Top 50 Questions on NISM Series 5A Mutual Funds

Ready to ace the NISM Series 5A exam?
This comprehensive guide covers the 50 most asked questions along with clear answers, practical tips, and a powerful study plan. Use it as your go‑to reference while preparing for the exam.

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📚 Table of Contents

1. Exam Overview
2. Top 50 Questions & Answers
   • 1️⃣ Fund Basics
   • 2️⃣ Investment Strategies
   • 3️⃣ Risk & Return
   • 4️⃣ Taxation
   • 5️⃣ Regulatory Framework
   • 6️⃣ Portfolio Management
   • 7️⃣ Performance Metrics
   • 8️⃣ Ethics & Compliance
3. Frequently Asked Questions (FAQ)
4. Practical Study Tips
5. Action Plan & Resources
6. Call to Action

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✅ Exam Overview

Feature	Detail
Exam Code	NISM Series 5A (Mutual Funds)
Duration	90 minutes
Question Type	100 multiple‑choice (single correct answer)
Passing Score	70 % (≥ 70 correct answers)
Eligibility	Holding a Bachelor’s degree (any discipline)
Validity	5 years from the date of issue
Exam Format	Computer‑Based Test (CBT)
Official Site	www.nismcert.org

Tip: Register early to secure a slot in your preferred city.

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🔥 Top 50 Questions & Answers

Structure:
Question → Answer → Explanation (if needed)

1️⃣ Fund Basics

#	Question	Answer
1	What is a mutual fund?	A pooled investment vehicle managed by an Asset Management Company (AMC).
2	What does SIP stand for?	Systematic Investment Plan.
3	Which of the following is NOT a type of mutual fund?	A) Equity B) Debt C) Hybrid D) Real Estate Trust (REIT)
4	What is NAV?	Net Asset Value – the price per unit of the fund.
5	How is NAV calculated?	(Total assets – liabilities) / Total units outstanding
6	What is a “fund of funds”?	A fund that invests in other mutual funds.
7	Which of the following is a closed‑end fund?	None – mutual funds are open‑ended.
8	What is an “exit load”?	A fee charged when redeeming units before a specified period.
9	When is a fund considered liquid?	When its units can be redeemed within 24 hours.
10	What is a “fund house”?	Synonym for Asset Management Company (AMC).

2️⃣ Investment Strategies

#	Question	Answer
11	Which strategy targets maximum growth?	Growth strategy (equity‑heavy).
12	Which strategy focuses on income?	Income strategy (fixed‑income heavy).
13	What is a “balanced” strategy?	Mix of equity and debt in a predefined ratio.
14	What does “arbitrage” mean in fund context?	Buying and selling related securities to profit from price differences.
15	Which of the following is a passive strategy?	Index fund.
16	What is a “systematic withdrawal plan” (SWP)?	Regular redemption of units for systematic income.
17	What is the difference between an “open‑ended” and “closed‑ended” fund?	Open‑ended issues/redemptions at NAV; closed‑ended trades on an exchange.
18	What is a “fund‐of‐funds” (FoF) advantage?	Diversification across multiple underlying funds.
19	Which tax‑efficient fund is suitable for short‑term capital gains?	Tax‑loss harvesting or tax‑advantaged index funds.
20	What is “fund‑specific risk”?	Risk unique to a particular fund’s strategy.

3️⃣ Risk & Return

#	Question	Answer
21	What is the Sharpe Ratio used for?	Measuring risk‑adjusted performance.
22	What does “beta” measure?	Systematic risk relative to the market.
23	Which risk is inherent to equity funds?	Market risk (price volatility).
24	What is “duration” in debt funds?	Sensitivity of fund to interest rate changes.
25	What is “liquidity risk”?	Risk that units cannot be redeemed quickly.
26	What is “credit risk” in debt funds?	Risk of default by issuers.
27	Which of the following is an “unhedged” fund?	A fund that does not use derivatives to reduce risk.
28	What does “alpha” represent?	Excess return over benchmark.
29	What is “risk‑adjusted return”?	Return after accounting for risk taken.
30	Which risk factor does a “high‑yield” bond face?	Credit risk.

4️⃣ Taxation

#	Question	Answer
31	What is the tax treatment of long‑term capital gains (LTCG) on equity funds?	₹0 tax if gains <₹1 lakh; 10 % above ₹1 lakh (without indexation).
32	What is the tax on short‑term capital gains (STCG) from equity funds?	15 % irrespective of holding period.
33	What is the tax on gains in debt funds after 3 years?