NISM Series - XV Research Analyst Cert. Mock Test - 1/50 All the Best!Oops!Time Out NISM Series – XV Research Analyst Cert. Mock Test – 1 1 / 50Find out how much money a business makes in sales if 40% of its earnings (EBITDA) is 20%, the company pays Rs.2 as a dividend per share, and 40% of its earnings are given as dividends. There are 10,000 outstanding shares in total. a) Rs. 755000 b) Rs 480000 c) Rs. 625000 d) Rs. 574000 Explanation: The dividend paid per share is Rs. 2 and the number of outstanding shares are 10,000.So the total dividend paid is Rs. 2 X 10,000 = Rs.20,000The Dividend Payout ratio is 40%. This means Rs 20000 paid as divided is 40% of the Net Profit.So the Net Profit is Rs. 50000 ( 20000 / 40 x 100 )The Net Profit is 20% of EBITDA.Rs 50000 is the Net Profit, So the EBITDA will be 50000 / 20 X 100 = 250000EBITDA is 40% of the business ie Sales.EBITDA is 250000. So Sales will be 250000 / 40 X 100 = 6250002 / 50What actions can SEBI (Securities and Exchange Board of India) take against a middleman or intermediary? a) Suspend the registration of the intermediary b) Cancel the registration of the intermediary c) Issue a warning or censure d) All of the above Explanation: SEBI can take various actions against intermediaries in the securities market, including registration, inspection, penalties, and disciplinary actions for violations. It ensures fair and transparent market practices through enforcement, education, and coordination with law enforcement agencies.3 / 50A company has assets worth Rs 1,000,000, and it earns Rs 1 per share. The company’s net income is Rs 80,000. The Price-to-Earnings ratio is 12, and the Price-to-Book Value ratio is 1.3. Calculate the Asset-to-Equity ratio. a) 1.35 b) 5.40 c) 2.33 d) 1.13 Explanation: First we calculate the number of Shares.EPS = Income / No. of Shares1 = 80000 / No. of SharesSo No. of Shares = 80,000Now we calculate the Market Price of a SharePE = Market Price / EPSMarket Price = PE X EPS= 12 x 1 = 12Book Value = Price / Price to Book Ratio= 12 / 1.3 = 9.23Equity (Networth) = Book Value x No. of Shares= 9.23 x 80,000 = 738400Asset to Equity Ratio = Asset / Equity= 1000000 / 738400= 1.354 / 50A company pays a 30% dividend on shares worth Rs 5 each. The dividend payout ratio is 40%, and the current share price is Rs 60. Calculate the P/E ratio and the Earnings Yield. a) PE = 20 , Earnings Yield = 6.88% b) PE = 14 , Earnings Yield = 8.56% c) PE = 24 , Earnings Yield = 9.50% d) PE = 16 , Earnings Yield = 6.25% Explanation: Dividend Declared is 30% of Rs 5 = Rs 1.5Dividend Payout Ratio = Yearly Dividend per Share / EPS40% ie. 0.4 = 1.5 / EPSEPS = 1.5 / 0.4 = 3.75PE = Market Price / EPS= 60 / 3.75PE = 16Earnings Yield formula is reverse of PE ratio formula x 100.= EPS / Market Price x 100= 3.75 / 60 x 1000.0625 x 100 = 6.25%5 / 50For a research report, you can easily find most of the needed data, except for what? a) Business model b) Competition in the industry c) Financial data d) Views of the Management on future opportunities and threats Explanation: Correct and detailed management views can be obtained only through personal interactions with them. These views are generally not available elsewhere.6 / 50Out of these options, which one doesn’t help you evaluate a company listed on a stock exchange? a) The P/BV Ratio b) The P/E Ratio c) The demand and supply of its securities in the stock exchange d) The Intrinsic Value Explanation: “The demand and supply of its securities in the stock exchange” is not typically considered a valuation parameter because it reflects market dynamics and investor sentiment, rather than specific financial metrics used for evaluating a company’s fundamental value. Valuation parameters usually involve financial ratios and metrics that provide a more direct assessment of a company’s worth.7 / 50__________ Bias is when people stick to old information, even if it’s not useful anymore, and use it to make decisions a) Familiarity b) Anchoring c) Herd Mentality d) Choice Paralysis Explanation: Investors hold on to some information that may no longer be relevant, and make their decisions based on that. New information is labelled as incorrect or irrelevant and ignored in the decision making process. This is known as Anchoring bias.8 / 50Which of these is not part of ‘Unfair Trade Practice’? a) Manipulation b) Publishing Falsehood c) Publicly known information d) Misleading Advertisement Explanation: Some of the instances of unfair trade practices cited in the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulation, 2003 are as follows:a) A wilful misrepresentation of the truth or concealment of material fact in order that another person may act, to his detriment b) A suggestion as to a fact which is not true, by one who does not believe it to be true c) An active concealment of a fact by a person having