Part of the NISM-Series-V-D Exam Prep Kit
A plain-language walk through all twenty-two chapters across three modules — mutual fund distribution first (the same ground as V-A), then equity derivatives, then interest rate derivatives. This is the exam for distributing Specialized Investment Fund (SIF) strategies, which can use derivatives well beyond a standard mutual fund's limits.
About 60–70 minutes, start to finish. Read it in one sitting or module by module — the links below jump straight to any chapter.
CHAPTER 1
Before recommending any fund, a distributor needs a map of the investment world: the four broad asset classes (equity, fixed income, real estate, commodities), the kinds of risk each carries (market, credit, liquidity, inflation, interest rate), and the behavioural biases (recency bias, loss aversion, herd mentality) that push investors toward poor decisions.
Risk profiling weighs an investor's need, ability, and willingness to take risk before any asset allocation is built, and that allocation is either strategic (a long-term target) or tactical (a deliberate, temporary tilt).
CHAPTER 2
A mutual fund pools investor money; a professional manager invests it; each investor's share is represented by units priced at the daily NAV. Schemes are open-ended (daily liquidity), close-ended (fixed offer period, then exchange-traded), or interval (hybrid, open only in windows).
SEBI's five broad categories — Equity, Debt, Hybrid, Solution-Oriented, Other — each carry hard percentage rules, so a "Large Cap Fund" means the same thing across every AMC.
CHAPTER 3
An Indian mutual fund is a trust, not a company. The Sponsor sets it up and largely steps back; the Trustees (at least two-thirds independent) watch over it on investors' behalf; the AMC runs day-to-day operations; the Custodian holds securities; the RTA maintains investor records (though an AMC may do this in-house). AMFI sits outside this structure entirely — an industry body, not a regulator.
CHAPTER 4
SEBI regulates mutual funds directly; RBI, IRDAI, and PFRDA regulate banking, insurance, and pensions respectively, with no overlap. SEBI's Advertisement Code mandates a standard risk warning and restricts celebrity endorsement to industry-level campaigns only. Mis-selling — concealing risks or recommending unsuitable products — is a core violation under SEBI's Fraudulent and Unfair Trade Practices Regulations.
CHAPTER 5
The SID covers everything specific to one scheme; the SAI covers the AMC/fund as a whole; the KIM (a summary of both) must accompany every application form. Any change in a scheme's fundamental attributes requires written notice and an exit option at prevailing NAV, without exit load.
CHAPTER 6
Individual distributors need an ARN; employees of institutional distributors (banks, national distributors) operate under the institution's ARN using their own EUIN. Distributors are paid only through trail commission — no upfront commission, and no upfronting of trail except for SIP inflows.
CHAPTER 7
NAV = Net Assets ÷ Outstanding Units, recalculated daily via mark-to-market. TER bundles the management fee, brokerage, transaction costs, and statutory levies, capped on a sliding scale by SEBI. Entry loads are banned entirely; exit loads are credited back to the scheme, never retained by the AMC.
CHAPTER 8
Equity-oriented funds: LTCG (holding >12 months) taxed at 12.5% with Rs. 1.25 lakh exempt annually; STCG at 20%. Debt funds: both STCG and LTCG taxed at the investor's marginal slab rate, regardless of holding period. ELSS carries a 3-year lock-in and a Section 80C deduction (old regime only).
CHAPTER 9
The heaviest chapter in Module 1: KYC, folio maintenance, nomination (up to 10 nominees, or an explicit opt-out declaration), transmission on death, systematic transactions (SIP/SWP/STP/Switch), and grievance redressal (21-day AMC resolution window) all live here.
CHAPTER 10
Standard deviation captures total volatility; Beta captures market sensitivity. Sharpe Ratio (return per unit of total risk) and Treynor Ratio (return per unit of Beta) combine return and risk into one comparable number.
