Home / NISM Series XV / Chapter 14
📊 NISM Series XV Chapter 14 of 15 ⚖ 10 marks weightage Case-Based ✓

Ch.14: Legal and Regulatory Environment

Practice questions for NISM-Series-XV: Research Analyst Certification Examination (mandated by SEBI under the Research Analysts Regulations, 2014). Chapter 14 carries 10 out of 100 marks in the final examination. The exam has 80 MCQs + 5 case-based sets, 120-minute duration, 60% passing score, and −0.25 negative marking per wrong answer.

50
MCQ
2
Case Sets
58
Total Qs
10
Exam Marks
60%
Pass Score
−0.25
Neg. Marking

What You Will Learn in This Chapter

Key Terms:SEBI Regulationsresearch analyst registrationcode of conductinsider tradingASMGSMCSCRF

Multiple Choice Questions (50)

Q1 MCQ MediumSEBI Functions

With which regulatory body did SEBI merge on September 28, 2015, to also regulate the commodities markets in India?

AReserve Bank of India
BInsurance Regulatory and Development Authority of India
✓Forward Markets Commission
DPension Fund Regulatory and Development Authority
💡 SEBI merged with the Forward Markets Commission on September 28, 2015, and now regulates the commodities markets in India.
Q2 MCQ MediumReserve Bank of India

According to its Preamble, what is one of the basic functions of the Reserve Bank of India?

AAdministering the Companies Act
BRegulating the insurance sector
✓Securing monetary stability in India
DOverseeing insolvency processes
💡 The Preamble of RBI defines its basic functions as '…to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India…'.
Q3 MCQ MediumRBI Functions

As the regulator and supervisor of the financial system, what is the primary objective of the Reserve Bank of India (RBI) regarding the banking system?

ATo ensure rapid growth of money supply to facilitate economic growth.
✓To maintain public confidence in the system, protect depositors' interest, and facilitate cost-effective banking services.
CTo administer the Foreign Exchange Management Act 1999 for external trade.
DTo manage issuances of Central and State Government Securities.
💡 The text states that as the regulator and supervisor of the financial system, RBI's objective is 'to maintain public confidence in the system, protect the interest of the people who have deposited money with the banking system and facilitate cost-effective banking services to the public'.
Q4 MCQ EasySEBI Functions

What is the primary role of the Securities and Exchange Board of India (SEBI) as described in its Preamble?

ATo manage foreign exchange reserves and currency circulation.
BTo regulate the insurance sector and protect policyholders.
✓To protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
DTo formulate and monitor India's fiscal policy and manage government expenditure.
💡 The Preamble of the SEBI Act describes its basic functions as 'to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto'.
Q5 MCQ HardMinistry of Finance - Departments

Which department within the Ministry of Finance is responsible for the systematic policy approach to disinvestment and privatization of Public Sector Undertakings?

ADepartment of Economic Affairs
BDepartment of Expenditure
CDepartment of Revenue
✓Department of Disinvestments
💡 The Department of Disinvestments is responsible for systematic policy approach to disinvestment and privatization of Public Sector undertakings.
Q6 MCQ EasyMinistry of Corporate Affairs

Which Ministry is primarily concerned with the administration of the Companies Act and the Competition Act 2002?

AMinistry of Finance
✓Ministry of Corporate Affairs
CReserve Bank of India
DSecurities and Exchange Board of India
💡 The Ministry of Corporate Affairs is primarily concerned with the administration of the Companies Act and other allied Acts, including the Competition Act 2002.
Q7 MCQ EasyMinistry of Corporate Affairs

Which of the following professional bodies is supervised by the Ministry of Corporate Affairs?

AAssociation of Mutual Funds in India (AMFI)
BIndian Banks' Association (IBA)
✓The Institute of Chartered Accountants of India (ICAI)
DNational Securities Depository Limited (NSDL)
💡 The Ministry of Corporate Affairs supervises three professional bodies, viz., the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India (ICSI) and the Institute of Cost and Works Accountants of India (ICWAI).
Q8 MCQ MediumMinistry of Finance

The Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) operate under which department of the Ministry of Finance?

ADepartment of Economic Affairs
BDepartment of Expenditure
✓Department of Revenue
DDepartment of Financial Services
💡 The Department of Revenue handles matters relating to all Direct and Indirect Taxes through the CBDT and CBEC.
Q9 MCQ HardMinistry of Finance Departments

The Department of Disinvestments, within the Ministry of Finance, is primarily concerned with which of the following?

