NISM-Series-X-B: Investment Adviser (Level 2 .

NISM-Series-X-B:Investment Adviser (Level 2)Certification Examination

NISM-Series-X-B: Investment Adviser (Level 2) Certification ExaminationWorkbook forNISM-Series-X-B: Investment Adviser (Level 2)Certification ExaminationNational Institute of Securities Marketswww.nism.ac.in1

NISM-Series-X-B: Investment Adviser (Level 2) Certification ExaminationThis workbook has been developed to assist candidates in preparing for the NationalInstitute of Securities Markets (NISM) Level 2 Certification Examination for InvestmentAdvisers.Workbook Version: January 2016Published by:National Institute of Securities Markets National Institute of Securities Markets, 2016Plot 82, Sector 17, VashiNavi Mumbai – 400 703, IndiaAll rights reserved. Reproduction of this publication in any form without prior permission ofthe publishers is strictly prohibited.2

NISM-Series-X-B: Investment Adviser (Level 2) Certification ExaminationForewordNISM is a leading provider of high end professional education, certifications, training andresearch in financial markets. NISM engages in capacity building among stakeholders in thesecurities markets through professional education, financial literacy, enhancing governancestandards and fostering policy research. NISM works closely with all financial sectorregulators in the area of financial education.NISM Certification programs aim to enhance the quality and standards of professionalsemployed in various segments of the financial services sector. NISM’s School forCertification of Intermediaries (SCI) develops and conducts certification examinations andContinuing Professional Education (CPE) programs that aim to ensure that professionalsmeet the defined minimum common knowledge benchmark for various critical marketfunctions.NISM certification examinations and educational programs cater to different segments ofintermediaries focusing on varied product lines and functional areas. NISM Certificationshave established knowledge benchmarks for various market products and functions such asEquities, Mutual Funds, Derivatives, Compliance, Operations, Advisory and Research.NISM certification examinations and training programs provide a structured learning planand career path to students and job aspirants who wish to make a professional career in theSecurities markets. Till May 2015, NISM has certified nearly 4 lakh individuals through itsCertification Examinations and CPE Programs.NISM supports candidates by providing lucid and focused workbooks that assist them inunderstanding the subject and preparing for NISM Examinations. The book covers allimportant topics to enhance the quality of investment advisory and related services in thefinancial services industry. It covers topics related to the structure and performance ofsecurities markets, importance of asset allocation and impact of the market movement onthe assets performance. This course teaches practical aspect of product selection, portfolioconstruction, review and rebalancing based on clients need. The book also discusses theconcept of compliance, operations and service elements in investment advice. It will beimmensely useful to all those who want to learn about the various aspects of investmentadvisory domain.Sandip GhoseDirector3

NISM-Series-X-B: Investment Adviser (Level 2) Certification ExaminationDisclaimerThe contents of this publication do not necessarily constitute or imply its endorsement,recommendation, or favoring by the National Institute of Securities Market (NISM) or theSecurities and Exchange Board of India (SEBI). This publication is meant for general readingand educational purpose only.The statements/explanations/concepts are of general nature and may not have taken intoaccount the particular objective/ move/ aim/ need/ circumstances of individual user/reader/ organization/ institute. Thus NISM and SEBI do not assume any responsibility for anywrong move or action taken based on the information available in this publication.Therefore before acting on or following the steps suggested on any theme or beforefollowing any recommendation given in this publication user/reader should consider/seekprofessional advice.The publication contains information, statements, opinions, statistics and materials thathave been obtained from sources believed to be reliable and the publishers of this title havemade best efforts to avoid any errors. However, publishers of this material offer noguarantees and warranties of any kind to the readers/users of the information contained inthis publication.Since the work and research is still going on in all these knowledge streams, NISM and SEBIdo not warrant the totality and absolute accuracy, adequacy or completeness of thisinformation and material and expressly disclaim any liability for errors or omissions in thisinformation and material herein. NISM and SEBI do not accept any legal liability what soever based on any information contained herein.While the NISM Certification examination will be largely based on material in this workbook,NISM does not guarantee that all questions in the examination will be from materialcovered herein.AcknowledgementThis workbook has been developed by NISM in consultation with the ExaminationCommittee for NISM-Series-X-B: Investment Adviser (Level 2) Certification Examinationcomprising of industry participants, educators and trainers and SEBI officials. NISMgratefully acknowledges the contribution of the committee members.About the AuthorThis workbook has been developed by the Certification Team of National Institute ofSecurities Markets in co-ordination with Mr. Sundar Sankaran of the Finberry Academy andMs. Uma Shashikant of the Centre for Investment Education and Learning. This workbookhas been reviewed by Ms. Sunita Abraham, Consultant.4

