Research Analysts Questions

What kind of information do Research Analysts need?

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Macro and micro economic factors

Industry-specific information
Company-specific information
All of the above

Feedback

Research Analysts must have the information of macro-micro economics, industry-specific information and
company-specific information for providing more accurate data in his/her research.

What are the focus areas for analysts to understand the economy?
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Changes in various macro-economic factors

Regulatory environment prevalent in the industry

Balance sheets and profit and loss statements
Business models and competition
Feedback

Macro economics factors like national income, inflation, interest rate and unemployment rate plays an
important role in the economy.

What responsibilities does a Research Analyst have?

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Research Analysts exclusively engage in data analysis.

Research Analysts solely participate in data collection.
Research Analysts assist clients in making well-informed decisions.

Research Analysts contribute to the financial planning of their clients

Feedback

Research Analysts need to communicate their research and findings to their clients for better outputs.

Analysis and decision-making, the two crucial parameters, are influenced by which of the
following factors?
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Ethical practices of management
Revenue and cost considerations
Operational efficiency
All of the above.

Feedback

Research analysts needs to understand cash flows, profit and loss statements, balance sheets and industry
studies. The job of a research analyst is to examine a company's balance sheet & grasp its many sections and
how they connect to the macro- and microeconomics of the nation as well as to competitors in the same market
area to develop genuine recommendations.

Sell-side analysts typically serve money managers such as mutual funds, hedge funds and
portfolio managers who buy and sell securities either for their personal investment accounts or
on behalf of their clients. Indicate whether this statement is true or false.
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False

True
Feedback

Sell side analysts are employed by companies that offers the services of investment banking, brokerage and
advisory services to their clients . Sell side analysts accept assignments to conduct research on a certain
company and provide recommendations about buying, holding or selling.

Which of the following attributes are sought in an effective research analyst?

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Aptitude for numbers and interpretation

Clear understanding of financial concepts
Capability to read and comprehend financial statements
All of the above.

Feedback

Research analysts should be good with Analytical Skill, Financial Concept understanding, Numerical
Proficiency, Ability to forecast, Quick decision making for making a good research report.

What do Research Analysts need to understand about industries?

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Analyzing consumer spending on luxury goods

Regulatory environment prevalent in the industry
Business models and competition
Both B & C

Feedback

Research analysts need to know about the rules and regulations along with business model and competitions
that affect the industry they're studying. This is crucial because changes in regulations can strongly influence
how companies operate and compete.

What are the two dimensions in which companies are studied by analysts?
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Qualitatively and Quantitatively

Regulatory environment prevalent in the industry

Business models and competition
Changes in various macro-economic factors
Feedback

Analysis and decision making by analyst is a process of both quantitative factors and qualitative factors.

What does qualitative understanding of companies involve?

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Understanding the balance sheets and profit and loss statements

Understanding the regulatory environment prevalent in the industry
Understanding changes in various macro-economic factors
Understanding why a particular business is better when compared to its peers

Feedback

Qualitative elements impacting operational efficiency includes work ethics, company plans, competitiveness
and operational efficiency.

What does quantitative understanding of companies involve?

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Understanding changes in various macro-economic factors

Understanding the regulatory environment prevalent in the industry
Understanding the balance sheets and profit and loss statements

Understanding why a particular business is better when compared to its peers

Feedback

Quantitative understanding of companies means looking at their financial statements like balance sheets and
profit and loss statements. Analyzing these numbers helps us understand how well the company is doing
financially.

What did John Maynard Keynes believe about governments and economic performance?
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Governments can change economic performance by adjusting inflation rates

Governments can change economic performance by adjusting tax rates and government spending
Governments cannot change economic performance
Governments can change economic performance by adjusting interest rates

Correct answer
Governments can change economic performance by adjusting tax rates and government spending
Feedback

John Maynard Keynes believed that governments could improve or control economic performance by
adjusting how much money they spend and the taxes they collect.

What is the importance of personal communication with management?

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To substitute direct interaction with companies and clients

To acquire a lot of information
To get a better insight into the vision of the company

To influence the market prices positively

Feedback

Personal communication with management is important because it helps us understand the company's vision
and future plans better. It's like having a direct conversation with the leaders to get insights into where the
company is headed

Why should analysts cross verify the claims of the management?

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To acquire a lot of information

To ensure the accuracy of the recommendations

To get a better insight into the vision of the company

To substitute direct interaction with companies and clients
Feedback

Analysts should check the information provided by the management to make sure it's accurate. This helps
ensure that their recommendations are reliable and trustworthy.

What should analysts do before meeting a company's management?

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Thoroughly learn about the company’s products, industry, and competitors

Read previous year’s annual reports
Understand the direction of the company
All of the above

Feedback

Before meeting a company's management, analysts should do these things: learn about the company, its
products, industry and competitors, read previous annual reports and understand the direction the company is
heading.

What should analysts base their analysis on?

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Factual information

Personal inclinations
Opinions of the management
Public domain information
Feedback

Analysts should base their analysis on real & verifiable information and not personal opinions, inclinations,
or management's opinions.

Who can provide meaningful insights into a company’s performance and plans?
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Top management

Competitors
Suppliers
All of the above

Correct answer
All of the above
Feedback
Insights into a company's performance and plans can come from its top management, competitors, and
suppliers.

What should analysts have in mind while communicating with clients?

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Stating unrealistic assumptions

Use complex jargon
Be optimistic in suggesting companies
Disclose any conflict of interest

Feedback

When talking to clients, analysts should tell them if there's any conflict of interest. This means being open
about any situations that might affect how they give advice.

What is expected from research analysts in terms of ethics?

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To interpret data/information with biasness

To follow all the rules and regulations specified by SEBI

To collect data/information from unreliable sources

To make use of technology without consent
Feedback

Research analysts should follow the rules and regulations set by SEBI (or other relevant regulatory bodies).
This is expected for ethical conduct.

What skills are required for a research analyst?

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Quantitative skills only

Qualitative skills only
Both quantitative and qualitative skills

None of the above

Feedback

Research analysts need both quantitative skills (working with numbers and data) and qualitative skills
(assessing non-numeric factors) to do their job effectively.

What is the importance of having good Excel skills for a research analyst?
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To analyze financial factors

To identify trends
To find relevant information
All of the above

Feedback

Good Excel skills are important for research analysts because they use Excel to analyze financial factors,
identify trends, and find relevant information.

What is one quality that a research analyst must possess?

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Ability to understand business models

Ability to ask pertinent questions
Attention to details
All of the above

Feedback

Research analysts should be good with understanding business models to predict the direction of the company.
Asking relevant questions and checking for the correct data for more accurate data gathering is an essential
part for a good research report.

In his study report on the automotive industry, Mr.Shyam offers his opinions on the field as well
as the best securities to purchase, hold and sell which is being provided for internal consumption
by the organization's staff. Determine the kind of analyst.
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Independent Analyst
Buy Side Analyst

Sell Side Analyst

None of the above
Feedback

Buy side analysts work for money managers such as pension funds, hedge funds, mutual funds and portfolio
managers. Buy side analysts work for their internal consumption of the firm.

Which is not an essential quality for a Research Analyst?

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Preparing research reports based on personal opinion

Ask relevant questions

Verbal and written communication skills
Good with numbers and excel
Feedback

Research analysts needs to be good with numbers, excel, communication and to be curious about asking more
questions but personal opinions and emotional decisions must be avoided by the analyst.

Research Analyst should seek information from management which is not available in the public
domain?
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False

True
Feedback

Researchers should not try to attempt to obtain important data that isn't in the public domain and also
management should not share any data that is not publicly there.

Treasury Bills issued by the________

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Banks
Government

Insurance Companies
All of the above
Feedback

Treasury Bills are issued by the government as short-term instruments to raise funds.

A close-ended mutual fund scheme allows investors to purchase units from the fund and
subsequently sell those units back to the fund at any time.
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False

True
Feedback

Close-ended mutual fund schemes have a fixed maturity and usually don't allow investors to buy or sell units
directly to the fund after the initial offer period. Instead, units are traded on secondary markets among
investors.

When a large number of shares are offered to a specific set of individuals, it is known as
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Equity Shares
Private Equity
None of the Above
Private Placement

Feedback

Private Placement refers to the sale of securities directly to a select group of investors rather than through a
public offering.

The major uses of indices are_______

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The performance of the economy is indicated by the index

Indices indicate real-time market sentiments
Indices act as an underlying for the Index
All of the above.

Feedback

All of the above are the uses of indices.

While raising capital, If capital is raised from investors outside the country is called
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Offshore offering

Onshore offering
Feedback
Offshore offering refers to raising capital from investors located outside the country where the issuing entity
operates.

