Annexure II

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

Test Objectives


Unit 1: Introduction to Indian Financial Market

1.1. Understand the overview of Indian Economy

1.2. Understand the Indian Financial Markets

1.2. Key features of Indian Financial Markets

1.3. Describe the structure of Financial Markets in India

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.   Securities 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.   Asset Management Company and & Portfolio Managers

1.4.10. Investment Advisors and distributors

1.5. Understand the role of Regulators of 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 of India

1.5.7.   Pension Fund Regulatory and Development Authority

1.5.8.   Self-Regulatory Organizations (SRO)    


Unit 2: Securities Market Segments

2.1.   Understand the nature and definition of Primary Markets

2.1.1.   Functions of the Primary Markets                                                 

2.1.2.   Various Types of Issues

2.1.3.   Categories of Issuers

2.1.4.   Types of Investors

2.1.5.   Various types of Public Issues of Equity Shares

2.1.6.   Pricing process of Public Issues of shares

2.1.7.   Regulatory Norms of Public Issue of Shares

2.1.8.   Process of Applying to a Public Issue

2.1.9.   Public Issue of Debt Securities

2.1.10. Private Placements in Equity and Debt

2.2.   Describe the role and function of Secondary Markets

2.2.1.   Functions of Secondary Markets

2.2.2.   Market Structure and Participants

2.2.3.   Market Information

2.2.4.   Risk Management Systems in the secondary markets

2.3.   Discuss about the 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.   Understand the meaning and different features of Mutual Funds

3.2.   Describe the Concepts and Terms Related to 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.   Understand the Regulatory Framework of Mutual Funds