NISM-Series-X-B: Investment Adviser (Level 2) Certification ExaminationAbout NISMNational Institute of Securities Markets (NISM) was established by the Securities andExchange Board of India (SEBI), in pursuance of the announcement made by the FinanceMinister in his Budget Speech in February 2005.SEBI, by establishing NISM, articulated the desire expressed by the Government of India topromote securities market education and research.Towards accomplishing the desire of Government of India and vision of SEBI, NISM deliversfinancial and securities education at various levels and across various segments in India andabroad. To implement its objectives, NISM has established six distinct schools to cater to theeducational needs of various constituencies such as investors, issuers, intermediaries,regulatory staff, policy makers, academia and future professionals of securities markets.NISM is mandated to implement Certification Examinations for professionals employed invarious segments of the Indian securities markets.NISM also conducts numerous training programs and brings out various publications onsecurities markets with a view to enhance knowledge levels of participants in the securitiesindustry.About NISM CertificationsThe School for Certification of Intermediaries (SCI) at NISM is engaged in developing andadministering Certification Examinations and CPE Programs for professionals employed invarious segments of the Indian securities markets. These Certifications and CPE Programsare being developed and administered by NISM as mandated under Securities and ExchangeBoard of India (Certification of Associated Persons in the Securities Markets) Regulations,2007.The skills, expertise and ethics of professionals in the securities markets are crucial inproviding effective intermediation to investors and in increasing the investor confidence inmarket systems and processes. The School for Certification of Intermediaries (SCI) seeks toensure that market intermediaries meet defined minimum common benchmark of requiredfunctional knowledge through Certification Examinations and Continuing ProfessionalEducation Programmes on Mutual Funds, Equities, Derivatives Securities Operations,Compliance, Research Analysis, Investment Advice and many more.Certification creates quality market professionals and catalyzes greater investorparticipation in the markets. Certification also provides structured career paths to studentsand job aspirants in the securities markets.5

NISM-Series-X-B: Investment Adviser (Level 2) Certification ExaminationAbout the WorkbookThis workbook has been developed to assist candidates in preparing for the NationalInstitute of Securities Markets (NISM) Level 2 Certification Examination for InvestmentAdvisers. NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination along withthe NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination seeks to createa common minimum knowledge benchmark for all associated persons registered as aninvestment adviser and partners and representatives of investment advisers under SEBI(Investment Advisers) Regulations, 2013 and offering investment advisory services.The book covers all important topics to enhance the quality of investment advisory andrelated services in the financial services industry. It covers topics related to the structureand performance of securities markets, importance of asset allocation and impact of themarket movement on the assets performance. This course teaches practical aspect ofproduct selection, portfolio construction, review and rebalancing based on clients need. Thebook also discusses the concept of compliance, operations and service elements ininvestment advice.6

NISM-Series-X-B: Investment Adviser (Level 2) Certification ExaminationAbout the Level 2 Certification Examination for Investment AdviserNISM-Series-X-B: Investment Adviser (Level 2) Certification Examination along with theNISM-Series-X-A: Investment Adviser (Level 1) Certification Examination seeks to create acommon minimum knowledge benchmark for all associated persons registered as aninvestment adviser and partners and representatives of investment advisers under SEBI(Investment Advisers) Regulations, 2013 and offering investment advisory services.An associated person shall be required to pass both the levels (i.e. NISM-Series-X-A:Investment Adviser (Level 1) Certification Examination and NISM-Series-X-B: InvestmentAdviser (Level 2) Certification Examination) to fulfill the requirements under Regulation 7(2)of the SEBI (Investment Advisers) Regulations, 2013.The certification aims to enhance the quality of investment advisory and related services inthe financial services industry.Examination ObjectivesOn successful completion of the examination, the candidate should: Know the comprehensive financial planning in the context of households to apply theplanning elements learnt in Level 1 Certification Examination.Understand the structure and performance of securities markets; importance of assetallocation and impact of the market movement on the assets performance.Know the practical aspect of product selection, portfolio construction, review andrebalancing based on clients need.Know the compliance, operations and service elements in investment advice.Assessment StructureThe examination consists of 8 caselets with 4 multiple choice questions of 2 marks each percaselet (adding to 64 marks) and 36 multiple choice questions of 1 mark each adding up to100 marks. The examination should be completed in 2 hours. There is negative marking of25% of the marks assigned to a question. The passing score for the examination is 60 marks.How to register and take the examinationTo find out more and register for the examination please visit www.nism.ac.in7