NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination

Unit 1: Introduction to Indian Financial Market

1.1.Discuss the macro-economic parameters of Indian Economy

1.2.Understand the Indian Financial Markets

1.2.1 Know the key features of Indian Financial Markets

1.3.Describe the structure of Indian Financial Markets

1.3.1. Banking System

1.3.2. Securities Market

1.3.3. Commodities Market

1.3.4. Foreign Exchange Market

1.3.5. Insurance Market

1.3.6. Pension Market

1.4.Understand the role of the participants in the Indian Financial Markets

1.4.1. Stock Exchanges

1.4.2. Depositories and Depository Participants

1.4.3. Custodians

1.4.4. Stock Brokers and Sub-brokers

1.4.5. Investment Banks

1.4.6. Commercial Banks

1.4.7. Insurance Companies

1.4.8. Pension Funds

1.4.9. Fund Managers (AMCs & Portfolio Managers)

1.4.10. Investment Advisors

1.5.Know the role of various Regulators regulating Indian Financial Markets

1.5.1. Ministry of Finance

1.5.2. Ministry of Corporate affairs

1.5.3. Registrar of Companies

1.5.4. Reserve Bank of India

1.5.5. Securities and Exchange Board of India

1.5.6. Insurance Regulatory and Development Authority

1.5.7. Pension Fund Regulatory and Development Authority


Unit 2: Securities Market Segments

2.1. Describe the nature, functions and types of issues in Primary Markets

2.1.1. Describe the functions of the Primary Markets

2.1.2. Discuss the various types of Issues (Public Issue, Private Placement, Preferential Issue, QIP, Rights and Bonus Issue)

