets an exposure — a loss on one position is broadly matched by a gain on the other. It reduces uncertainty at the cost of giving up some favourable movement. It does not eliminate risk, and that distinction is examinable.
Scoring yourself
Fewer than eight right, and you have three weeks of useful work rather than a nasty surprise.
The pattern in XII is different from the other exams: almost nothing needs calculation, but a lot turns on one precise word. That is why answering questions beats re-reading — you cannot tell whether you recognise a definition or actually know it until you are asked.
And because there is no negative marking, answer all 100 on the day.
ScoreSetu has 566 NISM XII questions organised by the workbook's own chapters, each with an explanation and a memory hook. Practise free, then take a timed mock scored to the real 60% pass mark.