Top 50 Questions on NISM Series 21A PMS Distributors

Overview

The NISM Series 21A – PMS Distributors exam is a cornerstone certification for professionals aiming to work as Portfolio Management Service (PMS) distributors in India. Clearing this exam validates your understanding of mutual fund distribution, regulatory frameworks, and investor servicing. Below you’ll find the most frequently asked questions, along with practical tips to ace the exam and a strong call‑to‑action to get certified today!

Frequently Asked Questions (FAQ)

#	Question	Answer
1	What does “PMS” stand for in the context of NISM Series 21A?	Portfolio Management Service
2	Which regulatory body issues the NISM Series 21A certification?	SEBI
3	Is the exam mandatory for working as a PMS distributor?	Yes, for SEBI‑registered distributors
4	How many sections does the NISM Series 21A exam contain?	Four sections (Basics of Mutual Funds, Regulatory Framework, PMS Distribution, Practical Aspects)
5	What is the minimum passing percentage?	60 %
6	Can a candidate appear for the exam without prior experience?	Yes, academic qualifications or experience are not mandatory
7	How long is the NISM Series 21A certificate valid?	Indefinitely (subject to SEBI’s ongoing compliance)
8	Which document is required for registration as a PMS distributor?	Certificate of Completion of NISM Series 21A
9	What is the role of a “Scheme Information Document (SID)” in PMS?	Provides key details about the PMS scheme to investors
10	How does a PMS differ from a Mutual Fund?	PMS is customized for high‑net‑worth investors, while mutual funds are offered to all

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Top 50 MCQs (with Options & Answers)