What is the process of converting securities held in physical form into electronic form?
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Dematerialization

Book Keeping
Rematerialization
None of the Above
Feedback

Dematerialization is the process of converting physical securities, such as share certificates or bonds, into
electronic or digital form

When a trader buys an asset at a lower price in one market and sells it at a higher price in another
market to exploit the price difference, it is known as:
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Arbitrage

Hedging
Trading
Speculation
Feedback

Arbitrage refers to the practice of buying an asset or security at a lower price in one market and
simultaneously selling it at a higher price in another market to profit from the difference in prices

A pledge is an act of taking a loan against securities by the investor. Then the entity that is giving
the loan against the securities is called as
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Pledgee

Pledgor
Feedback

When an investor offers securities as collateral to secure a loan, the party providing the loan against those
securities is known as the "pledgee.”
An agreement between two parties to exchange future cash flows based on a predetermined
formula is known as:
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Options

Contracts
Swaps
None of the Above

Correct answer
Swaps
Feedback

Swaps are financial agreements between two parties to exchange future cash flows according to a
predetermined formula. These agreements involve the exchange of financial instruments or cash flows, such as
interest rates, currencies, or other variables, typically over a specified period

Which option 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?
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Call Option
Put Option

Forward Contract
Future Contract
Feedback

A put option is a financial contract that grants the buyer the right, but not the obligation, to sell a specified
quantity of the underlying asset at a predetermined price (also known as the strike price) on or before the
expiration date of the option.

Debt instruments issued by institutions against financial assets such as home loans, auto loans,
rent receivable, credit card receivables, etc. known as
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Mortgage Backed Securities

Currency-linked Debentures
Commodity Linked Debentures
Equity Linked Debentures
Feedback
Mortgage-backed Securities (MBS) are debt instruments issued by institutions. They're backed by assets like
home loans, auto loans, or credit card receivables. Investors receive payments based on the interest and
principal from the underlying loans.

What is an entity established or incorporated outside India that proposes to make investments in
India?
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Insurance Companies
Domestic Portfolio Investors
Mutual Funds
Foreign Portfolio Investor

Feedback

A Foreign Portfolio Investor (FPI) refers to an entity established or incorporated outside India that aims to
invest in the Indian financial markets.

Which of the following statements accurately describes Global Depositary Receipts (GDRs)?
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GDRs are depositary receipts that can be traded in various countries.

GDRs are not related to international trading.

GDRs are depositary receipts limited to trading in a single country.
GDRs are exclusively used by domestic investors.
Feedback

GDRs are certificates representing shares in a foreign company. They are issued by international banks
outside the company's home country.

Which agency acts as a legal counterparty to all trades and guarantees settlement of all
transactions on the Stock Exchanges?
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Clearing Corporation

Clearing banks
Merchant Bankers
All of the above
Feedback
A Clearing Corporation serves as a central counterparty in financial markets, guaranteeing the settlement of
all trades executed on stock exchanges. It ensures the smooth and efficient functioning of the market by acting
as an intermediary between buyers and sellers.

TOM Trades are settled on_________

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Same day
Previous day
T+2 day
T+1 day

Feedback

In TOM trades, settlement occurs on the day after the trading day (T+1), which means there is a one-day gap
between the trade and the settlement.

Treasury bills, commercial papers, and certificates of deposits are long-term debt instruments.
True or False?
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False

True
Feedback

Treasury bills, commercial papers, and certificates of deposits are short-term debt instruments issued for a
period not exceeding one year.

_______market facilitates buying and selling for the investors.

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Secondary

Neither Primary or Secondary

Primary & Secondary
Primary
Feedback

In the secondary market, investors trade previously issued securities such as stocks, bonds, or derivatives
among themselves, allowing buying and selling without the involvement of the original issuing company.
How are exchange-traded funds comparable to other investment choices available to investors?
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Index funds

Bonds
Active Mutual Funds
Debt Funds
Feedback

ETFs and index funds share similarities as they both aim to replicate the performance of a specific market
index. They are passively managed investment options that offer diversification to investors.

Net asset value is the per-unit market value of all the securities held by a mutual fund scheme.
True or False?
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True

False
Feedback

Mutual funds collect money from investors and then invest it on their behalf in the securities market. The net
asset value (NAV) represents the per-unit market value of all the securities held within a mutual fund scheme.

What statements accurately describe Swap contracts?

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The notional amount, on which interest is calculated, is mutually agreed upon by the counterparties.
Involves an agreement between two parties to exchange future cash flows based on a predetermined
formula: one pays a fixed rate and receives a floating rate.
Exchange of interest rates on the agreed notional amount occurs at settlement dates (e.g., quarterly)
between the parties.
All of the above statements are correct.

Feedback

All the options accurately describe the characteristics of a swap.

In the right issue shares are offered to existing shareholders at a price____ current market price.
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Equal
Below

Any of the option

Above
Feedback

In a rights issue, shares are typically offered to existing shareholders at a price that is below the current
market price. This is done to incentivize current shareholders to participate in the issuance by offering them
the opportunity to buy additional shares at a discounted rate compared to the prevailing market price.

How are exchange-traded funds comparable to other investment choices available to investors?
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Index funds

Bonds
Active Mutual Funds
Debt Funds
Feedback

ETFs and index funds share similarities as they both aim to replicate the performance of a specific market
index. They are passively managed investment options that offer diversification to investors.

Depository Receipts are another form of financial instrument that represents______ of a local
company and is traded on a stock exchange_____ of its home country.
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Bonds, Inside
Convertible, Inside
Debenture, Outside
Shares, Outside

Feedback

Depository Receipts represent shares of a foreign company and are traded on a stock exchange outside the
country of its origin. They allow investors to hold shares of foreign companies in the form of certificates
traded on their local stock exchanges, making it easier to invest in companies from other countries.

Which of the following statements is false?

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Forwards are agreements to sell an asset at a future date

Forwards have no default risk while futures face the risk of counterparties defaulting
Futures are Exchange-traded contracts
Forwards are over-the-counter contracts
Feedback

A forward contract is a private agreement between a buyer and a seller to exchange an asset at an agreed
price, quantity, and time. They're known as OTC agreements without involvement from clearing houses.
Forwards involve selling an asset in the future, while futures have no default risk, unlike forwards which carry
counterparty default risk in the absence of a clearing house.

Which mutual fund scheme does not have any fixed maturity and can be bought and sold at any
time?
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Open-ended

Close-ended
Interval
None of the above
Feedback

The type of mutual fund scheme that does not have a fixed maturity and can be bought or sold at any time is
known as an "Open-Ended Mutual Fund." These funds do not have a specific maturity date, and investors can
enter or exit them at their convenience, as they continuously issue and redeem units based on investor demand.

Bonds issued ______ India and denominated in ______ are known as Masala bonds.
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Outside; USD
Inside; INR
Inside; USD
Outside; INR

Feedback

Masala bonds are issued by Indian entities outside of India but are in Indian Rupees (INR). They allow Indian
issuers to raise funds internationally while being denominated in their home currency.

Securities market provides a platform to mutually satisfy goals of_____and______

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Borrowers, Seekers of funds

Government, Issuers
Issuers, Investors
Liquidity, Raising capital X
Feedback

The securities market serves both issuers and investors by offering a platform. It allows investors to select
from various available instruments and enables issuers to raise capital without being restricted to specific
customers or locking them in.

Depository receipts have the underlying of the shares of the issuer company. True or False?
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True

False
Feedback

Depository receipts are backed by a specific quantity of underlying company shares. Shareholders who offer
their shares at an agreed price for conversion into depository receipts are known as sponsors of the issue.

The payment of interest and repayment of principal on FCCBs is in foreign currency.

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True

False
Feedback

FCCBs involve payments of interest and repayment of principal in a foreign currency, which is a key
characteristic of these bonds.

As compared to non-convertible bonds, the yield on the convertible bond is_______

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Relatively Higher
Relatively Lower

Feedback

Convertible bonds usually have a lower yield compared to non-convertible bonds because they offer investors
the option to convert the bonds into equity shares. Investors accept a lower yield in exchange for potential
gains from converting the bond into stocks later on.
What features does convertible debenture have?
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Debt, Price of the equity X

Income, Repayment
Debt, Confirmed Interest payment
Debt, Equity

Feedback

Convertible debentures possess a hybrid nature, combining characteristics of both debt and equity. They
function initially as debt instruments, providing regular interest payments to investors. However, they also
grant the option to convert these debentures into equity shares of the issuing company at a predetermined
price during a specified period

As per SCRA, the term securities include which of the following?

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Government Securities
Derivatives
Shares, scrips, or bonds

All of the above

Correct answer
All of the above
Feedback

As per SCRA, the term securities include Government Securities, Derivatives, Shares, Bonds, Certificates,
Scrips, Debentures etc.

