n NISM Certifications
VII NISM Series VII
Medium

In the Auction Close Out process, the buyer is compensated by paying the value of the short-delivered security at the highest price prevailing from the trading day until the auction day or 20% above the official closing price on the auction day, whichever is _______.

Practice question from NISM Series VII Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Higher

    Correct answer

  2. B

    Lower

  3. C

    Profitable

  4. D

    Standard average

Why this is the answer

When there is a short delivery, the Clearing Corporation compensates the buyer using the highest of the highest market price during the period or 20% above the auction day’s closing price.

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