AManaging all policy matters relating to the design and production of bank notes and coins.
BAdministering various financial rules and service conditions of Central Government employees.
✓Systematic policy approach to disinvestment and privatization of Public Sector undertakings.
DHandling matters relating to all Direct and Indirect Taxes through statutory Boards.
💡 The Department of Disinvestments is responsible for 'systematic policy approach to disinvestment and privatization of Public Sector undertakings' and the 'financial policy relating to the utilization of proceeds of disinvestment'. The other options pertain to the Department of Economic Affairs, Department of Expenditure, and Department of Revenue, respectively.
Q10 MCQ EasySecurities Contracts (Regulation) Act, 1956

The primary purpose of the Securities Contracts (Regulation) Act, 1956 (SC(R)A) is to:

AFormulate India's fiscal policy
BAdminister the monetary policy
✓Prevent undesirable transactions in securities
DRegulate the insurance sector
💡 The SC(R)A prevents undesirable transactions in securities by regulating the business of securities dealing and trading.
Q11 MCQ MediumMinistry of Finance Departments

Which department within the Ministry of Finance is concerned with the administration of various financial rules and regulations, including service conditions of all Central Government employees?

ADepartment of Economic Affairs
✓Department of Expenditure
CDepartment of Revenue
DDepartment of Disinvestments
💡 The Department of Expenditure oversees 'the administration of various financial rules and regulations including service conditions of all Central Government employees'.
Q12 MCQ EasyIRDAI

What is a key aspect of the mission of the Insurance Regulatory and Development Authority of India (IRDAI)?

ATo ensure adequate growth of money supply in the economy
BTo protect the interests of subscribers to pension funds
✓To ensure protection of the interest of insurance policyholders
DTo prohibit fraudulent and unfair trade practices in securities market
💡 IRDAI’s mission is to regulate, promote and ensure orderly growth of the insurance sector, including the re-insurance business, while ensuring protection of the interest of insurance policyholders.
Q13 MCQ HardPFRDA

A key responsibility assigned to the Pension Fund Regulatory and Development Authority (PFRDA) is to:

AAdminister the Foreign Exchange Management Act 1999
BRegulate the business in stock exchanges
✓Design the structure of funds and constituents in the National Pension System (NPS)
DOversee the expenditure management of Government of India
💡 The PFRDA has been assigned the responsibility of designing the structure of funds and constituents in the National Pension System (NPS).
Q14 MCQ MediumSecurities and Exchange Board of India

Which regulatory body in India merged with the Forward Markets Commission (FMC) on September 28, 2015, and now regulates the commodities markets?

AReserve Bank of India (RBI)
✓Securities and Exchange Board of India (SEBI)
CInsurance Regulatory and Development Authority of India (IRDAI)
DPension Fund Regulatory and Development Authority (PFRDA)
💡 SEBI merged with the Forward Markets Commission on September 28, 2015, and now regulates the commodities markets in India.
Q15 MCQ EasyIBBI Establishment

Under which legislation was the Insolvency and Bankruptcy Board of India (IBBI) established?

ASecurities and Exchange Board of India Act, 1992
✓Insolvency and Bankruptcy Code, 2016
CSecurities Contracts (Regulation) Act, 1956
DPFRDA Act, 2013
💡 The text states, 'IBBI, established under the Insolvency and Bankruptcy Code 2016, is the regulator for overseeing insolvency process...'.
Q16 MCQ MediumMinistry of Finance

Which department of the Ministry of Finance handles matters relating to all Direct and Indirect Taxes through statutory Boards like CBDT and CBEC?

ADepartment of Economic Affairs
BDepartment of Expenditure
✓Department of Revenue
DDepartment of Financial Services
💡 The Department of Revenue handles matters relating to all Direct and Indirect Taxes through the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC).
Q17 MCQ EasyMinistry of Corporate Affairs

The Ministry of Corporate Affairs is primarily concerned with the administration of which of the following Acts?

AForeign Exchange Management Act, 1999
BSecurities Contracts (Regulation) Act, 1956
✓Companies Act
DIRDA Act, 1999
💡 The Ministry of Corporate Affairs is primarily concerned with the administration of the Companies Act and other allied Acts, rules and regulations framed there-under.
Q18 MCQ MediumIRDAI Functions

Which of the following is a key responsibility of the Insurance Regulatory and Development Authority of India (IRDAI)?