knowledge or belief of the fact d) A promise made without any intention of performing it e) A representation, whether true or false, made in a reckless and careless manner.Publicly know information is not a unfair trade practice.9 / 50An industry is a good choice for investment if it has _________. a) Low competition b) Weak bargaining powers of the buyers c) High barriers to entry d) All of the above Explanation: Attractive Industry from shareholders’ perspective is one that has one or more the following salient features that create a profitable atmosphere for the business:Low competitionHigh barriers to entryWeak suppliers’ bargaining powerWeak buyers’ bargaining powerFew substitutesIf an industry is having these features, it would have strong pricing power and high profit margins and attract investors.10 / 50If a multinational company’s distribution channel is unhappy with selling the products, can those products still be sold effectively? a) Yes b) No Explanation: A company may have a good product, good marketing etc. but to make the product reach the consumers, it needs a good distribution network. If the distributors , retailers etc. are not happy (due to any reason) , this product may not reach the consumers.11 / 50This industry is well-developed and established in India. a) Bio-tech industry b) Oil and Gas industry c) Fintech industry d) E-Commerce industry Your answer is IncorrectYour answer is correctExplanation:Every industry typically goes through the following phases – Pioneering stage, Growth stage, Matured stage, Declining stage and Reinvention and revival.Matured stage: The industry has existed for long and most customers who can use the product are already using it.From the above four options, Oil and Gas industry is a matured industry as it has existed for very long.12 / 50According to Section 230 of the Companies Act, which of the following statements about the ‘Scheme of Arrangement’ is accurate? a) Scheme of Arrangement is the settlement of legal succession within the promoter family after the demise of the promoter b) Scheme of Arrangement is basically a agreement of co-operation by all the companies in an industry c) Scheme of Arrangement is a court monitored settlement process between the company and its creditors d) Scheme of Arrangement is the process of merging the subsidiaries with the holding company Your answer is IncorrectYour answer is correctExplanation:Under section 230 of Companies Act 2013, Scheme of arrangement can be sought by the company or its creditors / members. The person claiming the scheme of arrangement shall approach the National Company Law Tribunal (NCLT). The tribunal then orders the meeting between the company, its creditors and/or members to arrive a compromise or arrangement.13 / 50The company’s Market Capitalization is Rs. 8,00,000. With a Price-to-Book value ratio of 10 and a Book Value of Rs. 14, determine the company’s Net Worth. a) Rs. 60,000 b) Rs. 40,000 c) Rs. 50,000 d) Rs. 80,000 Your answer is IncorrectYour answer is correctExplanation:Price to book value ratio = Market capitalization/ Net-worth10 = 8,00,000/Net-worthNet-worth = 800000/10 = 8000014 / 50When do companies intend to expand their production capabilities? a) In the 'Boom' phase of economic cycle b) In the 'Recession' phase of economic cycle c) In the 'Depression' phase of economic cycle d) In the 'Slow Down' phase of economic cycle Your answer is IncorrectYour answer is correctExplanation:Expansion / Boom phase of Economic Cycle : The expansion is characterized by increased consumption of goods and services driven by higher income, lower interest rates and high level of consumer confidence. High demand for products results in higher production and higher employment which in turn keeps the momentum on the consumption high.Booming economy increases consumer and business confidence. Thus, businesses plan capacity expansion and consumers plan to acquire long term assets.15 / 50Who is eligible to join the committee responsible for assessing the salaries of research analysts, as outlined in Regulation 17 of the Code of Conduct for Research Analysts? a) Head of investment banking division b) Head of the brokerage division c) Head of research division d) Any one of the above as per the decision of the MD of the company Your answer is IncorrectYour answer is correctExplanation:Regulation 17: Compensation of research analystsThe compensation of all individuals employed as research analyst shall be reviewed, documented and approved annually by board of directors/committee appointed by board of directors of the research entity, which does not consist of representation from its merchant banking or investment banking or brokerage services divisions.From the above given three options, Head of the brokerage division and Head of investment banking division cannot review the salaries