Along with SEBI and other regulators under the Companies Act, RBI also regulates the Equity
Shares Market. State whether True or False.
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True
False

Feedback

The statement is false. The Reserve Bank of India (RBI) primarily regulates and supervises banks and
financial institutions in India.
A bond with a face value Rs. 1000 has a coupon rate of 9%. The excepted rate of return is 13%.
The value for this bond will be ______
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Equals to face value

Higher than face value
Lower than face value

None of them
Feedback

The value of the bond will be lower than face value because the expected rate of return (13%) is higher than
the coupon rate (9%), making the bond less attractive in the market, and thus, its value decreases.

What is true about investing in equity?

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It involves a blend of art and science, requiring both qualitative and quantitative analysis.

Equity investing requires identifying and exploiting inefficiencies and is amenable to mathematical
formulation.
Equity investing is solely based on luck and speculation.
The success of equity investments is independent of the behavioral and cognitive limitations of
individuals.
Feedback

The correct answer (b) is justified as equity investing involves a nuanced approach, blending qualitative
assessments, like market trends and investor sentiment (art), with quantitative analysis, such as financial
metrics and data-driven evaluations (science).

Purchasing a long-dated high coupon bond is a good safeguard against a decline in which of the
following?
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Deflation
Currency depreciation
None of the above
Interest rates

Feedback

Certainly! When you purchase a long-dated high coupon bond, you are locking in a fixed interest rate for an
extended period. This fixed interest rate becomes advantageous if broader market interest rates decline. In a
scenario of falling interest rates, new bonds issued in the market offer lower coupon rates. However, your
existing bond continues to provide higher fixed coupon payments, making it a more attractive investment.
Therefore, holding a long-dated high coupon bond serves as a safeguard against the negative impact of
declining interest rates on fixed-income investments.

When the market price of a stock exceeds its intrinsic value, it can be described as:
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Undervalued
Overvalued

Fairly valued
Price taker
Feedback

If the market price of a stock is higher than its intrinsic value, it suggests that the stock is overvalued, as
investors are paying more than the fundamental worth of the company's assets and earnings.

Which financial instrument provides a fixed income stream over a specified period?
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Equity shares
Corporate bonds

Derivatives
Cryptocurrencies
Feedback

Corporate bonds provide a fixed income stream over a specified period because they represent debt issued by
companies. Investors who purchase these bonds receive regular interest payments, and upon maturity, they
are repaid the principal amount, offering a predictable and stable income source over the bond's term.

Under which category of bonds do housing loans, auto loans, and consumer loans fall?
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Callable bonds
Amortization bonds

Zero coupon bonds

Floating rate bonds
Feedback

Housing loans, auto loans, and consumer loans are examples of amortization bonds, where the principal
amount is repaid gradually over the loan term.
Given a net profit of Rs. 21crores, a share price of Rs. 802.5, and 25,00,000 outstanding shares,
what is the P/E ratio?
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9.55

5.25
10.75
20.50
Feedback

The P/E ratio, calculated as the market price per share divided by earnings per share, is approximately Rs.
802.5 / (Rs. 21cr / 0.25cr) ≈ 9.55.

A company with a P/S ratio of 0.9 has annual sales of Rs. 1 billion. What is its market
capitalization?
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Rs. 900 million

Rs. 1.1 billion

Rs. 800 million
Rs. 950 million
Feedback

Market capitalization is calculated by multiplying the P/S ratio by annual sales. Here, Market Cap = 0.9 * Rs.
1 billion = Rs. 900 million.

Bond prices rises more than its fall with respect to interest rate movement, this is explained by
__________
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YTM
Covexity

Duration
Modified duration
Feedback

Convexity explains why bond prices rise more than they fall in response to changes in interest rates. While
duration measures the linear price sensitivity to interest rate changes, convexity accounts for the curvature in
the bond price-yield relationship. As interest rates decrease, convexity causes bond prices to increase at an
accelerating rate, providing additional returns beyond what is predicted by duration alone. Conversely, when
interest rates rise, the decline in bond prices is less severe than expected due to convexity.

Purchasing a long-dated high coupon bond is a good safeguard against a decline in which of the
following?
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Currency depreciation
None of them
Interest rates

Deflation
Feedback

Certainly! When you purchase a long-dated high coupon bond, you are locking in a fixed interest rate for an
extended period. This fixed interest rate becomes advantageous if broader market interest rates decline. In a
scenario of falling interest rates, new bonds issued in the market offer lower coupon rates. However, your
existing bond continues to provide higher fixed coupon payments, making it a more attractive investment.
Therefore, holding a long-dated high coupon bond serves as a safeguard against the negative impact of
declining interest rates on fixed-income investments.

Inverse floaters bonds have coupons rate which moves along with the benchmark rates. True or
False?
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True

False

Correct answer
False
Feedback

Inverse floaters are a type of bond with a coupon rate that moves in the opposite direction to changes in
benchmark interest rates. As benchmark rates rise, the coupon rate on inverse floaters falls, and vice versa.
This unique characteristic distinguishes them from regular floaters, where the coupon rate moves in the same
direction as benchmark rates.

A bond with a coupon rate of 6.5% is trading at Rs. 110. Calculate the current yield.
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5.91%
6.36%
7.27%
5.95%
Feedback

The current yield is calculated by dividing the annual interest payment (coupon) by the current market price of
the bond. In this case, Current Yield = (6.5% * Rs. 1000) / Rs. 110 = 5.91%.

An investor purchased a stock for rs 50 and sold it after one year for rs 62, receiving a dividend
of rs 2 during the holding period. Calculate the holding period return.
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30%
22%
28%

20%
Feedback

The holding period return is computed by considering both capital gain (selling price - purchase price) and
any dividends received. In this case, Holding Period Return = [(62 - 50 + 2) / 50] * 100 = 28%.

Which bond provides inflation protection?

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Payment in kind
Inflation index

Principal protected note

Warrant
Feedback

Bonds linked to an inflation index, often called inflation-indexed bonds or TIPS (Treasury Inflation-Protected
Securities), provide protection against inflation. The principal and interest payments of these bonds are
adjusted based on changes in a specified inflation index, ensuring that investors are shielded from the erosion
of purchasing power caused by inflation.

What is the primary characteristic of Perpetual Bonds?

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Fixed Maturity Period

No Maturity Date

Redeemed at Premium
Convertible into Equity
Feedback

Perpetual Bonds do not have a maturity date and continue indefinitely.

What is the term for the return earned on a bond based on its purchase price, coupon payments,
and any capital gain or loss upon selling?
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Yield to Maturity

Current Yield
Holding Period Return
Duration Return

Correct answer
Holding Period Return
Feedback

Holding Period Return considers coupon payments, capital gain or loss, and the purchase price of a bond
during the holding period.

Calculate the Enterprise Value of Company XYZ with the given details:

Market Price per Share: Rs. 30

Total Outstanding Shares: 75,000

Total Debt: Rs. 4,50,000

Cash in Hand: Rs. 2,50,000

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Rs. 24,50,000

Rs. 16,50,000
Rs. 21,50,000
Rs. 19,50,000
Feedback

Market Capitalization=Market Price per Share×Total Outstanding Shares=30×75,000=22,50,000

Enterprise Value=Market Capitalization+Total Debt−Cash in

Hand=22,50,000+4,50,000−2,50,000=24,50,000
Therefore, the correct answer is Rs. 24,50,000.

Investors can ask for their money earlier than maturity in case of __________ if interest rates
rise.
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Warrant
None of the above
Callable bonds
Putable bonds

Feedback

Putable bonds give investors the option to demand early repayment if interest rates rise, providing them with
flexibility. Callable bonds allow issuers, not investors, to call back the bonds.

Bonds that do not pay interest during the entire term are called _______________.
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Callable
Putable
Zero coupon

Floating rate
Feedback

Zero coupon bonds do not make periodic interest payments. Instead, they are issued at a discount to their face
value and redeemed at face value at maturity, allowing investors to earn a return through capital
appreciation. Callable and putable bonds have options related to redemption, and floating rate bonds have
variable interest rates.

What type of bond typically features variable interest rates that adjust periodically according to
prevailing market rates?
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Floating rate

Zero coupon
Callable
Putable
Feedback
Floating rate bonds have interest rates that fluctuate in response to changes in market interest rates. Callable
and putable bonds involve options for early redemption, while zero coupon bonds do not pay periodic interest
throughout their term.

Global Depository Receipts (GDR) are issued in several countries together and listed on a stock
exchange outside the US. True or False?
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True

False
Feedback

Global Depository Receipts (GDRs) are indeed issued in multiple countries simultaneously and are listed on a
stock exchange outside the United States. GDRs allow companies to raise capital globally by issuing shares to
international investors and are traded on exchanges outside their home country.