ARegistering fund managers and custodians for pension schemes.
BOverseeing corporate insolvency resolution and liquidation processes.
✓Defining the capital and net-worth requirements for insurance companies.
DRegulating the business in stock exchanges and any other securities markets.
💡 IRDAI is explicitly stated as the authority that 'defines the capital and net-worth requirements for insurance companies'. Option A is for PFRDA, B for IBBI, and D for SEBI.
Q19 MCQ EasyInsolvency and Bankruptcy Board of India

Which authority is responsible for overseeing the insolvency process as well as insolvency professionals in India?

APension Fund Regulatory and Development Authority (PFRDA)
✓Insolvency and Bankruptcy Board of India (IBBI)
CMinistry of Corporate Affairs (MCA)
DSecurities and Exchange Board of India (SEBI)
💡 IBBI, established under the Insolvency and Bankruptcy Code 2016, is the regulator for overseeing the insolvency process as well as the insolvency professionals.
Q20 MCQ MediumIRDAI

IRDAI defines rules for the terms and conditions of insurance contracts. Which of the following is NOT explicitly mentioned as a term or condition for which IRDAI defines rules?

ASum assured
BSurrender value
✓Premium calculation methodologies
DSettlement of claims
💡 The text states IRDAI defines rules for 'sum assured, surrender value, settlement of claims, nomination and assignment, insurable interest'. Premium calculation methodologies are not explicitly listed.
Q21 MCQ EasyMinistry of Corporate Affairs

The Ministry of Corporate Affairs is responsible for administering the Competition Act 2002. Which previous Act did the Competition Act 2002 replace?

ACompanies Act, 1956
✓Monopolies and Restrictive Trade Practices Act, 1969
CPartnership Act, 1932
DSocieties Registration Act, 1980
💡 The text states that the Competition Act 2002 replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP).
Q22 MCQ MediumSEBI Act, 1992

As per Section 11(2) of the SEBI Act, 1992, which of the following is NOT a measure that SEBI could adopt?

ATo regulate the business in stock exchanges and any other securities markets.
BTo register and regulate the working of credit rating agencies.
✓To issue currency and coins and to exchange or destroy the same.
DTo prohibit insider trading in securities.
💡 Issuing currency and coins is a function of the Reserve Bank of India, not SEBI. The other options are explicitly mentioned as measures SEBI could adopt.
Q23 MCQ MediumPFRDA Responsibilities

One of the key responsibilities of the Pension Fund Regulatory and Development Authority (PFRDA) is related to the National Pension System (NPS). What is this responsibility?

ATo formulate and monitor India's fiscal policy.
BTo define the capital and net-worth requirements for insurance companies.
✓To design the structure of funds and constituents in the National Pension System (NPS).
DTo oversee the expenditure management of the Government of India.
💡 The PFRDA 'has been assigned the responsibility of designing the structure of funds and constituents in the National Pension System (NPS)'.
Q24 MCQ HardReserve Bank of India

The Preamble of which regulatory body is defined as: “…to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage”?

ASecurities and Exchange Board of India (SEBI)
✓Reserve Bank of India (RBI)
CInsurance Regulatory and Development Authority of India (IRDAI)
DMinistry of Finance
💡 This specific preamble text is quoted for the Reserve Bank of India (RBI) in the chapter.
Q25 MCQ HardSEBI Act, 1992

According to Section 11(2) of the SEBI Act, 1992, which of the following entities does SEBI specifically have the power to register and regulate?

ACommercial banks and regional rural banks
BInsurance companies and re-insurance businesses
✓Investment advisers and credit rating agencies
DValuers in India and insolvency professionals
💡 Section 11(2) lays down that SEBI's measures may include 'registering and regulating the working of stockbrokers, sub-brokers... investment advisers... credit rating agencies, and others as may be specified.'
Q26 MCQ MediumSecurities Contracts (Regulation) Act, 1956

Which of the following aspects is covered by the Securities Contracts (Regulation) Act, 1956 (SC(R)A)?

AAdministering the monetary policy to maintain price stability.
BDefining capital and net-worth requirements for insurance companies.
✓Granting recognition to stock exchanges and prohibiting undesirable speculation.
DDesigning the structure of funds and constituents in the National Pension System (NPS).
💡 The SC(R)A explicitly covers 'Granting recognition to stock exchanges' and 'The power to prohibit undesirable speculation'. The other options relate to RBI, IRDAI, and PFRDA, respectively.
Q27 MCQ EasyMinistry of Finance

Which department within the Ministry of Finance is the nodal agency for formulating and monitoring India's fiscal policy and the functioning of the Capital Market?

