NISM Series XVI Negative Marking and Guessing Strategy
0.25 marks come off for every wrong answer on a 100-mark paper. That changes when guessing pays and when it does not.
NISM Series XVI deducts 25% of a question's marks for a wrong answer. Every question carries 1 mark, so a wrong answer costs 0.25. A blank costs nothing. A correct answer earns 1.
That ratio of 4 to 1 is the whole story. It is large enough that wrong answers add up, but small enough that a guess is still worth making in most situations. The useful question is not whether to guess, but how much you know before you do.
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What one question is worth
Expected marks from one four-option question, depending on how many wrong options you can rule out. 1 mark if right, 0.25 deducted if wrong:
Leave it blank
Chance of being right
None
Expected marks
0.00
Blind guess on four options
Chance of being right
1 in 4
Expected marks
+0.0625
One option ruled out
Chance of being right
1 in 3
Expected marks
+0.17
Two options ruled out
Chance of being right
1 in 2
Expected marks
+0.375
You know it
Chance of being right
Certain
Expected marks
+1.00
| Your position | Chance of being right | Expected marks |
|---|---|---|
| Leave it blank | None | 0.00 |
| Blind guess on four options | 1 in 4 | +0.0625 |
| One option ruled out | 1 in 3 | +0.17 |
| Two options ruled out | 1 in 2 | +0.375 |
| You know it | Certain | +1.00 |
The arithmetic, worked through
- 1
A blind guess on a four-option question
One time in four you gain 1 mark; three times in four you lose 0.25. Expected value: 0.25 x 1 minus 0.75 x 0.25 = 0.25 minus 0.1875 = +0.0625 marks. Positive, but small.
- 2
One option ruled out
Now one time in three you gain 1, two times in three you lose 0.25. Expected value: 0.333 minus 0.167 = about +0.17. Nearly three times the blind guess.
- 3
Two options ruled out
A straight choice between two. Expected value: 0.5 minus 0.125 = +0.375.
- 4
The break-even point
A guess beats a blank when your chance of being right, p, makes p minus 0.25 x (1 minus p) greater than zero. That works out to p above 0.2, or 1 in 5. On a four-option question even a blind guess clears it, just.
How many you need right if you attempt everything
Score = correct answers minus 0.25 x wrong answers, with all 100 attempted. The pass mark is 60.
75
Wrong
25
Score
68.75
Result
Pass
70
Wrong
30
Score
62.50
Result
Pass
68
Wrong
32
Score
60.00
Result
Pass, exactly
67
Wrong
33
Score
58.75
Result
Short by 1.25
65
Wrong
35
Score
56.25
Result
Short by 3.75
| Correct | Wrong | Score | Result |
|---|---|---|---|
| 75 | 25 | 68.75 | Pass |
| 70 | 30 | 62.50 | Pass |
| 68 | 32 | 60.00 | Pass, exactly |
| 67 | 33 | 58.75 | Short by 1.25 |
| 65 | 35 | 56.25 | Short by 3.75 |
Why 68, not 60
If you attempt every question, you need 68 correct to reach 60. Leaving some blank lowers that number, because blanks do not cost anything, but it also gives up any chance of marks on those questions.
Say you are confident on 64 questions and unsure on 36. If every confident answer is right, leaving the 36 blank scores exactly 64. Guessing all 36 blind adds about 36 x 0.0625, roughly 2.25 marks on average, but with a wide spread either way. If you can rule out one option on all of them, the average gain rises to about 6 marks. Elimination, not blind guessing, is where the value is.
Free questions, scored the way the exam scores them.
Calculation questions are different
Series XVI has numericals: fair value from cost of carry, basis, hedge outcomes, option and strategy pay-offs. On these, elimination works well. A quick estimate often rules out answers that are the wrong size or have the wrong sign, and an option that comes from doing one step the wrong way round can be spotted if you check the direction of your answer.
The opposite risk is a confident wrong answer. If you get the sign of the basis wrong, or read a pay-off from the wrong side of the trade, your working will land neatly on one of the options. That answer costs 1.25 against the right one: the mark you missed plus the 0.25 deducted. Check the setup of a calculation before you trust the number.
A practical approach on exam day
- checkFirst pass: answer everything you know, and flag the rest, including long calculations
- checkSecond pass: work the flagged numericals, checking the sign of the basis and which side of the trade you are on
- checkOn each remaining flagged question, try to rule out at least one option before answering
- checkIf you can rule out one or more options, answer it
- checkIf you truly cannot rule out anything, a guess still has a small positive average; decide in advance whether you will take it, and stick to that rule
- checkDo not change a confident answer on a vague second thought
Watch the clock on numericals
100 questions in 120 minutes is 72 seconds each. Fact questions take far less, which buys time for calculations. Do not let one hard numerical eat five minutes on the first pass: flag it and come back.
Learn your own pattern
Use practice papers to see where your wrong answers come from. Count how many were guesses, how many were calculation slips and how many were facts you were sure of. If most were confident mistakes, the fix is revision, not a different guessing rule.
FAQs
Is there negative marking in NISM Series XVI?expand_more
Yes. 25% of the marks assigned to a question is deducted for a wrong answer. Each question carries 1 mark, so that is 0.25 per wrong answer.
Are unanswered questions penalised?expand_more
No. A blank scores zero.
Should I guess in Series XVI if I do not know the answer?expand_more
A blind guess on four options is worth +0.0625 marks on average, slightly better than a blank. Ruling out one option raises that to about +0.17, so try to eliminate before you guess.
How many correct answers do I need to pass Series XVI?expand_more
The pass mark is 60 out of 100. If you attempt every question, 68 correct and 32 wrong gives exactly 60. 67 correct gives 58.75, which is short.
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