of research analyst. Therefore, Head of research division is the right answer.16 / 50Point out the type of transaction that would be categorized as a Capital Account Transaction. a) Interest which is earned on investment in foreign entities b) Remittances by NRIs abroad c) Amount received by an Indian exporter d) None of the above Your answer is IncorrectYour answer is correctExplanation:International trade refers to the total trade that a country does with all other countries in the world. A country’s balance of payment is the statement showing transactions of a country with the rest of the world.Balance of payment statement is broadly divided into two accounts namely the Current account and the Capital account. The current account has all the details of transactions on revenue account viz. imports and exports of goods and services while the capital account captures all the capital flows like FDI, FII, loans, and grants etc.None of the above are considered as Capital Account transaction.17 / 50When is Free Cash Flows to the Firm (FCFF) employed for valuation purposes? a) When the Free Cash Flow for Equity (FCFE) is likely to be negative b) When the capital structure of the firm is likely to change significantly in the future c) When the Free Cash Flow for Equity (FCFE) is likely to be positive Your answer is IncorrectYour answer is correctExplanation:FCFF is a measurement of a company’s profitability after all expenses and reinvestments.The Free Cash Flow model cannot be used when the cash flows are negative as it becomes difficult to determine the growth rates and form a terminal value.Also, if the firm is likely to change significantly in the future, to know the real value of the business, FCFF model is preferable.18 / 50The company has a Book Value per share of Rs. 18. With a Market Capitalization of Rs. 50 lakhs and a Net Worth of Rs. 10 lakhs.Determine the Price-to-Book Value ratio of this company. a) 5 b) 12 c) 2.78 d) 10 Your answer is IncorrectYour answer is correctExplanation:Price to book value ratio can be calculated using : Market capitalization / Net worth50,000,00 / 10,00,000 = 519 / 50Point out the action that is allowed or permissible according to the Research Analyst Code of Conduct. a) The performance rating of the Research Analyst is decided by the sales and trading team b) The employees in the sales team can give feedback to the Research Team on the research report c) There is a common supervisor of the sales and trading team and the Research Analyst d) All of the above Your answer is IncorrectYour answer is correctExplanation:As per SEBI (Research Analyst) Regulations, 2014 – Regulation 18: Limitations on publication of research report, public appearance and conduct of business, etc. :Research entity shall ensure that the individuals employed as research analyst are separate from other employees who are performing sales trading, dealing, corporate finance advisory or any other activity that may affect the independence of its research report: Provided that the individual employed as research analyst by research entity can receive feedback from sales or trading personnel of brokerage division to ascertain the impact of research report.20 / 50For which industries is it more appropriate to use EV/EBITDA instead of EV/EBIT as a valuation measure? a) Capital intensive b) Start-Ups c) Labour intensive d) Matured Your answer is IncorrectYour answer is correctExplanation:In the case of capital-intensive industries, the difference in the historical cost of asset and choice of depreciation method can cause major discrepancy in the method of depreciation. Therefore, for such industries it is preferable to use EV/EBITDA. For other industries, EV/EBIT is preferable.21 / 50What industry is classified as a ‘Defensive’ industry? a) Processed Foods b) Tourism c) Defense Equipment d) Media and information Your answer is IncorrectYour answer is correctExplanation:Defensive industries: These are industries that create products and services that have low income elasticity i.e., a fall or rise in income does not affect the demand significantly. Therefore, these industries experience minimal impact on account of economic cycles. Rather, their business prospects are affected only by secular trends.22 / 50If the cost of equity is 11%, the cost of debt is 8%, and the weight of equity is 60%, what is the weighted average cost of capital? a) 8.9% b) 10.7% c) 10.1% d) 9.8% Your answer is IncorrectYour answer is correctExplanation:The Weighted Average Cost of Capital of the firm (WACC) is then calculated as under:WACC = [Ke * We] + [Kd * (1-Tax)*Wd]Where Ke = Cost of Equity, We = Weight of Equity, Kd = Cost of Debt, Wd = Weight of Debt(As Tax is not mentioned, we ignore (1-Tax))Weight of equity is 60%, the weight of debt will be 100 – 60 = 40%WACC = [Ke * We] + [Kd *Wd](0.11 * 60) + (0.08 * 