✓Department of Economic Affairs
BDepartment of Expenditure
CDepartment of Revenue
DDepartment of Financial Services
💡 The Department of Economic Affairs is explicitly stated as the nodal agency for formulating and monitoring India's fiscal policy and the functioning of the Capital Market.
Q28 MCQ MediumRBI Functions

As the manager of Foreign Exchange, the Reserve Bank of India (RBI) is responsible for administering which specific Act?

AThe Companies Act
BThe Securities Contracts (Regulation) Act, 1956
✓The Foreign Exchange Management Act 1999
DThe Insolvency and Bankruptcy Code 2016
💡 One of RBI's main functions is 'As the manager of Foreign Exchange: To administer the Foreign Exchange Management Act 1999'.
Q29 MCQ MediumInsolvency and Bankruptcy Board of India

In addition to overseeing the insolvency process and insolvency professionals, the Insolvency and Bankruptcy Board of India (IBBI) is also appointed as the authority for what other specific function?

AAdministering the Partnership Act, 1932
✓Regulation and development of valuers in India
CSupervising the functioning of the Tariff Advisory Committee
DManaging issuances of Central and State Government Securities
💡 The text states, 'It is also appointed as the authority for regulation and development of valuers in India.'
Q30 MCQ EasyIRDAI

Which authority is responsible for regulating the insurance sector in India and is the licensing authority for insurance companies?

ASEBI
BRBI
✓IRDAI
DPFRDA
💡 IRDAI regulates the insurance sector in India in accordance with the terms of the IRDA Act, 1999, and is the licensing authority for insurance companies.
Q31 MCQ EasyRBI Functions

Which of the following is NOT listed as a main function of the Reserve Bank of India (RBI)?

AAs the monetary authority.
BAs the manager of Foreign Exchange.
✓As the regulator of the insurance sector.
DAs the issuer of currency.
💡 The regulation of the insurance sector is the responsibility of IRDAI, not RBI. The other options are explicitly listed as main functions of RBI.
Q32 MCQ MediumSecurities Contracts (Regulation) Act, 1956

Which of the following powers is covered under the Securities Contracts (Regulation) Act, 1956 (SC(R)A)?

AAdministering the monetary policy in India
BLicensing authority for insurance companies
✓Granting recognition to stock exchanges
DDesigning the structure of funds in the National Pension System
💡 The SC(R)A covers issues such as 'Granting recognition to stock exchanges' and 'Corporatization and demutualization of stock exchanges'.
Q33 MCQ EasyReserve Bank of India

What is the primary responsibility of the Reserve Bank of India (RBI) as defined by its Preamble?

✓To regulate the issue of Bank Notes and ensure monetary stability
BTo oversee the expenditure management of the Government of India
CTo administer the Companies Act and other allied Acts
DTo regulate the insurance sector in India
💡 The RBI's Preamble defines its basic functions as 'to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage'.
Q34 MCQ MediumSEBI and Commodities Market

On what date did SEBI merge with the Forward Markets Commission (FMC) to start regulating the commodities markets in India?

ASeptember 28, 1992
BSeptember 28, 2003
✓September 28, 2015
DSeptember 28, 2016
💡 The text explicitly states that 'SEBI merged with the Forward Markets Commission on September 28, 2015 and now regulates the commodities markets in India'.
Q35 MCQ EasySEBI Functions

According to the Preamble of the SEBI Act, 1992, what are the basic functions of SEBI?

ATo protect the interests of investors in securities.
BTo promote the development of the securities market.
CTo regulate the securities market.
✓All of the above.
💡 The Preamble of the SEBI Act describes its basic functions as 'to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto'.
Q36 MCQ HardSecurities Contracts (Regulation) Act, 1956

Which of the following powers is specifically granted under the Securities Contracts (Regulation) Act, 1956 (SC(R)A) rather than the general duties of SEBI under the SEBI Act, 1992?

APromoting investors' education
BProhibiting insider trading
✓Granting recognition to stock exchanges
DRegulating substantial acquisition of shares
💡 The text explicitly lists 'Granting recognition to stock exchanges' as a provision of the Securities Contracts (Regulation) Act, 1956. The other options are listed as functions of SEBI under the SEBI Act.
Q37 MCQ HardIBBI Functions

In addition to overseeing the insolvency process and insolvency professionals, what other specific regulatory and developmental responsibility is vested with the Insolvency and Bankruptcy Board of India (IBBI)?