Mr. B purchases MF units at NAV of Rs. 10. After 2 years, he redeems them at NAV of Rs. 14.
What is his closest compounded rate of return?
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18.32%

12.5%
40%
20%
Feedback

The compounded rate of return is calculated by [(Final NAV / Initial NAV)^(1/n) - 1] * 100, where n is the
holding period. In this case, [(14/10)^(1/2) - 1] * 100 = 18.32%. This represents the average annual growth
rate of Mr. B's investment over the 2-year period.

How does convexity enhance the understanding of a bond's price change?

1/1

It measures interest rate risk

It calculates the maturity period of a bond
It provides a measure of absolute bond price
It adjusts the predicted price change from duration to reflect curvature

Feedback

Convexity fine-tunes the predicted price change provided by duration by considering the curvature in the
price-yield relationship.
Which type of bond is likely to have higher convexity?
1/1

Short-term bonds
Long-term bonds

Bonds with higher coupon rates

Bonds with lower coupon rates
Feedback

Longer-term bonds typically have higher convexity, reflecting their increased sensitivity to interest rate
changes and the curvature in their price-yield relationship. Convexity is more closely tied to the bond's
maturity.

Speculation is _____________ calls made with leveraged funds, unlike investing money which
is a _________ disciplined activity for creating wealth.
1/1

Long term; Long term

Short Term; Long term

Long term; medium term

Long term; Short term
Feedback

Speculation, which involves making short-term calls with leveraged funds, is different from investing, which is
a long-term and disciplined activity for creating wealth over time.

Fundamental analysis encompasses which of the following?

1/1

All of the options

Industry Analysis
Company Analysis
Economic Analysis
Feedback

Fundamental analysis includes looking at the overall economy, the industry a company is in, and the specific
details of the company itself. So, the correct answer is "All of the options"
The duration during which price and volume are observed is a consideration in the influence of
long-term factors on prices over time. Indicate whether this statement is true or false.
0/1

True
False

Correct answer
True
Feedback

The statement is correct. Observing price and volume trends over time helps understand the influence of long-
term factors on prices.

In technical analysis, the influence of day-to-day price fluctuations is neutralized by which of the
following factors?
1/1

None of the options

Extending the time period of price charts
Incorporating liquidity parameters alongside prices
Employing Moving Averages

Feedback

Using Moving Averages in technical analysis helps smooth out day-to-day price fluctuations, making it easier
to see the overall trend. This neutralizes the influence of short-term volatility.

Which of the following statements accurately describes a limitation of the quantitative approach
to fundamental analysis?
1/1

The quantitative approach is not suitable for analyzing the economy.

Effectiveness of quantitative analysis in forecasting the future is constrained by changes in accounting
standards, business structures, and regulations.

Investing is an intuitive art with minimal opportunities for quantitative analysis.

None of the options
Feedback

The limitation of the quantitative approach in fundamental analysis is that changes in accounting standards,
business structures and regulations can affect its effectiveness in predicting the future.
There is news about the "ABC" auto company planning to enhance its production capacity for
electric vehicles in the country. A research analyst strongly advises purchasing the stock. What
approach has the research analyst employed in providing this recommendation?
0/1

Bottom up approach
Both top down and bottom up approach

Top down approach

Technical approach

Correct answer
Bottom up approach
Feedback

The analyst is using a "Bottom-up approach" by focusing on the specific details and plans of the "ABC" auto
company, rather than considering broader industry or economic trends.

What is the level called from where price tends to find some hold as it is going down.
1/1

Technical level
Support level

Resistance
Any of the option
Feedback

A "Support Level" is a price level where a security tends to find some buying interest, preventing further
decline. It's like a floor that supports the price from falling further.

Does the Efficient Market Hypothesis assert that stock prices cannot incorporate all relevant
information? True or False?
0/1

True

False

Correct answer
False
Feedback

The Efficient Market Hypothesis says that stock prices do incorporate all relevant information.

Line charts, bar charts, and candlestick charts assist chartists in identifying:
1/1

Triggers for buying or selling a stock

Trends
Reversals of trends
All of the options

Feedback

These charts help identify trends, reversals of trends, and triggers for buying or selling stocks. So, the correct
answer is "All of the options."

Upon receiving information about company "ABC" from his friend, Mr. Ankit chose to purchase
shares of the company. In contrast, Mr. Prakash, after learning the news, opted to conduct
thorough research on the company, analyzing its financials, reviewing annual reports, and
studying the performance of competitors of "ABC," before making an investment decision.

On the basis of the behaviour Ankit is _____________ and Prakash is ____________.

1/1

a hedger, an investor
an investor, a speculator
a speculator, an investor

a speculator, a hedger
Feedback

Mr. Ankit is a speculator because he made a quick decision based on information without thorough research.
Mr. Prakash is an investor because he took the time to analyze the company's details before deciding to invest.

Technical approach is to forecast the direction of prices through the study of patterns in historical
data, price and ____________.
1/1

Trend
Direction
Volume

Time Span
Feedback

In technical analysis, the study of patterns in historical data, price trends and trading volume helps forecast
the direction of prices. So, the correct answer is "volume."

Is it true or false that both the bottom-up approach and the top-down approach are components of
fundamental research?
1/1

True

False
Feedback

Both the bottom-up and top-down approaches are part of fundamental research. Bottom-up looks at specific
companies, while top-down starts with broader economic trends.

What is the objective of active investing?

0/1

To constantly evaluate every security in the investment portfolio.

To identify securities that are priced above their fair value.

To buy securities priced below their fair value.
To earn a rate of return above the broader asset class.

Correct answer
To earn a rate of return above the broader asset class.
Feedback

The objective of active investing is to outperform the broader market or asset class by actively managing the
portfolio. This involves making strategic decisions to select securities or assets that can generate a higher rate
of return than what is achieved by simply tracking the overall market.

What is the main strategy followed in passive investing?

1/1

Buying and selling individual securities based on analysis.

Investing in a broad set of securities that represent the asset class.

Constant evaluation of every security in the investment portfolio.

Identifying securities that are priced below their fair value.
Feedback
Passive investing involves a strategy of tracking a broad market index or asset class by investing in a
diversified portfolio of securities that mirrors the overall market. This approach aims to replicate the
performance of the chosen index rather than actively selecting individual securities.

Why is it important for a fundamental research analyst to conduct research on the economy,
industry and company?
1/1

To track actions taken by competitors

To visit the company's facilities
To collect insider information
To obtain thorough insights into the company's business and profitability

Feedback

These charts help identify trends, reversals of trends, and triggers for buying or selling stocks. So, the correct
answer is "All of the options."

What is the difference between insider information and mosaic analysis?

1/1

Insider information is reliable and certain, while mosaic analysis is based on public information
Insider information involves visiting the company's facilities, while mosaic analysis involves speaking to
industry experts
Insider information is material non-public information, while mosaic analysis involves collating
information from different sources

Insider information is obtained from annual reports, while mosaic analysis involves performing secondary
research
Feedback

Insider information is confidential and not public, while mosaic analysis involves collecting information from
different public sources to create a fuller picture.

When is an investment opportunity considered attractive in fundamental analysis?

1/1

When the market price is above the fair value

When the market price is equal to the fair value
When the market price is below the fair value

When the market price is irrelevant

Feedback
An investment opportunity is considered attractive in fundamental analysis when the market price is lower
than the fair value, indicating potential for growth.

What does fundamental analysis involve studying?

1/1

The company's marketing strategies

The company's competitors
The company's stock price
The company's financial position

Feedback

Fundamental analysis involves studying the financial position of a company, which includes looking at its
financial statements and metrics to understand its health and profitability.

Which aspect of fundamental analysis focuses on the company's management and governance?
1/1

Economic analysis
Company analysis

Market analysis
Industry analysis
Feedback

Company analysis in fundamental analysis focuses on evaluating the company's management and governance
practices.

What is a major limitation of applying a pure econometric approach in fundamental analysis?

0/1

Reading charts
Studying the relationship between price moves and volume
Availability of comparable information
Extrapolating future earnings

Correct answer
Availability of comparable information
Feedback

These charts help identify trends, reversals of trends, and triggers for buying or selling stocks. So, the correct
answer is "All of the options."
What makes past data less useful to be compared with present market conditions in fundamental
analysis?
1/1

Changes in accounting standards and business models

Quantitative and qualitative studies

Technical analysis
Regression of historical data
Feedback

Changes in accounting standards and business models make past data less useful for comparison in
fundamental analysis.

What should investment decisions be based on?

1/1

Listening to friends advice

Availability of comparable information

Random guessing
Flipping a coin
Feedback

Investment decisions should be based on analyzing the available information, not on random guessing, friends'
advice, or flipping a coin.