CHAPTER 11
Schemes benchmark to the Total Return Index (TRI), not the Price Return Index, since 2018 — TRI captures reinvested dividends, typically running 1.5–2.5% ahead of PRI historically. Tracking error measures how consistently an index fund deviates from its benchmark.
CHAPTER 12
Tied for heaviest in Module 1: matching a scheme to a client's suitability, time horizon, and risk profile — never selecting purely on recent past performance. The core-and-satellite approach uses diversified, long-held funds as the core and tactical, shorter-term bets as the satellite.
CHAPTER 13
A derivative's value derives from an underlying asset. The chapter traces the Indian derivatives market's evolution, maps out market participants (hedgers, speculators, arbitrageurs), and surveys the risks participants face — market, credit/counterparty, liquidity, and operational.
CHAPTER 14
A stock index tracks a basket of securities to represent market or sector movement. Most Indian indices (Nifty 50, Sensex) are now free-float market-capitalisation weighted — weighting each constituent by the shares actually available for public trading, not total shares outstanding.
CHAPTER 15
The single heaviest chapter in the entire syllabus. A forward is a private, customised, OTC agreement; a futures contract is its standardised, exchange-traded, daily-margined cousin. Contract value = futures price × lot size. On expiry, cash and futures prices converge — a relationship called price discovery.
Futures pricing follows the cost-of-carry model: Futures Price = Spot Price + Cost of Carry (financing cost, minus any dividend yield for equity).
CHAPTER 16
A call option is the right to buy; a put is the right to sell, at the strike price, for a premium. An option is in-the-money, at-the-money, or out-of-the-money depending on strike vs. spot; its premium splits into intrinsic value (the in-the-money amount) and time value (everything else).
Delta measures premium sensitivity to the underlying's price; Gamma measures how Delta itself changes; Theta measures time decay; Vega measures sensitivity to implied volatility.
CHAPTER 17
Futures and options get applied here to hedging, speculation, and arbitrage in practice. Put-call parity ties a call, a put, and the underlying's price together — any deviation creates a risk-free arbitrage opportunity. Delta-hedging uses an option's Delta to construct a position that's momentarily insensitive to small price moves in the underlying.
CHAPTER 18
This chapter rebuilds fixed-income concepts for the derivatives context: the term structure (yield curve), coupon vs. current yield vs. YTM, spot (zero) rates, accrued interest, and the standard bond risk measures (duration, convexity). It also maps India's primary and secondary debt markets.
CHAPTER 19
A short conceptual bridge: interest rate derivatives let participants manage exposure to interest rate movements. The underlying can be a government security, a T-Bill, or an interest rate benchmark like the overnight MIBOR. The chapter contrasts OTC derivatives (customised, bilateral) against exchange-traded ones (standardised, centrally cleared).
CHAPTER 20
The heaviest IRD chapter. Cash-settled IRF contracts trade on 6-, 10-, and 13-year GOI securities (residual maturity buckets of 4–8, 8–11, and 11–15 years), with one lot equal to notional bonds of FV Rs. 2 lakh (2,000 bonds), a tick size of Rs. 0.0025, and expiry on the last Thursday of the month. A separate contract exists on the 91-day T-Bill.
CHAPTER 21
Options on interest rate futures work the same way equity options do — moneyness, the same set of Greeks, and implied volatility — but the underlying is a GOI security futures contract rather than a stock or index. The chapter also compares exchange-traded IROs against their OTC equivalents.
CHAPTER 22
The syllabus closes by applying IRF/IRO to hedging (protecting a bond portfolio against rate rises), speculation (directional rate bets), arbitrage, and spread trading, plus the practical limitations of using exchange-traded contracts for hedging (basis risk, imperfect maturity matches).
You've now seen the shape of all twenty-two chapters across three modules. The natural next step is the diagnostic quiz — a short, weighted set of questions to show you which modules need the most work before you move to flashcards, worksheets, and the full timed mock exam.