40)6.6 + 3.2 = 9.8%23 / 50If a company’s shares have a face value of Rs. 5, it pays a dividend of 15%, has a 100% dividend payout ratio, and a current book value of Rs. 80, what is the Earnings Yield? a) 10% b) 7.5% c) 2% d) Insufficient data – Cannot be calculated Your answer is IncorrectYour answer is correctExplanation:The formula to calculate the Earnings Yield is : Earnings Per Share (EPS) / Market Price of the shareThe EPS can be calculated from the above data but the Market Price of the share is not known.Therefore, Earnings Yield cannot be calculate as data is insufficient.24 / 50In India, excise duty is levied on _______ . a) Plastic products b) Detergents c) Alcoholic beverages d) All of the above Your answer is IncorrectYour answer is correctExplanation:Excise duty is tax on production. With the introduction of GST, excise duty has been removed for most of the goods. However, excise duty is still applied on liquor, petrol and diesel as these products do not come under GST.25 / 50In SWOT analysis, an enhanced medical insurance cover would be regarded as _______ for the healthcare industry a) Opportunity b) Weakness c) Threats d) Strength Your answer is IncorrectYour answer is correctExplanation:Opportunities are created through external environment.Increased medical insurance will lead more people getting better medical treatment in hospitals as cost will not be a concern due to medical insurance.Therefore industries involved in healthcare like hospitals, pharma etc. will benefit from it. Increased medical insurance will provide a good growth opportunity to them.26 / 50Despite data suggesting a potential decrease in equity share prices, the research analyst strongly believes they might rise. What should the analyst advise their clients? a) As the analyst is in two minds, he should not recommend anything on that equity share b) Intuitions usually come true and the analyst should recommend a buy or hold rating c) The analyst should recommend a sell rating on that equity share as this is what the data and indicators are pointing to d) The analyst can give two recommendations – one based on intuition and other on indicators Your answer is IncorrectYour answer is correctExplanation:As per the Code of Conduct for Research Analyst : Regulation 15 – Research analyst or research entity shall have written internal policies and control procedures governing the dealing and trading by any research analyst for promoting objective and reliable research that reflects the unbiased view of research analyst.27 / 50For plain vanilla fixed-rate bonds, ________ are definite and known to bond investors. A. The Capital Appreciation B. The amount of cash flows C. The timing of cash flows a) Only A b) Only B and C c) Only A and B d) All A, B and C Explanation:A plain vanilla bond is market jargon to describe a standard bond i.e. an interest-bearing security paying coupons at regular intervals with a stated fixed maturity. In other words, a plain vanilla bond has no embedded options or structured elements.‘Plain Vanilla Bonds’ are the most basic type of bonds, having a fixed coupon payment at pre-determined fixed intervals with a pre-determined maturity.The face value of the bond is also pre-determined and the investor receives the bond at the face value on the date of maturity.28 / 50If a company’s Total Assets are Rs 100,000 and Total Liabilities are Rs 74,000, what is the Equity to Asset Ratio? a) 3.41 b) 0.74 c) 1 d) 0.26 Your answer is IncorrectYour answer is correctExplanation:Equity = Assets – Liabilities= 100000 – 74000= 26000Equity to Asset Ratio = Equity / Assets= 26000/ 100000= 0.2629 / 50When a research analyst provides a __________ rating, it’s similar to a BUY rating. a) Out perform b) Accumulate c) Hold d) All of the above Explanation:Accumulate: Some analyst refer to this category as accumulate while others refer to this as Add. It typically refers to stocks that are likely to earn about 10% returns in the next one year or approximately equal to the index returns. Accumulate recommendation refers to stocks that may not have immediate visibility but has the potential to substantially outperform in the next 3-4 years. It is a stock that calls for patience in investing.Outperform means that the company will produce a better rate of return than similar companies, but the stock may not be the best performer in the index.A ‘hold’ is generally an experts suggestion or recommendation to not either sell or purchase securities.30 / 50If a company’s EV/EBITDA ratio is 4 and it has reported an EBITDA of Rs. 180 crores, with a net debt of Rs. 310 crores, what is the value of equity? a) Rs. 410 crores b) Rs. 490 crores c) Rs. 310 crores d) Rs. 180 crores Your answer is IncorrectYour answer is correctExplanation:It is given that EV/EBITDA = 4EBITDA is given as Rs. 180 croresTherefore EV / 180 crores = 