What can influence investment decisions?

1/1

Political events
Luck
Behavioural biases

It adjusts the predicted price change from duration to reflect curvature

Feedback

Investment decisions can be influenced by behavioral biases, which are psychological tendencies affecting
how people make decisions, often deviating from purely rational analysis.

Why do securities prices go away from their fair values?

1/1

Market manipulation
Fear and greed of market participants

Random fluctuations
Government intervention
Feedback

Securities prices can move away from their fair values because of the fear and greed of market participants.
Emotions and speculative behavior can cause overvaluation or undervaluation.

What is the thinking behind proponents of this philosophy?

0/1

Market participants are always rational

Fear and greed have no impact on securities prices

Investment decisions should be based on luck
Securities prices always reflect their fair values

Correct answer
Securities prices always reflect their fair values
Feedback

Proponents of this philosophy believe that securities prices always reflect their fair values.

What is not true about Wholesale Price Index (WPI) and Consumer Price Index (CPI)?
1/1

Wholesale Price Index measures the average price that households pay for a basket of different goods and
service.

Wholesale price index and consumer price index provides trend and important input to government and
central banker.
Wholesale price Index keeps track of the wholesale price of goods
Consumer Price Index measures the average price that households pay for a basket of different goods and
service.
Feedback

This statement is not true about the WPI and CPI as Wholesale Price Index measures the average price that
households pay for a basket of different goods and service.
____________ minimum percentage of the total deposits, which commercial banks have to hold
as cash reserves with the central bank.
1/1

Cash Reserve Ratio

Statutory Liquidity Ratio

Repo Rate
Balance sheets and profit and loss statements
Feedback

CRR is the rule that says banks must keep a minimum percentage of their total deposits as cash reserves with
the central bank, it ensures that banks hold a certain amount of cash to maintain financial stability.

Unemployment rates, Gross domestic product (GDP), overall price levels, inflation, savings rate,
investment rate etc. are highly affected by changes in the public policies. True or False?
1/1

False
True

Feedback

Changes in government policies can strongly affect things like unemployment rates, GDP, prices, inflation,
savings and investment rates.

According to ___________ ,the aggregate demand for goods and services is computed as the
sum of private consumption, government spending, gross capital formation and net exports.
1/1

Expenditure method

Income Method
Product Method
None of the option
Feedback

The expenditure method adds up what people, government, businesses, and other countries spend on goods
and services to calculate the total demand in an economy

Which of the following transactions are not captured in Capital Account?

1/1
Foreign Portfolio Inflows
Import of goods

Corporate Loan from abroad

Foreign Direct Investment
Feedback

Importing goods is not part of the capital account; it is recorded in the current account. The capital account
deals with financial transactions like investments and loans.

Which investment is known as Hot Money?

1/1

Foreign Direct Investors (FDI)

Foreign Portfolio Investors (FPI)

Feedback

Hot money refers to funds that move quickly between financial markets for short-term gains. Foreign Portfolio
Investors (FPI) are known as hot money because they can easily enter or exit markets based on short-term
opportunities, unlike Foreign Direct Investors (FDI), which make more stable and long-term investments.

The fiscal deficit is bridged by the government through market borrowings, both short term and
long term. True or False?
1/1

False
True

Feedback

The government covers its fiscal deficit by borrowing from the market, using both short-term and long-term
methods.

What are the categories of working population for calculation of national income?
1/1

Investors
Employees & Professionals
Business models and competition
All of the options

Feedback
ll of the options (Employees & Professionals, Investors, Entrepreneurs) are included in the working
population for calculating national income.

Microeconomics is the study of the behaviour of individuals and their decisions to buy. True or
false?
1/1

False
True

Feedback

Microeconomics studies how individuals make decisions, especially when it comes to buying goods and
services.

Price of tomatoes rise due to shortage of supply of it can be categorised as which type of
inflation?
1/1

Cost Push Inflation

Demand Pull Inflation

Feedback

When the price of tomatoes goes up because there's not enough supply to meet the demand, it's called Demand
Pull Inflation. This happens when people want more of a product than what's available, causing prices to rise.

What is true about Fiscal Deficit?

1/1

Budgeted excess of Government’s expenditure over its revenues in a specific year is known as fiscal
deficit.
Both of the options

Fiscal Deficit is generally defined as a percentage of GDP.

None of the options
Feedback

Fiscal Deficit is the excess of government expenditure over its revenues in a specific year and it is often
expressed as a percentage of the GDP.

Who has the responsibility of managing monetary policy?

1/1

Ministry of Finance (MOF)

RBI

None of the options

SEBI
Feedback

The Reserve Bank of India (RBI) has the responsibility for managing monetary policy.

Both low interest rates and low inflation contribute to an economy recovery from Inflation. True
or False?
1/1

True

False
Feedback

Both low interest rates and low inflation help an economy recover from inflation. Low interest rates make
borrowing cheaper, and low inflation keeps the value of money stable, promoting economic growth.

Balance of payment of a country puts together:

1/1

The current account transactions imports and exports of goods and services.
Surplus or deficit on both current and capital accounts are put together.
All of the options

The capital account captures all the capital flows like FDI, FII, loans and grants etc.
Feedback

The balance of payments combines the surplus or deficit on both the current account (transactions involving
goods and services) and the capital account (captures various capital flows like investments and loans).

According to __________ , National income is measured as an aggregated flow of goods and

services in the economy from the different sectors: agriculture, industry and services
1/1

Income Method
Factor cost method
Expenditure method
Product Method

Feedback

Using the Product Method, national income is measured as the total value of goods and services produced in
the economy, combining contributions from sectors like agriculture, industry, and services.

Higher National Income means higher the standard of living for a country. True or False?
1/1

False

True
Feedback

While higher national income is often linked to a better standard of living, it doesn't guarantee it. Other
factors like income distribution and cost of living also influence the standard of living.

National Savings constitute of three constituents, personal, corporate and _____________.

1/1

Central Bank Reserve

None of the options
Both of the options
Public Savings

Feedback

National Savings include personal, corporate, and public savings. Public savings specifically refer to the
savings made by the government.

GAAR formed to stop tax avoidance. True or False?

1/1

True

False
Feedback

GAAR (General Anti-Avoidance Rule) is created to prevent tax avoidance by deterring aggressive tax
planning strategies.
If a government’s spending exceeds its income, it is following _________
1/1

A contractionary fiscal policy

A neutral fiscal policy
None of the options
An expansionary fiscal policy

Feedback

If a government spends more than it earns, it is implementing an expansionary fiscal policy to boost economic
growth.

What is the use of Macroeconomics?

1/1

Macroeconomics helps us understand drivers of income, savings, investments and employment in an

economy.
All of the options

Macroeconomics helps us understand various aspects of international trade of goods and services.
Macroeconomics helps us understand the general state of the economy.
Feedback

Macroeconomics is used to understand international trade, factors influencing income, savings, investments,
employment, and to assess the overall state of the economy.

Microeconomics is centered on analyzing elements that influence the combined supply and
demand within an economy, encompassing factors like unemployment rates, gross domestic
product (GDP), general price levels, inflation, savings rate, investment rate, and more. Indicate
whether this statement is true or false.
1/1

False

True
Feedback

Microeconomics looks at how individuals and businesses make decisions, not at overall economic factors like
unemployment rates or GDP.
Two major influencers of the public policies in an economy are __________ &
_______________.
1/1

State Bank of India; National Stock Exchange

Government; Central Bank

Central Bank; Stock Exchanges

Stock Exchanges; Government
Feedback

In an economy, the major influencers of public policies are the government and the central bank.

The national income of an economy can be assessed using which of the following approaches?
1/1

All of the options

Product Method
Expenditure method
Income Method
Feedback

The national income of an economy can be calculated using three approaches: Product Method, Income
Method, and Expenditure Method.

The government covers the fiscal deficit by resorting to market borrowings, encompassing both
short-term and long-term instruments. Indicate whether this statement is true or false.
1/1

False
True

Feedback

The government addresses the fiscal deficit by engaging in market borrowings, which include both short-term
and long-term instruments.

What is the main philosophy behind Microeconomics?

1/1

Focuses on individual and firm behavior

Analyzes overall economic trends
Examines government policies
Studies international trade dynamics
Feedback

Microeconomics is concerned with the behavior of individuals and firms in making decisions regarding the
allocation of resources.

What does the term "Fiscal Policy" refer to?

1/1

Government measures related to taxes and spending

Monetary measures by the central bank

Policies regulating the stock market
Policies related to international trade
Feedback

Fiscal policy involves the use of government spending and taxation to influence the economy.

What does the term "Inflation" represent in an economy?