AAdministering the monetary policy to maintain price stability.
BRegulating the business in stock exchanges and any other securities markets.
✓Regulating and development of valuers in India.
DEnsuring the adherence of insurance products to laid down rules.
💡 The text states, 'It is also appointed as the authority for regulation and development of valuers in India.'
Q38 MCQ HardRBI Preamble

The Preamble of the Reserve Bank of India defines its basic functions with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. This specifically includes:

AAdministering the Foreign Exchange Management Act 1999 to facilitate external trade and payment.
✓To regulate the issue of Bank Notes and keeping of reserves.
CPerforming a wide range of promotional functions to support national objectives.
DActing as a banker to the Government and managing issuances of Central and State Government Securities.
💡 The RBI's Preamble is quoted as: '…to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage'. The other options are listed as general functions but not specifically part of the Preamble's definition.
Q39 MCQ EasyMinistry of Finance

Which department within the Ministry of Finance is the nodal agency for formulating and monitoring India's fiscal policy and the functioning of the Capital Market, including stock exchanges?

✓Department of Economic Affairs
BDepartment of Expenditure
CDepartment of Revenue
DDepartment of Financial Services
💡 The Department of Economic Affairs is explicitly stated as the nodal agency for formulating and monitoring India’s fiscal policy and the functioning of the Capital Market.
Q40 MCQ EasyRBI Responsibilities

Which of the following is NOT listed as a main function of the Reserve Bank of India (RBI)?

AAs the monetary authority.
✓As the regulator and supervisor of the insurance sector.
CAs the manager of Foreign Exchange.
DAs the issuer of currency.
💡 RBI is the regulator and supervisor of the financial system, not specifically the insurance sector, which is regulated by IRDAI.
Q41 MCQ HardSecurities Contracts (Regulation) Act, 1956

The Securities Contracts (Regulation) Act, 1956 (SC(R)A) covers a variety of issues. Which of the following is a power specifically covered under this Act?

AAdministering the Foreign Exchange Management Act (FEMA) 1999.
BDesigning the structure of funds and constituents in the National Pension System (NPS).
✓Granting recognition to stock exchanges.
DRegulating the insurance sector in India.
💡 The SC(R)A covers 'Granting recognition to stock exchanges'. The other options relate to RBI, PFRDA, and IRDAI respectively.
Q42 MCQ EasyMinistry of Finance

Which department within the Ministry of Finance is the nodal agency responsible for formulating and monitoring India's fiscal policy as well as the functioning of the Capital Market?

ADepartment of Revenue
BDepartment of Expenditure
✓Department of Economic Affairs
DDepartment of Financial Services
💡 The Department of Economic Affairs is explicitly stated as the nodal agency of the Central Government to formulate and monitor India’s fiscal policy as well as the functioning of the Capital Market.
Q43 MCQ EasyReserve Bank of India

The Reserve Bank of India (RBI) is primarily responsible for administering which of the following?

ACorporate Governance Standards
✓Monetary Policy
CTaxation Policy
DInsurance Sector Regulations
💡 RBI is the central bank of the country which has the responsibility of administering the monetary policy.
Q44 MCQ HardSecurities Regulations

Which of the following powers is explicitly listed under the Securities Contracts (Regulation) Act, 1956 (SC(R)A) in the provided text?

AProhibiting insider trading in securities.
BRegistering and regulating the working of stockbrokers.
✓Granting recognition to stock exchanges.
DPromoting investors’ education and training of intermediaries.
💡 The SC(R)A covers 'Granting recognition to stock exchanges' among its listed issues. The other options are functions of SEBI under the SEBI Act.
Q45 MCQ MediumSEBI & Commodity Markets

SEBI merged with which regulatory body on September 28, 2015, to begin regulating the commodities markets in India?

AInsurance Regulatory and Development Authority of India (IRDAI)
✓Forward Markets Commission (FMC)
CPension Fund Regulatory and Development Authority (PFRDA)
DInsolvency and Bankruptcy Board of India (IBBI)
💡 The text states that 'SEBI merged with the Forward Markets Commission on September 28, 2015 and now regulates the commodities markets in India'.
Q46 MCQ EasyMinistry of Finance

Which department within the Ministry of Finance is responsible for the preparation of the Union Budget annually?

