NISM Series V-A Mock Test 2025 — 25 Latest Exam Questions Explained

If you are preparing for NISM Series V-A (Mutual Fund Distributors), you have probably noticed that the same questions keep showing up sitting after sitting. The concepts barely change — only the wording does. This post walks through 25 of the most frequently repeated V-A questions and explains the logic behind each answer, so you can recognise them instantly on exam day.

At a glance: NISM V-A has 100 questions, 2 hours, 60% pass mark, 0.25 negative marking, and a ₹1,500 + GST fee. Master the recurring question patterns below and you remove a large chunk of uncertainty from the paper.

If you are still mapping out your overall study approach, start with our first-attempt study plan for NISM V-A and then use this question walkthrough as your final-week revision.

Scheme structure and SEBI basics

These are pure-recall questions. Memorise the numbers exactly.

• Minimum investors in a scheme: A mutual fund scheme must have at least 20 investors, and no single investor may hold more than 25% of the scheme’s corpus.
• TER and NAV disclosure: The AMC (Asset Management Company) must disclose the Total Expense Ratio (TER) and the Net Asset Value (NAV) on its website on a daily basis.
• Index fund minimum holding: An index fund must invest at least 95% of total assets in the securities of the particular index it tracks. The remaining 5% can be held as cash and equivalents.
• Money market investments: Mutual funds must follow RBI regulations for investments in money market instruments.

Benchmarks — match the fund to its index

A benchmark lets you judge whether a fund beat or lagged the market for the same level of risk.

• A large-cap fund is benchmarked against an index like the Nifty 50.
• A balanced hybrid fund uses the CRISIL Hybrid 50+50 Moderate Index as its proper benchmark.

Exam tip: If the question pairs a fund category with a benchmark, look for the index that matches the fund’s asset mix. Hybrid funds get hybrid benchmarks; equity funds get equity indices.

Segregated portfolios (side-pocketing)

This 2018 SEBI norm is an important and recurring concept.

When a debt instrument held by a scheme is downgraded below investment grade (or defaults), the AMC must move those affected securities into a separate (segregated) portfolio. The purpose is to:

1. Protect incoming new investors from a credit event,
2. Preserve the credit quality of the main portfolio, and
3. Maintain transparency.

The AMC must also inform the valuation agencies, credit rating agencies, debenture trustee and AMFI about the segregation. In short: a segregated portfolio is created for debt/money-market securities affected by a credit event such as a rating downgrade.

Loads, returns and commission

• Entry load no longer exists — SEBI abolished it. Only an exit load applies today.
• When an exit load applies, the value taken is NAV minus exit load. For example, many funds charge a 1% exit load if you redeem within one year, deducted from your NAV.
• Trail commission is paid to the distributor as long as the money stays invested in the fund. It is calculated daily and paid quarterly.

Risk and performance metrics

These questions look intimidating but reduce to simple ideas.

Alpha

Alpha measures a fund’s performance against its benchmark for the same risk.

• If a large-cap fund returns 20% while the Nifty 50 returns 12%, alpha is positive — the fund outperformed.
• If the fund returns less than its benchmark, alpha is negative, which indicates underperformance by the fund manager.

Sharpe ratio numerator

Sharpe Ratio = (Portfolio Return − Risk-Free Return) ÷ Standard Deviation

If portfolio return is 9%, risk-free return is 5%, standard deviation is 3 and beta is 1.6, then the numerator is simply 9 − 5 = 4. (The full Sharpe ratio would be 4 ÷ 3.) Beta is a distractor here.

Average maturity

Average maturity determines the interest-rate sensitivity of a bond fund. The longer the maturity, the more sensitive the fund is to interest-rate changes — because over a longer horizon, rates are more likely to move.

Distribution, suitability and due diligence

• The best strategy for selecting a fund is NOT simply reading past performance — past performance does not guarantee future returns. Instead, assess the investor’s risk tolerance, investment goals, time horizon, the fund’s objective, the manager’s experience and the expense ratio.
• A distributor cannot ignore the investor’s needs once understood. Suitability comes first.
• Asset allocation means deciding how much money to invest across different asset categories (equity, debt, gold) based on the investor’s profile.
• Risk profiling and investment-objective evaluation are the job of the Investment Adviser, not the distributor — internal controls should de-link the sales function from this evaluation.
• The “business model, experience and proficiency” criterion applies to larger distributors — for example, those earning commission above ₹1 crore per annum, present at more than 20 locations, or raising significant AUM. AMCs must run fit-and-proper due diligence before empanelling them.

Quick-fire facts that repeat

• EUIN exam: Employees of institutions distributing mutual funds must clear the NISM Series V-A exam and obtain an Employee Unique Identification Number (EUIN).
• ELSS lock-in: 3 years (the tax benefit under the old regime, up to ₹1.5 lakh under Section 80C).
• AGNI: Stands for AMFI Guidelines and Norms for Intermediaries.
• SID: To understand a scheme’s fundamental attributes in detail, an investor reads the Scheme Information Document (SID).
• Expense heads: SEBI specifies which heads can be charged to a scheme — advisory fee, fund manager fee, legal fee, operational cost, audit fee, etc. — and the maximum TER limits.
• MIPs (Monthly Income Plans): They do have equity exposure (the statement that they have none is false).
• NRI applicants: Must provide a current overseas address.
• STT on equity-oriented schemes: Securities Transaction Tax of 0.001% on repurchase of units.
• IDCW (Income Distribution cum Capital Withdrawal): When calculating distributable surplus, valuation gains are ignored (conservative approach) but valuation losses must be adjusted against profits. Dividends can be paid only out of distributable surplus.

Exam tip: On capital gains, remember the post-23-July-2024 rules — equity STCG at 20% and equity LTCG at 12.5% above the ₹1.25 lakh annual exemption (Finance No. 2 Act 2024). See our full LTCG/STCG guide for NISM aspirants so you are never caught out by outdated PDFs.

Negative marking strategy

V-A applies 0.25 negative marking per wrong answer:

• Right answer: +1
• Wrong answer: −0.25
• Skipped: 0

So if you can eliminate even one option, the expected value of a guess is positive. Never blindly skip a question where you can rule out at least one wrong choice.

Not sure V-A is the right starting exam?

If you are deciding between V-A and other certifications, our guide on which NISM exam you should take breaks down the career paths for distributors, advisers and analysts.

Practise these patterns in the app

The fastest way to lock in these recurring questions is repetition under exam conditions. The NISM Exam Prep app covers all 31 NISM exams with 13,000+ practice questions, including full-length 100-question V-A mocks with accurate 0.25 negative marking.

• Drill the recurring V-A questions in the free V-A quiz.
• Crunch Sharpe ratio, exit load, SIP and XIRR sums using the 20 finance calculators.
• Revise SEBI limits, benchmarks and tax rates fast with the 8 quick reference guides.

Read the workbook once, watch your concept videos, then spend two or three days hammering the question bank — for most candidates that is more than enough to clear NISM Series V-A on the first attempt.