#	Question	Options (A‑D)	Correct Answer
1	Which of the following is not a function of a PMS distributor?	A. Assess investor suitability B. Prepare audit reports C. Provide performance reports D. Execute trades on behalf of the PMS manager	B
2	The “Portfolio Management Agreement” must be signed between the PMS manager and:	A. SEBI B. Investor C. Distributor D. Stock Exchange	C
3	Which document discloses the fees charged by a PMS provider?	A. SID B. Offer Letter C. Fact Sheet D. Annual Report	A
4	“Know Your Client” (KYC) norms are mandatory for:	A. Only institutional investors B. All PMS investors C. Only high‑net‑worth individuals D. None of the above	B
5	The maximum number of investors allowed in a PMS is:	A. 50 B. 100 C. 200 D. No limit	D
6	Which of the following is a key feature of PMS?	A. Uniform investment strategy for all investors B. Customized investment strategy C. Fixed returns guarantee D. No risk disclosure	B
7	The “Performance Attribution” report includes:	A. Benchmark comparison B. Tax implications C. Legal clauses D. Recruitment policies	A
8	Which act governs the functioning of PMS distributors?	A. Companies Act, 1956 B. SEBI Act, 1992 C. Indian Stamp Act D. Income Tax Act	B
9	A PMS distributor must disclose the following to investors:	A. Past performance only B. Risks, fees, and performance C. Future stock prices D. Personal bank details	B
10	The “Offer Document” for a PMS is required to be filed with:	A. RBI B. SEBI C. IRDA D. NSE	B
11	Which of the following is not a type of PMS?	A. Equity PMS B. Debt PMS C. Hybrid PMS D. Insurance PMS	D
12	The “Annual Report” of a PMS must be provided to investors within:	A. 15 days of year‑end B. 30 days of year‑end C. 60 days of year‑end D. 90 days of year‑end	C
13	Which regulatory circular emphasizes investor protection in PMS?	A. SEBI/LODF/13486/2009 B. SEBI/CFD/DIR/14‑2012 C. SEBI/CFD/DIR/15‑2014 D. SEBI/CFD/DIR/16‑2018	A
14	The “Investor Protection Fund” is maintained by:	A. PMS Manager B. Distributor C. SEBI D. Investor	C
15	Which of the following is mandatory for a PMS distributor?	A. Having a fixed deposit B. SEBI registration as an IA C. Owning a brokerage license D. Being a chartered accountant	B
16	The “Code of Conduct” for PMS distributors includes:	A. Guaranteed returns B. Fair dealing with investors C. Manipulating market data D. Non‑disclosure of risks	B
17	“Margin of Safety” is a concept used in:	A. Debt PMS only B. Equity PMS C. Hybrid PMS D. None of the above	B
18	Which of the following is a prohibited act for a PMS distributor?	A. Providing research reports B. Soliciting funds without a PDS C. Maintaining records D. Disclosing portfolio composition	B
19	The “Disclosure of Interest” rule applies to:	A. Only senior management B. All employees involved in PMS distribution C. Only external auditors D. Investors	B
20	A PMS distributor must maintain records for at least:	A. 3 years B. 5 years C. 7 years D. 10 years	C
21	Which document outlines the fee structure for PMS services?	A. Scheme Information Document B. Fact Sheet C. Offer Letter D. Annual Report	C
22	“Portfolio Review” meetings are held:	A. Quarterly B. Yearly C. Monthly D. Only on request	A
23	The “Risk‑Return Profile” of a PMS is disclosed in:	A. Offer Letter B. SID C. Fact Sheet D. Annual Report	B
24	Which of the following is not a regulatory requirement for PMS?	A. Maintaining transaction records B. Providing quarterly performance reports C. Offering a money‑back guarantee D. Disclosing remuneration	C
25	The “Know Your Client” (KYC) process for PMS is governed by:	A. RBI guidelines B. SEBI circular on AML/CTF C. IRDA norms D. NSE rules	B
26	A PMS distributor can act as a:	A. Investment Advisor (IA) only B. Portfolio Manager (PM) only C. Both IA and PM D. Neither	C
27	“Performance Fee” in PMS is:	A. Fixed percentage of AUM B. Charged only if the portfolio outperforms the benchmark C. Charged irrespective of performance D. Not disclosed to investors	B
28	The “Scheme Registration” for a PMS is done with:	A. SEBI B. RBI C. IRDA D. NSE	A
29	Which of the following is a key advantage of investing in a PMS?	A. Higher liquidity B. Customized strategy C. Guaranteed returns D. No risk	B
30	The “Investor Education” initiatives are mandatory for:	A. Only mutual fund houses B. Only PMS managers C. Both PMS managers and distributors D. Only SEBI	C
31	Which document is not required for PMS registration with SEBI?	A. Offer Letter B. Audited financial statements C. Marketing brochure D. Portfolio Management Agreement	C
32	“Portfolio Reconciliation” is performed:	A. Daily B. Weekly C. Monthly D. Quarterly	C
33	The “Investor Grievances” redressal mechanism is overseen by:	A. SEBI B. RBI C. Investor Association D. Stock Exchanges	A
34	Which of the following is not a permissible investment in an Equity PMS?	A. Indian equities B. Derivative contracts C. Foreign exchange D. Government bonds	C
35	“Disclosure of Conflicts of Interest” must be made in the:	A. SID B. Fact Sheet C. Offer Letter D. Annual Report	C
36	The “Annual Compliance Report” is filed by:	A. Investor B. PMS Manager C. Stock Exchange D. SEBI	B
37	Which of the following is a mandatory feature of a PMS?	A. Guaranteed returns B. Risk disclosure C. Fixed management fee only D. No performance fee	B
38	“Portfolio Turnover Ratio” measures:	A. Number of trades per month B. Percentage of portfolio replaced annually C. Investor’s risk tolerance D. Management fee percentage	B
39	The “Investor Consent” form is required before:	A. Providing any PMS service B. Signing the Offer Letter C. Receiving performance fees D. Conducting portfolio review	A
40	Which of the following is not a regulatory body in the PMS ecosystem?	A. SEBI B. RBI C. IRDA D. NSE	C
41	“Custodial Services” for PMS are provided by:	A. Stockbrokers B. Custodians like CDSL C. Investment advisors D. Mutual fund houses	B
42	The “Disclosure of Past Performance” must be presented for a minimum period of:	A. 1 year B. 3 years C. 5 years D. 7 years	B
43	Which of the following is a key responsibility of a PMS distributor?	A. Managing client portfolios B. Selling insurance products C. Conducting market research D. Filing tax returns	A
44	“Anti‑Money Laundering” (AML) norms are enforced through:	A. SEBI circulars B. RBI directives C. IRDA guidelines D. NSE rules	A
45	A PMS distributor must maintain a record of:	A. Employee salaries B. Investor complaints C. Office décor D. Personal phone numbers	B
46	“Scheme Termination” can be initiated by:	A. Investor only B. PMS Manager only C. Both investor and manager D. SEBI	C
47	Which of the following is a common mistake candidates make in the exam?	A. Ignoring the case studies B. Over‑reading the syllabus C. Skipping the mock tests D. Memorizing every rule	A
48	“Investor Education” sessions should be conducted at least:	A. Once a year B. Twice a year C. Quarterly D. Monthly	C
49	The “Portfolio Management Agreement” must be renewed every:	A. 1 year B. 2 years C. 3 years D. 5 years	C
50	Which of the following statements about PMS is true?	A. It is a standardized product for all investors. B. It offers personalized investment strategies. C. It does not require disclosure of fees. D. It is regulated by RBI.	B

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Practical Tips for NISM Series 21A Success

• Master the Syllabus: Focus on the four core sections – Basics of Mutual Funds, Regulatory Framework, PMS Distribution, and Practical Aspects.
• Create a Study Schedule: Allocate 2‑3 hours daily; balance theory with practice.
• Use Official Study Material: The NISM website offers free PDF modules; they are the most accurate.
• Solve Mock Tests: Aim for 50‑70 practice questions daily; review every wrong answer.
• Focus on Case Studies: Many questions are scenario‑based; practice analysing real‑life investor situations.
• Time Management: Practice answering 30 questions in 30 minutes to simulate exam pressure.
• Stay Updated: Follow SEBI circulars and latest PMS guidelines; they often appear in recent exam papers.
• Join a Coaching Program: Structured guidance and doubt‑clearing sessions can boost confidence.

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Disclaimer: This blog post is for informational purposes only. All exam questions are illustrative and not taken from the official NISM examination material.