NISM V-D Investment Landscape — Practice Questions
Practice the Investment Landscape chapter of NISM Series V-D: savings versus investment, the risk-return trade-off, inflation and compounding, and the main investment options open to an Indian household.
30 questions on Investment Landscape in the ScoreSetu bank — each with a detailed explanation and, where useful, a memory hook.
What this topic covers
- Savings vs investment
- Risk, return and inflation
- Power of compounding
- Investment options for households
Free sample questions
1. Mohit needs Rs. 2,00,000 in 5 years from now. The interest rate is 7%. The amount required today to be invested can be calculated by using the formula ______ .
- A. 200000 / (1+0.07)^5 ✅
- B. 200000 * (1- 0.07)^5
- C. 200000 / (1+0.07)*5
- D. 200000 * (1+0.07)*5
Answer: A — 200000 / (1+0.07)^5
Why: The formula for calculating the Future Value of an investment made today is FV = PV * (1 + r) ^ n Where FV is the future value ; PV is the present value ; r is the rate of inflation or interest rate ; n is the number of years Thus the formula for Present value will be PV = FV / (1 + r) ^ n Subsituting the above numbers : PV = 2,00,000 / (1+0.07) ^ 5
💡 Present Value: PV = FV / (1+r)^n; discounts a future need back to today.
2. A portfolio manager chooses to invest in cement manufacturing companies because the industry is expanding through new capacity additions. This investment approach is best described as :
- A. Value investing
- B. Growth investing ✅
- C. Blend investing
- D. Cyclical investing
Answer: B — Growth investing
Why: Growth investing focuses on companies expected to grow rapidly in the future. In this case, cement companies are setting up new capacities, which indicates expected business expansion and higher future earnings. The portfolio manager is investing based on future growth potential. Therefore, this investment style is called growth investing.
💡 Investing for a sector's future expansion/higher earnings -> Growth investing.
3. A group of investors joins a new Ponzi scheme after noticing that many of their friends have already invested in it. This behaviour reflects which type of bias ?
- A. Confidence bias
- B. Herd mentality ✅
- C. Anchoring
- D. Recency bias
Answer: B — Herd mentality
Why: Herd mentality means investors follow what others are doing instead of making independent decisions. In a Ponzi scheme, people often invest because friends or relatives are investing and appearing to earn very high returns. They assume the investment is safe simply because many others are participating. Hence, this behaviour is called herd mentality.
💡 Investing just because friends/others did -> Herd mentality.
Practise all 30 Investment Landscape questions
Plus the full 853-question NISM V-D bank and real-feel mock exams.
Other NISM V-D topics
Concept & Role of Mutual FundsLegal StructureLegal & RegulatoryScheme Related InformationDistribution & ChannelsNAV, TER & PricingTaxationInvestor ServicesRisk, Return & PerformanceScheme PerformanceScheme SelectionBasics of DerivativesUnderstanding the IndexForwards & FuturesOptionsEquity Derivative StrategiesInterest Rates & Fixed IncomeInterest Rate DerivativesInterest Rate FuturesInterest Rate OptionsInterest Rate Strategies