1/1

Stability in price levels

Decrease in general price levels
No change in price levels
Increase in general price levels

Feedback

Inflation is the general increase in the price levels of goods and services, leading to a decrease in the
purchasing power of money.

What does a high Current Account Deficit (CAD) indicate about an economy?
1/1

Strong credit worthiness

Weakness in trade competitiveness

Economic stability
Low government borrowing
Feedback
A high CAD suggests that a nation is importing more than it is exporting, indicating a trade imbalance.

The government covers the fiscal deficit by resorting to market borrowings, encompassing both
short-term and long-term instruments. Indicate whether this statement is true or false.
0/1

Regulating stock markets

Controlling fiscal policies

Managing price stability
Promoting cultural exchange

Correct answer
Managing price stability
Feedback

Monetary policies aim to manage price stability, money supply, and interest rates to promote economic
growth.

How does Contractionary Monetary Policy impact the economy?

0/1

Increases money supply

Boosts economic growth

Reduces interest rates
Cools down the heated economy

Correct answer
Cools down the heated economy
Feedback

Contractionary Monetary Policy aims to reduce the money supply and increase interest rates to control
inflation and cool down an overheated economy.

What tool does the central bank use to lend money to commercial banks?
0/1

Product Method
Cash Reserve Ratio (CRR)
Reverse repo rate

Repo rate
Correct answer
Repo rate
Feedback

Repo rate is the rate at which the central bank lends money to commercial banks.

What is the impact of continuous deficit on the current account of a country?

1/1

Boosts market confidence

Increases foreign currency reserves
Strengthens the currency
Causes devaluation

Feedback

Continuous deficit on the current account can lead to devaluation of the country's currency.

How is the exchange rate defined?

1/1

The value of one currency with respect to others

The ratio of imports to exports

The total trade of a country
The balance of payment number
Feedback

Exchange rate refers to the value of one unit of a currency with respect to other currency/currencies.

What does Globalization allow individuals and firms to do?

1/1

Avoid optimizing resource output

Produce only in their home country
Restrict resource flow
Produce and sell anywhere in the world

What is a characteristic of Secular trends in economic analysis?

1/1
Driven by changes in technology, culture & demographic change

Temporary trends
Short-term fluctuations
Highly predictable patterns
Feedback

Secular trends are long-term changes in the economy driven by factors like technology, culture, and
demographics.

What do Seasonal trends in economic analysis refer to?

0/1

Temporary trends affecting the quantity of goods and services

Long-term changes in the economy

Highly predictable patterns in production and consumption
Short-term fluctuations in commodity prices

Correct answer
Highly predictable patterns in production and consumption
Feedback

Seasonal trends are predictable fluctuations in the quantity of goods and services produced or consumed.

What does the term "Demand Pull Inflation" refer to?

1/1

No change in prices
Rise in prices due to excess demand

Fall in prices due to decreased demand

Rise in prices due to increased input costs
Feedback

Demand Pull Inflation occurs when prices increase because demand exceeds the available supply.

How is the Consumer Price Index (CPI) different from the Wholesale Price Index (WPI)?
1/1

CPI is used for international trade, WPI is used for domestic trade
CPI measures wholesale prices, WPI measures consumer prices
CPI measures retail price levels, WPI measures wholesale price levels
CPI and WPI are interchangeable terms
Feedback

CPI reflects changes in retail prices, while WPI reflects changes in wholesale prices.

What does a high interest rate environment impact in the economy?

1/1

Reduces unemployment rates

Increases consumer spending
Boosts investments and economic growth
Slows down overall economic activity

Feedback

A high-interest rate environment can discourage borrowing and spending, leading to a slowdown in economic
activity.

In the ___________, national income is measured as the aggregate income of individuals in the
economy.
1/1

Expenditure method
Factor cost method
Product Method
Income Method

Feedback

The Income Method measures national income by adding up the total earnings of individuals in the economy,
including wages, profits, rent, and taxe

Fast-growing market & low market share segment in BCG is:

1/1

Dogs
Cash Cows
Question Marks

Stars
Feedback
Question Marks represent business segments in a fast-growing market but with low market share. These
segments require strategic investments to increase market share and potentially become cash cows.

In the BCG matrix, which segment is characterised by a mature market and high market share?
0/1

Dogs
Stars

Question Marks
Cash Cows

Correct answer
Cash Cows
Feedback

Cash Cows are business segments in mature markets with high market share. They generate steady cash flows
but have low growth prospects.

In the BCG matrix, which segment represents high-growth markets with a significant market
share?
0/1

Stars
Dogs
Cash Cows
Question Marks

Correct answer
Stars
Feedback

Stars are characterised by high-growth markets and a substantial market share. They require investments but
can become future Cash Cows.

Which BCG matrix segment indicates slow growth, intense competition, and low cash
generation?
1/1

Cash Cows
Stars
Dogs
Question Marks
Feedback

Dogs represent business segments with slow growth, intense competition, and low cash generation. These
segments are not attractive for significant investments.

In Michael Porter’s Five Forces, Supplier power is high if _____________.

1/1

Switching cost for the customers is lown 4

Products/services have a threat of substitutes
The number of suppliers is limited and buyers are manyue

There are many suppliers to choose from.

Feedback

Supplier power is high when there are few suppliers, and they have more control over prices and terms. If
there are many buyers, it can amplify the supplier's power.

In the context of Michael Porter's Five Forces, the threat of new entrants is high if:
0/1

There is intense competition among existing firms.

Existing firms have strong brand loyalty.

Barriers to entry are low.
The industry has slow growth.

Correct answer
Barriers to entry are low.
Feedback

The threat of new entrants is high when barriers to entry are low, such as low capital requirements and easy
access to distribution channels.

In telecom industry Average Revenue Per Unit (ARPU) is calculated by:

1/1

Total Revenue divided by number of subscribers

Average number of calls made by a subscriber

Percentage of average revenue subscribers in a circle
Total Revenue multiplied by number of subscribers
Feedback

It is calculated by dividing the total revenue generated by the telecom service provider by the total number of
subscribers. This metric helps assess the financial performance and efficiency of the telecom company in
monetizing its subscriber base.

What factors contribute to a high bargaining power of suppliers in an industry, according to

Porter's Five Forces?
1/1

All of the following factors

Presence of many buyers

Limited availability of suppliers
Absence of substitute products
Feedback

A high bargaining power of suppliers is indicated when there are limited suppliers, many buyers, and a low
threat of substitute products, collectively making suppliers influential in negotiations.

There could be new modes of servicing customers, but _______ industry has low threat of
substitutes.
1/1

Computers
Telecom
Healthcare

All of the options

Feedback

The healthcare industry typically has a low threat of substitutes due to the unique nature of medical services
and treatments

In SCP Analysis, which financial metrics are considered under "performance"?

1/1

Industry Growth Rate

Return on Investment (ROI)
Net Profit Margin
Both ROI and Net Profit Margin
Feedback

SCP Analysis evaluates industry performance using financial metrics such as Return on Investment (ROI) and
Net Profit Margin. These indicators provide insights into the efficiency and profitability of businesses within
the industry.

Which industry faces increased competition due to the rise of virtual communication tools and
remote collaboration platforms?
0/1

Real estate
Manufacturing
Traditional print media

Healthcare

Correct answer
Real estate
Feedback

Virtual communication tools impact the real estate industry by influencing remote work trends, potentially
reducing the demand for physical office spaces.

Conduct analysis include____________

1/1

How many players exist in the industry

Relationship between suppliers and buyers
Dependency on government policy & technology.

Threat from substitutes

Feedback

Conduct analysis involves assessing the industry's reliance on government policies and technology. This
includes understanding how government regulations and technological advancements impact the industry's
conduct and operations.

An industry where rivalry is high, the end result will be _____ pricing power and ______
incomes for the industry participants.
1/1

High, high
High, low
Low, low
Low, high
Feedback

In an industry with high rivalry, competition tends to drive down prices, resulting in lower pricing power for
businesses. Additionally, intense competition often leads to reduced profit margins and, consequently, lower
incomes for industry

The Threat of Substitutes places High risk on

1/1

All of the options

Substitute product is cheaper than industry product

Substitute product quality is equal or superior to industry product quality
Consumer switching costs are low
Feedback

The Threat of Substitutes places high risk when substitute products are cheaper, offer equal or superior
quality, and consumer switching costs are low. All these factors contribute to the potential threat posed by
substitutes in the industry.

Potential rivals will not find it difficult to enter a market where:

0/1

Economies of scale are insignificant

Existing firms have the ability to retaliate strongly
Existing firms have long-term contracts with the biggest customers
Product differentiation is very strong

Correct answer
Economies of scale are insignificant
Feedback

When economies of scale are insignificant, potential rivals can easily enter the market without facing
significant cost disadvantages. This condition makes it easier for new entrants to compete on a relatively equal
footing, reducing the barriers to entry.