ADepartment of Revenue
BDepartment of Financial Services
✓Department of Economic Affairs
DDepartment of Expenditure
💡 The Department of Economic Affairs is the nodal agency of the Central Government to formulate and monitor India’s fiscal policy, and a principal responsibility of this Department is the preparation of the Union Budget annually.
Q47 MCQ MediumMinistry of Corporate Affairs

Which of the following professional bodies is NOT supervised by the Ministry of Corporate Affairs?

AThe Institute of Chartered Accountants of India (ICAI)
BThe Institute of Company Secretaries of India (ICSI)
CThe Institute of Cost and Works Accountants of India (ICWAI)
✓The Institute of Banking Personnel Selection (IBPS)
💡 The text explicitly lists ICAI, ICSI, and ICWAI as professional bodies supervised by the Ministry of Corporate Affairs. IBPS is not mentioned.
Q48 MCQ EasyMinistry of Finance

Which department within the Ministry of Finance is primarily responsible for the preparation of the Union Budget annually?

ADepartment of Revenue
BDepartment of Financial Services
✓Department of Economic Affairs
DDepartment of Expenditure
💡 The Department of Economic Affairs is explicitly stated as having the principal responsibility for the preparation of the Union Budget annually.
Q49 MCQ MediumIBBI

Besides overseeing the insolvency process and professionals, the Insolvency and Bankruptcy Board of India (IBBI) is also appointed as the authority for the regulation and development of which group in India?

AStockbrokers
BInsurance agents
✓Valuers
DMerchant bankers
💡 IBBI is also appointed as the authority for regulation and development of valuers in India.
Q50 MCQ MediumSEBI

SEBI merged with which other regulatory body on September 28, 2015, to extend its regulation to the commodities markets in India?

APension Fund Regulatory and Development Authority (PFRDA)
✓Forward Markets Commission (FMC)
CInsurance Regulatory and Development Authority of India (IRDAI)
DInsolvency and Bankruptcy Board of India (IBBI)
💡 The text states that 'SEBI merged with the Forward Markets Commission on September 28, 2015 and now regulates the commodities markets in India.'

Case-Based Questions (2 sets)

Case 1 Case-Based Corporate Finance and Regulatory Compliance
InnovateTech Solutions Ltd., a growing technology firm, is facing financial difficulties and considering various options to restructure its debt and raise capital. The company is exploring a public issue of debentures to raise funds and simultaneously evaluating a potential merger with a larger competitor to gain market share and financial stability. This merger, if it proceeds, would involve significant changes in their corporate structure and shareholding. Due to the financial distress, there's also a possibility that the company might enter into an insolvency resolution process if other measures fail. The board of directors is actively seeking advice on compliance with various regulations, including those related to capital raising, corporate restructuring, and potential insolvency proceedings. They are also reviewing existing contracts and financial instruments to ensure they adhere to broad parameters set for financial operations in India.
Medium Sub-question 1

If InnovateTech Solutions Ltd. proceeds with a public issue of debentures to raise capital, which regulatory body would primarily oversee the issuance of these securities and protect the interests of investors in them?

AReserve Bank of India (RBI)
BMinistry of Corporate Affairs (MCA)
✓Securities and Exchange Board of India (SEBI)
DInsolvency and Bankruptcy Board of India (IBBI)
💡 SEBI's regulatory jurisdiction extends over corporates in the issuance of capital and transfer of securities, and its primary role is to protect the interests of investors in securities.
Medium Sub-question 2

The potential merger of InnovateTech Solutions Ltd. with a larger competitor would involve significant changes in their corporate structure. Which Act, administered by the Ministry of Corporate Affairs, has replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP) and would be relevant for reviewing such mergers for competition aspects?

ACompanies Act
✓Competition Act 2002
CSecurities Contracts (Regulation) Act, 1956
DForeign Exchange Management Act, 1999
💡 The Ministry of Corporate Affairs is responsible for administering the Competition Act 2002, which replaced the MRTP Act, 1969.
Easy Sub-question 3

In the event that InnovateTech Solutions Ltd. needs to initiate an insolvency resolution process due to its financial distress, which regulatory body would be responsible for overseeing this process?

