n NISM Certifications
V-A NISM Series V-A
Medium

Identify the correct statement/s: (A) Valuation gains are ignored, but valuation losses need to be adjusted against the profits while calculating distributable surplus. (B) The Mark-to-market gains form a part of the distributable reserves in case of mutual fund Income Distribution Cum Capital Withdrawal plan.

Practice question from Nism VA Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Only A is correct

    Correct answer

  2. B

    Only B is correct

  3. C

    Both A and B are correct

  4. D

    Both A and B are incorrect

Why this is the answer

Only realized profits can be distributed. Mark-to-market gains are not realizable and cannot be used for distribution. However, losses from valuation must be accounted for before profit distribution.

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