4EV (Enterprise Value) = 180 x 4 = 720 croresEnterprise Value = Value of Equity + Value of Debt720 crores = Value of Equity + 310 croresValue of Equity = 720 – 310 = Rs. 410 crores31 / 50In discounted cash flow-based valuation, how does the increase in the risk-free rate affect the value of shares? a) An increase in the risk-free rate would lead to a decrease in the fair value of shares. b) An increase in the risk-free rate would result in a higher fair value for shares. c) The risk-free rate would not affect share prices. Your answer is IncorrectYour answer is correctExplanation:In discounted cash flow-based valuation, alterations in the risk-free rate of return affect bond prices but do not impact share prices.32 / 50Which of these segments are essential to incorporate in a company research report? a) Shareholding pattern of the company and its financial indicators b) Comprehensive industry overview and peer group analysis c) Both of the above d) None of the above Your answer is IncorrectYour answer is correctExplanation:The essential components of a research report comprise: Company business description, peer group analysis, shareholding pattern, key strengths, key concerns, industry overview, company fundamentals, vital financial indicators, and financial statements.33 / 50The reduction of a country’s fiscal deficit can be achieved by: A. Decreasing public expenditure B. Disposing of assets through disinvestment C. Augmenting tax collections a) Only A b) Only B c) Only A & C d) All of the Above Your answer is IncorrectYour answer is correctExplanation:Fiscal deficit refers to the planned excess of a government’s expenditure over its revenues within a specific year.Strategies to Decrease Government Deficit:Prioritize tax-based revenues, implementing measures to curb tax evasion effectively.Opt for disinvestment in underutilized assets.Reduce government subsidies to mitigate the deficit.Avoid unplanned expenditures whenever possible.Secure funds through borrowing from domestic sources.Explore borrowing options from external sources.Broaden the tax base to aid in reducing the government deficit.34 / 50In the Porter’s Five Forces model, ________ is regarded as a lateral influence. a) Supplier Bargaining Power b) Customer Bargaining Power c) Threat of New Entrants d) All of the Above Your answer is IncorrectYour answer is correctExplanation:Michael Porter’s Industry Analysis Model, known as the Five Forces Model, evaluates industries based on five key forces categorized into two vertical and three horizontal elements.Horizontal Forces:Threat of SubstitutesThreat of New EntrantsThreat of Established RivalsVertical Forces:Bargaining Power of SuppliersBargaining Power of Customers35 / 50One of the objectives that a research report does not aim to achieve is __________. a) Offering market perspective b) Providing concise company analysis c) Presenting investment opportunities d) All of the Above Your answer is IncorrectYour answer is correctExplanation:A comprehensive research report is expected to offer an in-depth company analysis rather than a brief overview. It should encompass intricate details such as the company’s business model, competitive advantages, opportunities, threats, management competency, and vision, among other essential factors.36 / 50Which of these elements is incorporated in an Income Statement? a) Depreciation and Amortisation b) Long-term debt c) Accounts receivable d) Current assets and Current liabilities Your answer is IncorrectYour answer is correctExplanation:The Income Statement, also known as the Profit and Loss Statement, encompasses all types of expenses incurred by a company. Depreciation and amortisation are considered company expenses.Depreciation signifies the gradual and permanent reduction in the value of assets due to aging, use, and obsolescence, while amortisation refers to the gradual write-off of intangible assets over their lifespan.On the other hand, Accounts Receivable, Long-term Debt, Current Assets, and Current Liabilities are components featured in the company’s Balance Sheet.37 / 50Typically, during economic expansions, the unemployment rate ________. a) Rises b) Falls c) remains constant Your answer is IncorrectYour answer is correctExplanation:The unemployment rate represents the percentage of the eligible and willing-to-work population without jobs in a country.In economic slowdowns, the unemployment rate increases, while during expansion phases, it decreases due to the creation of more jobs with the rise in production.38 / 50Which of the following details could be classified as insider information? a) The count of employees working remotely b) The Managing Director discussing an undisclosed acquisition proposal c) Details about the factory operating additional shifts, publicly announced but not yet published in the annual report Your