Which force is about switching cost for customers from one product/service to another is low or
nil and and substitutes offer equal or better experience to customers
1/1
Bargaining power of suppliers
Threat of entry
Rivalry among competitors
Threat of substitution

Feedback

The threat of substitution is about the ease with which customers can switch to alternative products or
services. When switching costs are low or nil, and substitutes offer equal or better experiences, the threat of
substitution becomes high, impacting the industry's attractiveness.

Which of the following is considered as an political factor in PESTLE analysis?

1/1

All of the options

Bureaucracy
Tax policy
Freedom of press
Feedback

In PESTLE analysis, political factors encompass various aspects, including bureaucracy, tax policy, and
freedom of the press. All these elements contribute to shaping the political landscape that can impact
businesses and industries.

Television Rating Points (TRPs) are the most widely tracked indicator in electronic media.
1/1

False
True

Feedback

Television Rating Points (TRPs) are indeed a widely tracked indicator in electronic media. TRPs provide an
estimate of the number of viewers watching a particular program, helping gauge its popularity and
advertisers' interest.

What does Industry structure in Structure Conduct Performance (SCP) analysis refer to?
1/1

All of the options

Market size
Relationship among various players in industry
Industry growth rate
Feedback

Industry structure in SCP analysis encompasses factors such as market size, the relationship among various
players, and the industry growth rate.

Which of the following is a disadvantage of PESTLE?

0/1

It can enable an organisation to spot business opportunities and exploit them fully

It facilitates an understanding of the wider business environment

It can enable an organisation to anticipate future business threats and take action to avoid or minimise
their impact
To be effective this process needs to be undertaken on a regular basis

Correct answer
To be effective this process needs to be undertaken on a regular basis
Feedback

While PESTLE analysis is valuable for understanding the business environment, its effectiveness depends on
regular updates to adapt to the dynamic nature of external factors.

Which of the following factor influenced the profitability of export oriented IT companies?
1/1

EXIM policy
Occupancy levels
Currency levels

Aaverage revenue per user

Feedback

Currency levels play a crucial role in influencing the profitability of export-oriented IT companies, as changes
in exchange rates can impact the revenue and cost structure, affecting overall profitability.

What does Dog symbolise in BCG matrix?

1/1

Decline

Introduction
Growth
Maturity
Feedback

In the BCG matrix, the "Dog" represents a business or product that is in a declining market with low growth
potential and a low market share. These are products or business units with low prospects for future growth
and are considered to be in the decline stage of their life cycle.

Most important factor which has largest impact on banking industry is _____________.
1/1

Provisioning norms
NPA levels
Monetary policy

Tight/ lose regulatory reserves

Feedback

The monetary policy, set by the central bank, has a significant impact on the banking industry. It influences
interest rates, liquidity, and credit availability, thereby affecting the overall economic conditions and the
performance of banks.

When there are many sellers with products or services, that are standardised with little or no
differentiation, the bargaining powers of buyers are __________ regarding prices.
1/1

None
Very low
Medium
Very high

Feedback

In a situation where there are many sellers offering standardized products or services with little
differentiation, buyers have the upper hand in negotiating prices. The abundance of options gives buyers
significant bargaining power, leading to the likelihood of prices being driven down.

Policies relating to pollution control, waste disposal etc are issues related to which of the analysis
in PESTLE analysis?
2/2

Political
Environmental
Economic
Socio-culture
Feedback

In PESTLE analysis, the environmental factor encompasses policies and issues related to pollution control,
waste disposal, conservation of resources, and other ecological considerations. This factor helps businesses
understand the impact of environmental regulations on their operations and strategies.

In Michael Porter’s Five Forces, Buyer power is high if _____________.

1/1

They have little information

The buyer requires a high quality product for their own production
Differentiation is low

Switching cost of buyer is high

Feedback

In Michael Porter's Five Forces, buyer power is high when there is low differentiation among products or
services. When alternatives are similar, buyers can easily switch between suppliers, giving them higher
bargaining power.

The smartphone industry in a country comprises four major players and numerous smaller ones.
A survey indicates that approximately 25% of total sales come from smaller, local brands. The
top four companies reported revenues of Rs 15,000 crore, Rs 10,000 crore, Rs 12,000 crore, and
Rs 8,000 crore, respectively, for the year 2020. What is the closest fair estimate of the overall
size of the smartphone market in that country for the year 2020?
1/1

Rs 60,000 crore

Rs 75,000 crore
Rs 50,000 crore
Rs 70,000 crore
Feedback

To estimate the overall size of the smartphone market, we sum the revenues of the major players and adjust for
the percentage contributed by smaller brands. Therefore, Rs 15,000 crore + Rs 10,000 crore + Rs 12,000
crore + Rs 8,000 crore = Rs 45,000 crore, and adjusting for 25% from smaller brands, we get Rs 45,000
crore / (1 - 0.25) = Rs 60,000 crore.
In an industry where the threat of substitutes is low, the end result will be _______ pricing power
for the industry participants and ______ incomes.
1/1

Higher; lower
Lower; lower
Higher; higher

Lower; higher
Feedback

When there are limited substitutes, industry participants have more pricing power as consumers have fewer
alternatives. This can lead to higher incomes for the industry participants, especially if demand remains
strong and competition is limited.

Who can exert a lot of pressure and dictate prices, if there are a large number of sellers with
similar products/services?
1/1

Sellers
Consumers

Producers
None of the above
Feedback

If there are a large number of sellers with similar products/services and little differentiation, consumers have
more options and can exert pressure on prices. In such a scenario, sellers may find it challenging to
differentiate their offerings, giving consumers the power to influence and potentially dictate prices.

Which of the following is considered as an economic factor in PESTLE analysis?

0/1

Forex reserves
Monitory policies of the RBI

Country’s dependence on other countries in terms of important natural resources

All of the options

Correct answer
All of the options
Feedback
Economic factors in PESTLE analysis encompass a wide range of aspects, including Forex reserves, the
monetary policies of the RBI, and a country's dependence on other nations for important natural resources.
These factors collectively contribute to the economic landscape and can significantly impact businesses and
industries.

Which stage witnesses a surge in market demand due to widespread adoption?

1/1

Pioneering Stage
Reinvention and Revival
Declining Stage
Growth Stage

Feedback

The Growth Stage is characterised by a surge in market demand as the product or service gains widespread
adoption.

With the rise of eco-friendly and sustainable products gaining popularity in the Indian consumer
market, which stage of the industry life cycle do these products likely represent?
0/1

Reinvention and Revival

Growth Stage

Pioneering Stage
Matured Stage

Correct answer
Reinvention and Revival
Feedback

The rise of eco-friendly and sustainable products suggests a shift towards Reinvention and Revival in response
to changing consumer preferences as companies making changes in current operations and incubating these
products

With the increasing saturation of the smartphone market in India and many players struggling to
differentiate their products, which stage of the industry life cycle does the smartphone industry
currently face?
1/1

Declining Stage
Growth Stage
Matured Stage

Reinvention and Revival

Feedback

The smartphone industry's struggle to differentiate and the market saturation point to the Matured Stage in its
life cycle.

In the early days of the Indian quick commerce industry, players like Zepto, Swiggy, Instamart,
Blinkit faced uncertainties as they were introducing a new way of shopping. Which industry life
cycle stage does this represent?
1/1

Growth Stage
Reinvention and Revival
Pioneering Stage

Declining Stage
Feedback

The introduction of a new concept, like quick delivery by such companies is a new concept and is in the
nascent phase therefore Pioneered stage

In the context of the Indian telecommunication industry, where established players are facing
increased competition from emerging technologies like 5G and satellite internet services, what
stage of the industry life cycle might these telecom giants be encountering?
1/1

Reinvention and Revival

Saturation Stage
Declining Stage
Growth Stage
Feedback

The introduction of new technologies and the need for telecom giants to adapt and find new opportunities
suggest a phase of Reinvention and Revival in the industry life cycle.

The compliance officer is required to disclose information regarding shareholding structures,

investor complaints, and capital raised from investors when announcing outcomes on a:
1/1
Quarterly basis

Semi-annual basis
Monthly basis
Annual basis
Feedback

Regulations require sharing results, ownership structure, managing investor complaints, revealing how funds
from IPO/FPO are used, and reporting changes in management shares every quarter. These are essential
compliance tasks.

In a SWOT analysis, Strengths and Weaknesses are considered part of the external environment
of the company, while Opportunities and Threats are related to the internal business
environment.
1/1

True
False

Feedback

Strengths and Weaknesses are internal factors, focusing on what a company does well (Strengths) and areas
where it lacks (Weaknesses). Opportunities and Threats are external factors. Opportunities represent external
chances for growth, while Threats are external risks or challenges that could affect the business.

