📊 NISM Series XXI-A Chapter 4 of 12 ⚖ 5 of 100 marks weightage

Ch.4: Investing in Fixed Income Securities

Practice questions for NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors Certification Examination, Chapter 4: Investing in Fixed Income Securities. This chapter introduces the Indian fixed income market and its issuer segments, then the building blocks of a bond: coupon, face value, maturity, redemption value and embedded call, put and conversion options. It covers bond safety through indentures, covenants, security and credit ratings, values bonds by discounting cash flows and through yield to maturity, and ends with how bond prices react to rate changes, measured by Macaulay and modified duration. Carries 5 out of 100 marks. The exam has 100 MCQs, 60% passing score, and −10% negative marking per wrong answer.

What You Will Learn in This Chapter

How the Indian fixed income market is segmented by issuer and why corporate bond issuance is mostly a private placement market.
The core features of a bond (coupon, face value, maturity, redemption value) and how callable, puttable and convertible bonds change the risk for issuer and investor.
How indentures, covenants, collateral and SEBI-standardised credit rating symbols help judge a bond's default risk.
How to value a bond as the present value of its cash flows, what YTM means, and how YTM compares with the coupon at a discount, premium or par.
The rules of bond price volatility, interest rate and reinvestment risk, and how Macaulay and modified duration measure price sensitivity.

Key Terms:CouponFace (par) valueZero coupon bondCallable / puttable bondIndenture and covenantsInvestment gradeYield to maturity (YTM)Reinvestment riskMacaulay durationModified duration

Free Sample Question

Q1MCQMediumBonds vs debentures

In Indian usage, when is a long-term debt security usually called a 'debenture' rather than a 'bond'?

AWhen it is issued in a foreign currency outside India

✓When it is issued by a private company, not by government or a development FI

CWhen it pays a floating coupon instead of a fixed one

DWhen its maturity is less than one year from the date on which it is issued

💡 Long-term debt of the Central or State Governments, their undertakings or development financial institutions is called a bond. Similar instruments from other entities are called debentures.

39 more questions in this chapter

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About this content: These practice questions are written by BullWiser from the syllabus of the NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors Certification Examination, using the workbook published by the National Institute of Securities Markets (NISM), Mumbai (September 2025 edition) as the fact source. NISM is a SEBI-established institution. Questions cover Chapter 4: Investing in Fixed Income Securities with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM, SEBI or APMI. Last updated: September 30, 2026.

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