2.1.3. List the categories of issuers in the Primary Markets

2.1.4. List the types of investors in primary market issues

2.1.5. Discuss the various types of Public Issues of Equity Shares in India (IPO, FPO, OFS, SME Issues)

2.1.6. Know the Pricing process of Public Issues of shares

2.1.7. Know the regulatory norms of public issue of shares

2.1.8. Know the process of applying to a public issue

2.1.9. Discuss the Public Issue of Debt Securities in India

2.1.10. Describe Private Placement in Equity and Debt

2.2. Describe the role and function of Secondary Markets

2.2.1. List the functions of Secondary Markets

2.2.2. Describe the market structure and various participants in Secondary Markets

2.2.3. Understand Market Information --Market Size, Reading Market Prices and Disclosures

2.2.4. Understanding the Risk Management Systems for secondary markets

2.3. Discuss the types of various Corporate Actions

2.3.1. Rights Issue

2.3.2. Bonus Issue

2.3.3. Dividend

2.3.4. Stock Split

2.3.5. Share Buy-back

2.3.6. Delisting of Shares

2.3.7. Mergers & Acquisitions


Unit 3: Mutual Funds

3.1. Describe the meaning and features of a mutual fund

3.2. Describe the key terms and concepts associated with mutual funds

3.2.1. Investment Objectives

3.2.2. Units

3.2.3. Net Assets

3.2.4. Net Asset Value

3.2.5. Mark to Market

3.2.6. Open-ended and Close-end Schemes

3.2.7. Interval Funds

3.3. Know the regulatory framework for mutual funds

3.3.1. Investor Service Standards

3.4. Define and describe the various types of mutual fund products

3.4.1. Equity funds

3.4.2. Debt funds

3.4.3. Hybrid funds

3.4.4. Other types of funds

3.5. Discuss the taxation of Mutual Fund Products

3.5.1. Tax on Dividend

3.5.2. Tax on Capital Gains

3.6. Discuss the investment options in mutual funds

3.7. Describe the processes associated with investing in mutual funds

3.7.1. Permanent Account Number

3.7.2. Know Your Customer

3.7.3. In Person Verification

3.7.4. Fresh Purchases: NFO and Continuous offer

3.7.5. Additional Purchase

3.7.6. Minimum Investment Options

3.7.7. Payment Instrument for Mutual Fund Purchases

3.7.8. Investment Modes

3.7.9. Redemptions

3.7.10. Maintenance of Investor Polio - Non-financial transactions

3.7.11. Personal Information

3.7.12. Joint Holding

3.7.13. Bank Account

3.7.14. Nomination

3.7.15. Change in Investment of Minors

3.7.16. Power of Attorney

3.7.17. Transmission

3.7.18. Statement of accounts

3.8. Understand how systematic transactions are conducted and their uses

3.8.1. Systematic Investment Plan

3.8.2. Systematic Withdrawal Plan

3.8.3. Systematic Transfer Plan

3.8.4. Switches

3.9. List the benefits of investing with mutual funds


Unit 4: Investment Products

4.1. List and describe the various types of small savings instruments

4.1.1. Public Provident Fund

4.1.2. National Saving Certificate

4.1.3. Senior Citizen Saving Scheme

4.1.4. Post Office Schemes and Deposits

4.2. List and describe the various types of fixed income / debt instruments

4.2.1. Government Securities

4.2.2. Inflation Index Bonds

4.2.3. Corporate Bonds

4.2.4. Infrastructure Bonds

4.2.5. Bank Deposits

4.3. Define and describe the various types of alternate investments

4.3.1. Derivatives and Structured Products

4.3.2. Real estate

4.3.3. Gold

4.3.4. Commodities

4.3.5. Private Equity and Venture Capital

4.3.6. International Investments

4.3.7. Art and collectibles

4.4. Direct equity as an investment option

4.4.1. Benefits and risks of investing in equity shares

4.4.2. Know the various market indicators

4.4.3. Define and describe fundamental analysis and EIC framework

4.4.4. Understand the key valuation measures – PE, PBV and dividend yield

4.4.5. Know the basics of technical analysis


Unit 5: Managing Investment Risk

5.1. Define Risk

5.2. Know the Common Types of Risk

5.2.1. Inflation risk

5.2.2. Default risk

5.2.3. Liquidity risk

5.2.4. Reinvestment risk

5.2.5. Business risk

5.2.6. Exchange rate risk

5.2.7. Interest rate risk

5.2.8. Market Risk

5.2.9. Systematic and Unsystematic risk

5.3. Understand how to measure risk

5.3.1. Computing Standard Deviation and Variance


Unit 6: Measuring Investment Returns

6.1. Understanding the concept of return

6.2. Define and understand how to apply the following return concepts:

6.2.1. Absolute Return

6.2.2. Annualized Returns

6.2.3. Total Returns

6.3. Understand and apply the concept of compounding

6.3.1. Compound Return

6.3.2. Time Value of Money

6.3.3. Annuities

6.3.4. Compounded Annual Growth Rate

6.3.5. Internal Rate of Return

6.3.6. Net Present Value

6.3.7. Holding Period Return

6.4. Compute Real rate of return vs. nominal return

6.5. Compute Tax adjusted return

6.6. Compute Risk-adjusted Returns


Unit 7: Concept of Financial Planning

7.1. Understand what constitutes financial planning

7.2. Know the need for financial advisory services

