NISM XII Secondary Markets — Practice Questions
Practise how shares trade after listing: the exchange and its members, order types and matching, impact cost and liquidity, clearing, settlement and the rolling settlement cycle, and the rights and obligations of an investor.
120 questions on Secondary Markets in the ScoreSetu bank — each with a detailed explanation and, where useful, a memory hook.
What this topic covers
- Exchanges, brokers and the UCC
- Order types and matching
- Impact cost and liquidity
- Clearing, settlement and investor rights
Free sample questions
1. Sunrise Foods Ltd is making its first offer of shares to the public. The issue is book built with a price band of Rs 180 to Rs 190, a minimum bid lot of 78 shares, and portions reserved for qualified institutional buyers, non-institutional investors and retail individual investors. Anita, a salaried investor, applies for one lot at cut-off price through her bank's ASBA facility. The retail portion is subscribed 6.4 times and the issue is finally priced at Rs 190.
Because this is Sunrise Foods' first offer of shares to the public, it is:
- A. A follow-on public offer
- B. An initial public offer ✅
- C. A rights issue
- D. A private placement
Answer: B — An initial public offer
Why: An IPO is the first offer of shares to the public by a company that is not yet listed. A follow-on offer is made by a company already listed, a rights issue goes to existing shareholders, and a private placement goes to a selected group.
💡 IPO = the FIRST public offer. FPO comes later.
2. Sunrise Foods Ltd is making its first offer of shares to the public. The issue is book built with a price band of Rs 180 to Rs 190, a minimum bid lot of 78 shares, and portions reserved for qualified institutional buyers, non-institutional investors and retail individual investors. Anita, a salaried investor, applies for one lot at cut-off price through her bank's ASBA facility. The retail portion is subscribed 6.4 times and the issue is finally priced at Rs 190.
By bidding 'at cut-off price', Anita has agreed to:
- A. Pay only Rs 180, the floor of the band
- B. Accept whatever price is finally discovered within the band ✅
- C. Withdraw if the price rises above Rs 185
- D. Pay the average of the band
Answer: B — Accept whatever price is finally discovered within the band
Why: Bidding at cut-off means accepting the final discovered price, whatever it turns out to be within the band. It maximises the chance of allotment without the investor having to judge the right level, and the facility is available to retail individual investors.
💡 Cut-off = 'whatever the price ends up being' — a retail-only facility.
3. Sunrise Foods Ltd is making its first offer of shares to the public. The issue is book built with a price band of Rs 180 to Rs 190, a minimum bid lot of 78 shares, and portions reserved for qualified institutional buyers, non-institutional investors and retail individual investors. Anita, a salaried investor, applies for one lot at cut-off price through her bank's ASBA facility. The retail portion is subscribed 6.4 times and the issue is finally priced at Rs 190.
Under ASBA, what happens to Anita's application money while the issue is open?
- A. It is transferred to the company immediately
- B. It stays blocked in her own bank account ✅
- C. It is held by the registrar
- D. It is paid to the merchant banker
Answer: B — It stays blocked in her own bank account
Why: ASBA blocks the amount in the applicant's own bank account rather than moving it. She continues to earn interest on it, and if she is not allotted shares there is nothing to refund — the block is simply released.
💡 ASBA BLOCKS the money in your account. No transfer, no refund needed.
Practise all 120 Secondary Markets questions
Plus the full 566-question NISM XII bank and real-feel mock exams.