3.3.1.   Investor Service Standards

3.4.   Explain the Mutual Fund Products

3.4.1.   Equity funds

3.4.2.   Debt funds

3.4.3.   Hybrid funds

3.4.4.   Solution Oriented Schemes              

3.4.5.   Other Types of Funds

3.5.   Know about the Taxation of Mutual Fund Products

3.6.   Discuss Mutual Funds Investment Options

3.7.   Explain 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 of Mutual Fund units

3.7.5.   Additional Purchase in a Mutual fund

3.7.6.   Minimum Investment Amount

3.7.7.   Payment Instrument for Mutual Fund Purchases

3.7.8.   Investment Modes

3.7.9.   Redemptions from a Mutual Fund

3.7.10. Maintenance of Investor Folio - 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. Investment by Minors

3.7.16. Power of Attorney

3.7.17. Transmission

3.7.18. Statement of accounts

3.8.   Understand about Systematic Transactions

3.8.1.   Systematic Investment Plan

3.8.2.   Systematic Withdrawal Plan

3.8.3.   Systematic Transfer Plan

3.8.4.   Switch

3.9.   Explain the benefits of Investing in Mutual Funds


Unit 4: Investment Products  

4.1.   Explain about the concept of Equity

4.1.1.   Direct Investment

4.1.2.   Portfolio Management Services

4.1.3.   Equity Mutual Funds 

4.2.   Explain about Fixed Income Instruments

4.2.1.   Government Securities

4.2.2.   Sovereign Gold Bond Scheme, 2015

4.2.3    Inflation Index Bonds

4.2.4.   Small savings instruments

4.2.5.   Corporate Bonds

4.2.6.   Infrastructure Bonds

4.2.7.   Bank Deposits

4.3.   Define and describe different Alternate Investments

4.3.1.   Derivatives and Structured Products

4.3.2.   Real estate/Infrastructure Investments

4.3.3.   Gold

4.3.4.   Commodities

4.3.5    SEBI (Alternative Investment Funds) Regulations, 2012

4.3.6.   International Investments

4.3.7.   Art and Collectibles


Unit 5: Managing Investment Risk

5.1.   Define Risk

5.2.   Understand 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.   Standard Deviation and Variance

5.3.2.   Beta

5.3.3.   Covariance and Correlation  


Unit 6: Measuring Investment Returns

6.1.   Understand the Concept of Return

6.2.   Define and understand the different Return Concepts

6.2.1. Absolute Return

6.2.2. Annualized Returns

6.2.3. Total Returns

6.3.   Understand 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 Rate of Return

6.5.   Compute Tax adjusted return

6.6.   Compute Risk-adjusted Returns

6.6.1.    Sharpe Ratio

6.6.2.    Sortino Ratio

6.6.3.    Treynor Ratio

6.6.4.    Alpha    


Unit 7: Concept of Financial Planning

7.1.   Understand the Concept of Financial Planning

7.2.   Understand the need for Financial Advisory Services

7.3.   Understand the Scope of Financial Planning Services

7.3.1 Personal financial analysis

7.3.2 Debt counselling

7.3.3 Insurance Planning

7.3.4 Investment Planning and asset allocation

7.3.5 Tax planning

7.3.6 Retirement Planning

7.3.7 Estate Planning  

7.4.   Understand the Financial Advisory and Execution

7.5.   Understand the Concept of Assets, Liabilities and Net worth

7.6.   Know about Preparation of Budget

7.7.   Describe the Financial Planning Delivery Process

7.7.1.   Client-Planner Relationship

7.7.2.   Client’s Financial Situation

7.7.3.   Client Needs and Financial Goals

7.7.4.   Concept of Risk Profiling

7.7.5.    Portfolio Construction

7.7.6.   Reviewing & Rebalancing


Unit 8: Asset Allocation and Investment Strategies  

8.1. Understand different Asset Classes 

8.1.1.   Definition of Asset Class

8.1.2.   Board asset classes

8.1.3.   Asset allocation

8.2.   Explain about Portfolio construction

8.2.1. Asset Allocation linked to Financial Goals

8.2.2. Asset Allocation linked to Life Cycle Stages

8.2.3.   Portfolio Objectives and Constraints

8.3.   Explain Practical Asset Allocation and Rebalancing Strategies

8.3.1.   Strategic Asset Allocation

8.3.2.   Tactical Asset Allocation

8.3.3.   Dynamic Asset Allocation

8.3.4.   Concept of Model Portfolios

8.4.   Explain the Need for Portfolio Monitoring and Re-balancing


Unit 9: Insurance Planning

9.1.   Understand the Need for Insurance

9.2.   Understand the requirements of an Insurable Risk

9.3.   Understand the Role of Insurance in Personal Finance

9.4.   Explain the various Steps Involved in Insurance Planning

9.5.   Know about the Insurance Products

9.6.   Discuss about the Life Insurance Products

9.6.1.   Elements of Life Insurance Products

9.6.2.   Types of Life Insurance Products

9.6.3.   Variable Insurance Products

9.6.4.   Unit Linked Insurance Products          

9.7.   Understand the concept of Non-Life Insurance

9.7.1.   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

9.8.1.   Income Replacement Method

9.8.2.   Need based approach


Unit 10: Retirement Planning

10.1.   Understand Retirement Planning Process

10.2.   Learn to Estimate Retirement Corpus

10.2.1. Income replacement method

10.2.2. Expense Protection Method

10.3.   Understand the process of determining Retirement Corpus

10.4.   Explain Retirement Products

10.4.1. Mandatory Retirement Benefit Schemes

10.4.2. Voluntary Retirement Schemes

10.4.3. Drawing on the Corpus: Investment Products for the Distribution Stage


Unit 11: Tax and Estate Planning

11.1. Understand Income Tax Principles

11.1.1.   Heads of income

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

11.1.3.   Types of Benefits 

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.   Taxation of Dividends

11.2.2.   Taxation of Interest Income

11.2.3.   Taxation of Capital Gains

11.2.4.   Set off and Carry Forward of Losses

11.2.5.   Securities Transaction Tax

11.3. Explain Estate Planning

11.3.1.   What constitutes estate?

11.3.2.   Consequences of dying intestate

11.3.3.   Elements of Estate Planning

11.3.4.   Tools for estate planning - before death and after death

11.3.5.   Concept of Wills

11.3.6.   Concept of Gifts, Joint Holding and Nomination

11.3.7.   Family Settlement and Trusts

11.3.8.   Powers of Attorney and Mutation    


Unit 12: Regulatory Environment and Ethical Issues

12.1.   Understand different provisions under SEBI (Investment Advisers) Regulation, 2013

12.1.1.    Definition and Requirement to Register

12.1.2.   Exemption from Registration

12.1.3.   Qualification & Certification Requirements and Capital Requirement

12.1.4.   Obligations and Responsibilities of Investment Advisers

 12.1.5.   Code of Conduct for Investment Adviser     

12.2.   Discuss important aspects of Prevention of Money Laundering Act, 2002

12.3.   Explain the SEBI Guidelines on Anti - Money Laundering 

12.4.   Understand the code of conduct and Ethics provided under SEBI Intermediaries Regulations, 2008

12.5.   Discuss Ethical Issues in Providing Financial Advice

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