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NISM Series V-D · Chapter 18: Interest Rate, Instruments and Fixed Income

ब्याज दर, साधन और फिक्स्ड इनकम बाज़ार · NISM-Series-V-D: Mutual Fund – Specialized Investment Fund (SIF) Distributors Certification Examination

6% weightage · ~9 questions 150 questions · 180 minutes · 60% to pass · −0.10 per wrong answer 24 practice questions in our bank

What this chapter covers

The fixed-income foundation for the interest-rate module: bond terminology, price–yield inverse relationship, YTM and current yield, duration and convexity as interest-rate risk measures, the yield curve, and the Indian government-securities market.

बॉन्ड की शब्दावली, मूल्य-यील्ड विपरीत संबंध, YTM, ड्यूरेशन, यील्ड कर्व और G-Sec बाज़ार।

What to master before the exam

Exam tip: Duration arithmetic ("price falls by roughly modified duration × change in yield") is the classic question. Know the direction and the approximation.

Sample questions from this chapter

Five of the 24 questions in our free bank. Open the answer to see the explanation — every question in the mock test has one, in English and Hindi.

Question 1
A “fixed income security” is a debt instrument that:
"फिक्स्ड इनकम सिक्योरिटी" वह ऋण साधन है जो:
  1. Pays a fixed amount of interest (coupon) and returns the principal at maturityनिश्चित ब्याज (कूपन) देता है और परिपक्वता पर मूलधन लौटाता है
  2. Pays dividends onlyकेवल लाभांश देता है
  3. Gives ownership of the issuerजारीकर्ता का स्वामित्व देता है
  4. Has no maturityकी कोई परिपक्वता नहीं होती
Show answer & explanation
Answer: A — Pays a fixed amount of interest (coupon) and returns the principal at maturity
Bonds/debentures pay periodic coupons and return the principal at maturity — hence “fixed income”. They are debt, not ownership.
बॉन्ड/डिबेंचर आवधिक कूपन देते हैं और परिपक्वता पर मूलधन लौटाते हैं — इसलिए "फिक्स्ड इनकम"। ये ऋण हैं, स्वामित्व नहीं।
Question 2
The coupon (interest) of a bond is calculated on its:
बॉन्ड का कूपन (ब्याज) किस पर परिकलित होता है?
  1. Face value (par value)अंकित मूल्य (पार वैल्यू)
  2. Market priceबाज़ार मूल्य
  3. Yield to maturityयील्ड टू मैच्योरिटी
  4. Credit ratingक्रेडिट रेटिंग
Show answer & explanation
Answer: A — Face value (par value)
The coupon is a fixed percentage of the face (par) value; the coupon rate = coupon ÷ face value.
कूपन अंकित (पार) मूल्य का एक निश्चित प्रतिशत है; कूपन दर = कूपन ÷ अंकित मूल्य।
Question 3
A zero-coupon bond (ZCB):
ज़ीरो-कूपन बॉन्ड (ZCB):
  1. Pays no periodic interest; it is issued at a discount and redeemed at face valueकोई आवधिक ब्याज नहीं देता; यह छूट पर जारी और अंकित मूल्य पर रिडीम होता है
  2. Pays the highest couponसबसे अधिक कूपन देता है
  3. Has a floating couponका फ्लोटिंग कूपन होता है
  4. Never maturesकभी परिपक्व नहीं होता
Show answer & explanation
Answer: A — Pays no periodic interest; it is issued at a discount and redeemed at face value
A ZCB pays no interim interest — it is issued at a discount and redeemed at face value, with a single cash flow at maturity; T-bills, CMBs and STRIPS are examples.
ZCB कोई अंतरिम ब्याज नहीं देता — यह छूट पर जारी और अंकित मूल्य पर रिडीम होता है, परिपक्वता पर एकल नकदी-प्रवाह के साथ; T-बिल, CMB व STRIPS इसके उदाहरण हैं।
Question 4
Which of the following bonds has the HIGHER credit risk?
निम्नलिखित में से किस बॉन्ड में क्रेडिट जोखिम अधिक है?
  1. A bond rated BBBBBB रेटेड बॉन्ड
  2. A bond rated AAAAAA रेटेड बॉन्ड
  3. A bond rated AA रेटेड बॉन्ड
  4. All carry the same credit riskसभी में समान क्रेडिट जोखिम
Show answer & explanation
Answer: A — A bond rated BBB
A lower rating means higher credit (default) risk. AAA is safest, A is riskier than AAA, and BBB is riskier than A — so BBB has the highest credit risk here.
कम रेटिंग का अर्थ अधिक क्रेडिट (डिफ़ॉल्ट) जोखिम। AAA सबसे सुरक्षित, A, AAA से जोखिमपूर्ण, और BBB, A से जोखिमपूर्ण — इसलिए यहाँ BBB में सर्वाधिक क्रेडिट जोखिम है।
Question 5
The credit spread is the price of:
क्रेडिट स्प्रेड किसकी कीमत है?
  1. Credit riskक्रेडिट जोखिम
  2. Reinvestment riskपुनर्निवेश जोखिम
  3. Price riskमूल्य जोखिम
  4. Liquidity riskतरलता जोखिम
Show answer & explanation
Answer: A — Credit risk
Credit spread = the yield difference between a corporate bond and a government bond of similar maturity; it compensates for (is the price of) credit risk.
क्रेडिट स्प्रेड = समान परिपक्वता के कॉरपोरेट बॉन्ड और सरकारी बॉन्ड के यील्ड का अंतर; यह क्रेडिट जोखिम की भरपाई करता है (उसकी कीमत है)।
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All V-D chapters

1. Investment Landscape · 5%2. Concept and Role of a Mutual Fund · 4%3. Legal Structure of Mutual Funds in India · 3%4. Legal and Regulatory Framework · 7%5. Scheme Related Information · 7%6. Fund Distribution and Channel Management · 4%7. NAV, Total Expense Ratio and Pricing of Units · 5%8. Taxation · 3%9. Investor Services · 10%10. Risk, Return and Performance of Funds · 5%11. Mutual Fund Scheme Performance · 5%12. Mutual Fund Scheme Selection · 10%13. Basics of Derivatives · 10%14. Understanding the Index · 5%15. Introduction to Forwards and Futures · 15%16. Introduction to Options · 13%17. Strategies using Equity Futures and Options · 9%18. Interest Rate, Instruments and Fixed Income · 6%19. Interest Rate Derivatives · 2%20. Exchange Traded Interest Rate Futures · 10%21. Exchange Traded Interest Rate Options · 6%22. Strategies using Interest Rate Derivatives · 6%
← Chapter 17: Strategies using Equity Futures and Options Chapter 19: Interest Rate Derivatives →

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