7.3. Understand the scope of financial advisory services

7.4. Understand the business model for the delivery of financial advice to client

7.5. Understand assets, liabilities and net worth

7.6. Understand the preparation of budget

7.7. Describe the financial planning delivery process

7.7.1. Define the Client-Planner Relationship

7.7.2. Understand the client’s financial situation

7.7.3. Identifying the client needs and financial goals

7.7.4. Understand the factors that determine the individual’s investment risk profile

7.7.5. Know how to align investment strategy and products to client’s situation

7.7.6. Understand the importance of monitoring & reviewing periodically


Unit 8: Asset Allocation and Investment Strategies

8.1. Asset classes

8.1.1. Define the term ‘asset class’

8.1.2. List the various types of asset classes and describe them in terms of their risk and return

8.1.3. Define the term ‘asset allocation’

8.2. Portfolio construction

8.2.1. Discuss how asset allocation is linked to financial goals

8.2.2. Discuss how asset allocation may be carried out based on life cycle stages

8.2.3. Understand how portfolio objectives and constraints are used to decide asset allocation

8.3. Practical asset allocation and Rebalancing Strategies

8.3.1. Describe and illustrate Strategic asset allocation

8.3.2. Describe and illustrate Tactical asset allocation

8.3.3. Describe and illustrate Dynamic asset allocation

8.3.4. Describe how model portfolios are constructed using asset class features, investor objectives and constraints.

8.4. Explain the need for portfolio monitoring and re-balancing


Unit 9: Insurance Planning

9.1. Understand the need for insurance in personal finance

9.2. List the requirements for a risk to be insurable

9.3. Understand the role of insurance in personal finance.

9.4. Discuss the various steps involved in Insurance Planning

9.5. Discuss the types of Insurance Products

9.6. Discuss about the Life Insurance Products

9.6.1. Discuss the elements of Life Insurance Products

9.6.2. Discuss about the types of Life Insurance Products

9.6.3. Discuss about the Variable Insurance Products

9.6.4. Discuss about the Unit Linked Insurance Products

9.7. Discuss about the Non-Life Insurance Products

9.7.1. Discuss the elements of Non-Life Insurance Products

9.7.2. Discuss about the types of Non-Life Insurance Products

9.8. Explain life insurance needs analysis (Human life approach, Needs approach)

9.8.1. Discuss the Income Replacement Method

9.8.2. Discuss about the Need based approach


Unit 10: Retirement Planning

10.1. Understand the retirement planning process

10.2. Understand and estimate retirement corpus

10.2.1. Income replacement method

10.2.2. Expense protection method

10.3. Determining the retirement corpus

10.4. Describe retirement products and their features

10.4.1. Mandatory retirement schemes (PF, gratuity)

10.4.2. Voluntary retirement schemes (NPS, PPF, Pension plans of mutual funds and insurance companies

10.4.3. Other avenues for creation of retirement corpus (Annuities, MIS, MIP, SCSS, reverse mortgage)


Unit 11: Tax and Estate Planning

11.1. Understand Income tax principles

11.1.1. Heads of income

11.1.2. Exemptions and deductions

11.1.3. Types of assesses – resident, non-resident and HUF

11.1.4. Rates of taxation

11.1.5. Obligations for filing and reporting under the Income Tax Act

11.2. Understand Tax aspects of Investment products

11.2.1. Types of tax benefits

11.2.2. Taxation of dividends

11.2.3. Taxation of interest income

11.2.4. Taxation of capital gains, Indexation

11.2.5. Set off and carry forward of losses

11.3. Describe Estate Planning

11.4.1. What constitutes estate?

11.4.2. Consequences of dying intestate (Basic legal framework)

11.4.3. Elements of Estate Planning

11.4.4. Tools for estate planning - before death, after death

- Wills (Parties, probate, registration)

- Gifts, Joint Holding and Nomination

- Family Settlement and Trusts

- Powers of Attorney, mutation


Unit 12: Regulatory Environment and Ethical Issues

12.1. Describe the provisions of the SEBI (Investment Advisers) Regulations, 2013

12.1.1. Definition and requirement to register

12.1.2. Exemptions

12.1.3. Qualification and Certification requirements, Capital adequacy

12.1.4. Obligations and responsibilities of investment advisers

12.1.5. Code of Conduct for Investment Adviser

12.2. Describe overall framework of the regulatory system

12.3. Explain roles of regulators in detail: MoF, MCA, SEBI, RBI, IRDA, PFRDA

12.4. Discuss the role of Self Regulatory Organizations

12.5. Discuss the provisions of PMLA, 2002

12.6. Detail codes of conduct by SEBI, AMFI, etc

12.7. Discuss ethical issues in providing financial advice

12.8. Describe investor complaint redressal mechanism

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