answer is IncorrectYour answer is correctExplanation:Insider information pertains to significant non-public data that, upon disclosure, would promptly influence an investor’s decision to trade securities. The classification of information as insider depends on its source reliability, impact, and certainty.Among the options provided, the Managing Director discussing an undisclosed acquisition proposal is deemed insider information.39 / 50According to SEBI (Research Analyst) Regulations – Regulation 8, corporate entities aiming to register with SEBI as Research Analysts must maintain a minimum net worth of ________. a) 25 Lacs b) 50 Lacs c) 70 Lacs d) 1 Cr Your answer is IncorrectYour answer is correctExplanation:Regulation 8, regarding capital adequacy, states that individual or partnership research analysts must maintain net tangible assets of at least one lakh rupees. For research analysts operating as body corporate or limited liability partnership firms, a minimum net worth of twenty-five lakh rupees is required.40 / 50Exclusions from unfair trade practices include: a) Misleading information b) Publicly known information c) Wilful mis-statement d) Active concealment Your answer is IncorrectYour answer is correctExplanation:Publicly known information does not fall under unfair trade practices as per the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulation, 2003.41 / 50How are transactions settled in the Over-The-Counter (OTC) market? a) OTC transactions are settled directly between the parties b) OTC transactions are settled through Stock Exchanges c) OTC transactions are settled through clearing and settlement corporations d) None of the above Your answer is IncorrectYour answer is correctExplanation:OTC markets are the markets where trades are directly negotiated between two or more counterparties. There is no Stock Exchange or any other Exchange involved.In this type of market, the securities, commodities etc. are traded and settled among the counterparties directly.For eg – An Exporter selling US Dollars to a Bank.42 / 50Find the right statement about Bonus Shares. a) Bonus shares are also called as equity dividend b) Bonus issue can be made using all types of reserves including Revaluation Reserve c) Bonus shares results in appreciation of wealth of shareholders by the proportion of bonus shares issued d) All of the above Your answer is IncorrectYour answer is correctExplanation:A bonus issue, also known as equity dividend, is an alternative to cash dividend. Bonus shares are issued to the existing shareholders by the company without any consideration from them. The reserves lying in the books of the company (shareholders’ money) gets transferred to another head i.e. paid-up/subscribed capital (Except Capital reserve and revaluation reserve)The shareholders do not pay anything for these shares and there is no change in the value of their holdings in the pre and post-bonus stages. The issuance of bonus shares is more to influence the psychology of investors without any economic impact.43 / 50Determine the accurate statement regarding Quantitative Analysis. a) Quantitative analysis is more useful for long term investors than short term investors b) Quantitative analysis is useful only for technical analysis c) Quantitative analysis is useful only for traders but not for investors d) Quantitative analysis is useful for both traders and investors Your answer is IncorrectYour answer is correctExplanation:Quantitative analysis (QA) with reference to financial research is collecting, evaluating and assessing data to understand patterns in the past, present and future. Understanding more about quantitative analysis can help you better use and interpret data.In this, analysts try to understand the balance sheets and profit and loss statements of last few years, cash flows, assets and liabilities and so on. Quantitative approach can be used for both technical analysis and fundamental analysis and can be used by both traders and investors.44 / 50A seller is potentially obligated to sell an asset at a predetermined price. According to the _________. a) Call Buyer b) Call Writer c) Put Buyer d) Put Writer Explanation:In Options, the buyers have the RIGHT but NO OBLIGATIONS.The Writers (sellers) have the Obligations.The Call writer has the obligation to sell / give delivery of the asset to the Call Buyer at a predetermined price.The Put writer has the obligation to buy / take delivery of the asset from the Put Buyer at a predetermined price.Call gives the buyer the right, but not the obligation, to buy a given quantity of the underlying asset, at a given price on or before a given future date.Put gives the buyer the right, but not the obligation, to sell a given quantity of the underlying asset at a given price on or before a given date.45 / 50Find the statement that is the most