AMinistry of Finance
BSecurities and Exchange Board of India (SEBI)
✓Insolvency and Bankruptcy Board of India (IBBI)
DReserve Bank of India (RBI)
💡 The IBBI is established under the Insolvency and Bankruptcy Code 2016 and is the regulator for overseeing the insolvency process.
Hard Sub-question 4

InnovateTech is reviewing its financial instruments and contracts to ensure adherence to broad parameters for financial operations. Which of the following functions of the Reserve Bank of India (RBI) is most relevant to setting these broad parameters and maintaining public confidence in the financial system?

AAs the issuer of currency.
BAs the manager of Foreign Exchange.
✓As the regulator and supervisor of the financial system.
DAs a banker to the Government.
💡 The RBI, as the regulator and supervisor of the financial system, prescribes broad parameters of banking operations to maintain public confidence and protect investor interests.
Case 2 Case-Based Regulatory Framework for Financial Entities
Alpha Research & Advisory Pvt. Ltd., a newly established financial research firm, is seeking to expand its operations beyond traditional equity research. The firm plans to offer comprehensive investment advisory services to retail and institutional clients and is also considering the feasibility of launching a small mutual fund. The founders are meticulous about ensuring full compliance with the Indian financial market regulations. During a recent strategic meeting, one founder highlighted the importance of understanding the Ministry of Finance's role, specifically the Department of Economic Affairs, in overseeing capital markets and formulating fiscal policy. Another founder emphasized SEBI's overarching jurisdiction over securities markets, especially concerning investor protection and market development. They are particularly concerned about the specific process of registering as an Investment Adviser and the regulatory implications of launching a mutual fund. Furthermore, they are reviewing the corporate governance requirements and the administration of the Companies Act, which are relevant to their corporate structure and any potential public offerings they might consider in the future. The firm aims to build a reputation for integrity and adherence to the highest standards of regulatory compliance in India's dynamic financial landscape.
Hard Sub-question 1

Alpha's plan to launch a mutual fund involves several regulatory aspects. Which of the following is NOT a primary function of SEBI that directly relates to regulating entities like mutual funds and protecting investors?

APromoting and regulating self-regulatory organizations in the securities market.
BRegulating the business in stock exchanges and any other securities markets.
✓Administering the Foreign Exchange Management Act (FEMA) 1999.
DCalling for information from, undertaking inspection, and conducting inquiries of mutual funds.
💡 Administering the Foreign Exchange Management Act (FEMA) 1999 is a primary responsibility of the Reserve Bank of India (RBI), not SEBI.
Medium Sub-question 2

For Alpha Research & Advisory Pvt. Ltd. to launch a mutual fund and register as an Investment Adviser, which regulatory body would be the primary authority for registration and ongoing regulation related to these specific activities in the securities market?

AReserve Bank of India (RBI)
BMinistry of Corporate Affairs (MCA)
✓Securities and Exchange Board of India (SEBI)
DPension Fund Regulatory and Development Authority (PFRDA)
💡 SEBI's functions include registering and regulating the working of investment advisers and calling for information from, undertaking inspection, and conducting inquiries of mutual funds.
Medium Sub-question 3

The founders are reviewing the corporate governance requirements and the administration of the Companies Act. Which ministry is primarily concerned with the administration of the Companies Act and regulating the functioning of the corporate sector in India?

AMinistry of Finance
✓Ministry of Corporate Affairs
CMinistry of Commerce and Industry
DMinistry of Law and Justice
💡 The Ministry of Corporate Affairs is primarily concerned with the administration of the Companies Act and other allied acts for regulating the functioning of the corporate sector.
Easy Sub-question 4

Which specific department within the Ministry of Finance is primarily responsible for the functioning of the Capital Market, including stock exchanges, and formulating India’s fiscal policy?

ADepartment of Expenditure
BDepartment of Revenue
✓Department of Economic Affairs
DDepartment of Financial Services
💡 The Department of Economic Affairs is explicitly stated as the nodal agency for formulating and monitoring India’s fiscal policy and the functioning of the Capital Market.
About this content: These practice questions are based on the NISM-Series-XV: Research Analyst Certification Examination Workbook (February 2026) published by the National Institute of Securities Markets (NISM), Mumbai. NISM is a SEBI-established institution. Questions cover Legal and Regulatory Environment with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI. Last updated: .

Ready to Test Yourself Under Exam Conditions?

Full 120-minute mock exam with all 15 chapters, case-based questions, negative marking, and NISM-accurate 60% pass threshold.

Start Full Mock Exam ▶
← Ch.13: Qualities of a Good Research Report Ch.15: Technical Analysis →