accurate. a) Equity analyst have to pay attention on analysing broader economy and also the industry as they affect the performance of the companies analysed b) Equity analyst have to pay attention on industry and company factors but they need not consider broader economic conditions as its unpredictable c) Equity analyst have to pay special attention on understanding economic factors as market movements are largely driven by the economic factors d) Equity analyst should not pay attention on economic or industry analysis as those outside factors are not under the control of a company Your answer is IncorrectYour answer is correctExplanation:A complete study of company by an equity analyst will involve : Economic analysis 2. Industry analysis 3. Company analysisTherefore, while researching a company, the equity analyst need to focus his studies on the boarder economy, the industry to which the company belongs and the company.46 / 50SEBI (Research Analyst) Regulations 2014, who does not meet the qualifications to be registered as a research analyst? a) Post-Graduate b) Chartered Accountant c) Company Secretary d) Graduate Your answer is IncorrectYour answer is correctExplanation:As per rules, a professional qualification or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, financial services or markets is required to become a Research Analyst.Company Secretary is not a professional qualification in the fields mentioned above.A graduate in any discipline with an experience of at least five years in activities relating to financial products or markets or securities or fund or asset or portfolio management is also considered as valid qualification.47 / 50The EBITDA of a company is Rs. 275 crores and the EV/EBITDA ratio is 6x . The company has a net debt of Rs 520 crores. Calculate the value of its equity. a) Rs. 1130 crores b) Rs. 1275 crores c) Rs. 960 crores d) Rs. 895 crores Explanation:It is given that EV/EBITDA = 6EBITDA is given as Rs. 275 croresTherefore EV / 275 crores = 6EV (Enterprise Value) = 275 x 6 = 1650 croresEnterprise Value = Value of Equity + Value of Debt1650 crores = Value of Equity + 520 croresValue of Equity = 1650 – 520 = Rs. 1130 crores48 / 50Companies which have _______ will be ranked higher on ESG parameters. a) Less than 30% of his directors as independent directors b) No independent directors on their boards c) Over 50% of directors as independent directors d) Between 30% to 50% of directors as independent directors Your answer is IncorrectYour answer is correctExplanation:Environment, Social and Corporate governance (ESG)Independent directors are those who do not have any material relationship with the company, its management, or its major shareholders. They are considered independent in their judgment and decision-making, free from any conflicts of interest that may compromise their ability to act in the best interests of the company and its stakeholders.Independent directors are responsible for overseeing the company’s ESG performance. They play a critical role in guiding the company’s ESG strategy, monitoring progress, and reporting to stakeholders.Board composition: The directors of a company can include independent directors, nonexecutive directors (who are not part of management but not independent, either), and executive directors. For the sake of strong corporate governance standards, majority of the board should comprise of independent directors. Currently, SEBI regulation stipulates that independent directors should constitute at least 50% of the board if the chairman is an executive director.49 / 50If there is ________ in the economy, it’s most likely to aid the government in following expansionary fiscal policy. a) Hyper inflation b) High Fiscal Deficit c) Low Fiscal Deficit d) Stagflation Your answer is IncorrectYour answer is correctExplanation:When an economy is in a recession, the Government resorts to Expansionary fiscal policy by pumping in more money in the economy to boost demand.A low fiscal deficit means the Government has plenty of money to pump in the economy without restoring to huge borrowings etc.50 / 50What element offers crucial insights into the foundational strength of a trend in technical analysis? a) Market Capitalisation b) Volume of trading c) Historical Prices d) Enterprise Value Your answer is IncorrectYour answer is correctExplanation:According to technical analysis, there are three essential elements in understanding the price behaviour:1. The history of past prices provides indications of the underlying trend and its direction. 2. The volume of trading that accompanies price movements provides important inputs on the underlying strength of the trend. 3. The time span over which price and volume are observed factors in the impact of long term factors that influence prices over a period of time.Your score is 0% Restart quiz Exit