Currency Levels are critical for which type of companies?

1/1

Export-oriented IT companies
Both export-oriented IT companies and import-oriented oil companies

Import-oriented oil companies

Neither export-oriented IT companies nor import-oriented oil companies
Feedback

Currency levels are crucial for both export-oriented IT companies and import-oriented oil companies.
Fluctuations directly impact the competitiveness of IT exports and the cost of oil imports, affecting their
operations and competitiveness.

Is it essential for a good analyst to regularly monitor disclosures, commitments, and deliveries of
an organization to assess a company?
1/1
False
True

Feedback

Analyzing disclosures, commitments, and deliveries regularly is crucial for a good analyst to evaluate a
company's performance and prospects accurately.

What are the strengths of the Company?

1/1

Highly valuable intellectual properties

Strong execution capability and track record
High customer concentration
1 and 2 both

Feedback

The Company's strengths include valuable intellectual properties and a proven ability to execute plans
effectively.

Credit rating of the company is related to_________?

1/1

Company's creditworthiness

Company's stock performance

Company's profitability
Company's market share
Feedback

Credit rating is an evaluation conducted by credit rating agencies to assess the creditworthiness or the ability
of an entity (which could be a company, government, or individual) to meet its financial obligations.

What factors should an analyst examine to evaluate the corporate governance standards of a
company?
1/1

Remuneration of independent directors

Board composition
Auditor fees
All of the options
Feedback

An analyst should examine various aspects, including the remuneration of independent directors, board
composition (like the presence of independent directors and diversity), and auditor fees. These factors
contribute to understanding the governance practices and transparency within the company.

What is a fundamental aspect considered in Corporate Governance?

1/1

Integrity

Risk-taking
Innovation
Marketing strategies
Feedback

In Corporate Governance, integrity is a fundamental aspect that focuses on honesty, ethics, and transparency
in business operations and decisions, building stakeholder trust.

In fundamental research, what is the primary focus of company analysis?

1/1

Industry-specific factors
Government policies
Macro-economic factors
Company-specific factors

Feedback

Company analysis in fundamental research focuses on the unique aspects of a particular company, such as its
business model, competitive advantage, management competency, governance structure, and strategic vision.

What factor determines if a company has a competitive edge over its competitors?
0/1

Capability to exploit opportunities

Market capitalization
Share price performance
Financial Results

Correct answer
Capability to exploit opportunities
Feedback
A company's competitive advantage lies in its ability to capitalize on opportunities efficiently and effectively in
comparison to its competitors.

What is a unique parameter for evaluation in the retail sector?

1/1

Footfalls and same-store sales (SSS)

Average Revenue Per User (ARPU)

Average room tariffs
Net Interest Income (NII)
Feedback

Each sector has its unique parameters for evaluation. For the retail sector, footfalls and same-store sales
(SSS) are important parameters

What does pricing power refer to in a company's business strategy?

1/1

The flexibility to follow competitors' pricing

The ability to increase input costs
The capacity to reduce product prices
The capability to set prices independently

Feedback

Pricing power denotes a company's ability to autonomously determine and charge prices for its products,
unaffected by external factors or competition.

Which factor related to a particular company can affect its pricing power?
1/1

Leadership position in the industry

Economic indicators
Industry growth rate
Global market trends
Feedback

A company's natural leadership position within its industry can influence its pricing power by allowing it to
independently set prices.
Strong pricing power allows a company to pass on increased input costs to its customers. True or
False
1/1

True

False
Feedback

Companies with strong pricing power can pass on increased input costs to customers, thereby maintaining
profit margins.

Product differentiation is primarily depends on _____________.

1/1

Marketing claims
High sales strategy
Strong innovation and R&D

Low production costs

Feedback

Product differentiation is achieved through innovative features, requiring a robust R&D capability.

Sustainable competitive pricing is feasible even without a low-cost advantage.

0/1

True

False

Correct answer
False
Feedback

Sustainable competitive pricing typically requires a low-cost advantage; otherwise, competitors can replicate
pricing strategies.

In analyzing competitive pricing, analysts should focus on products which offer ____________.
1/1

High cost
Comparable pricing
Low value
Better value for money

Feedback

Analysts need to assess which products offer customers better value for money in cases where direct pricing
comparison is complex.

External factors that can lead to potential risks for a company are categorized as:
1/1

Strengths
Weaknesses
Opportunities
Threats

Feedback

Threats are external factors beyond a company's control that pose potential risks. These factors, like
competition, economic changes, or regulations, can negatively impact a company's performance or stability.

Threats in SWOT analysis only arise from economic downturns. True or False?
1/1

False

True
Feedback

Threats can originate from various sources like regulatory changes, technological disruptions, or market
shifts, not just economic downturns.

Weaknesses are typically external issues that hinder a company's performance. True or False?
1/1

True
False

Feedback

Weaknesses are internal limitations or issues affecting a company's performance.

Opportunities in a SWOT analysis are generated through external events that create chances for
___________.
1/1

Growth

Fragmentation
Decline
Stability
Feedback

Opportunities, in the context of a SWOT analysis, arise from external events or conditions that provide
chances for a company's growth or development.

Which of the following is NOT an example of a strength?

1/1

Efficient production process

Weak financial position

Strong brand reputation

High customer satisfaction
Feedback

A strength is something that gives a company an advantage over its competitors. A weak financial position is
not an advantage, but rather a disadvantage.

Which of the following is NOT an example of a threat?

1/1

Technological disruptions
Increased competition
Strong brand reputation

New regulations
Feedback

A threat is an external factor that poses a challenge to a company's success. A strong brand reputation is not a
challenge, but rather an advantage.

In a company, the separation between ownership and management can potentially lead to:
1/1

Decreased agency risk

Efficient decision-making
Increased shareholder control
Agency risk

Feedback

The separation of ownership and management in a company can lead to agency risk, where there's a potential
conflict of interest between shareholders and the management team.

What is the primary responsibility of the Board of Directors in a company?

1/1

Overseeing management and governance

Daily management of the company

Appointing the management team
Ensuring shareholder profits
Feedback

The Board of Directors is responsible for overseeing the management team and ensuring effective governance
practices within the company.

Management with a vision for __________ and __________ of the company showcases
competence in long-term planning. responsibility of the Board of Directors in a company?
1/1

Short-term goals; operational efficiency

Quarterly targets; market competition
Long-term goals; strategic direction

Current profits; shareholder interests

Feedback

A competent management team should have a vision for the long-term goals and strategic direction of the
company.

Timely __________ compliance indicates effective management control and governance

practices.
1/1
Operational
Financial
Regulatory

Market
Feedback

Timely regulatory compliance signifies effective management control and adherence to governance
requirements.

What is the primary objective of good corporate governance standards?

1/1

To control the operations of the company through executive directors.

To maximize short-term profits for shareholders.
To protect the interests of all stakeholders, including minority shareholders.

To comply with regulatory requirements only.

Feedback

Good corporate governance aims to ensure fairness and transparency in decision-making, protecting the
interests of all stakeholders, not just majority shareholders.

What is a promoter in a company?

1/1

Identified shareholders involved in legal disputes

Shareholders with the largest holding in a company
Investors contributing initial founding capital

Their legal designation and specific role

Feedback

Promoters are typically individuals or a group involved in the initial founding or are part of the controlling
shareholders of a company in India.

What does credit rating primarily evaluate?

1/1

Profitability of a company
Growth potential of a company
The ability of a borrower to manage debt obligations

Equity returns of a company

Feedback

Credit rating assesses the borrower's capacity to fulfill debt-related responsibilities.

Which section in the Cash Flow statement will provide information about the funds a company
borrowed during the preceding year?
1/1

Total Net Cash Flows

Financing Cash Flows

Operating Cash Flow

Investment Cash Flows
Feedback

The Financing Cash Flows section details the cash activities related to raising or repaying capital. It includes
obtaining loans, issuing or repurchasing stock, and paying dividends.

Which of the following measures the ability of the company to satisfy its short-term obligations?
1/1

Current Ratio

High Return on Equity

Inventory Turnover Ratio
High Return On Capital Employed
Feedback

The Current Ratio is a financial ratio that evaluates a company's ability to pay its short-term liabilities (debts
and payables) with its short-term assets (such as cash, inventory, and accounts receivable) within the next 12
months.

The price-to-earnings ratio of a business is 10, price to book value ratio of this business is 5, the
book value per share is Rs. 15 and the outstanding number of shares is 10,000, what would be
the return `on equity of this business?
1/1

50%

25%
20%
75%
Feedback

P/E = 10 P/B = 5
BVPS = 15 Shares Outstanding = 10,000
P/B = 5
∴ P/ 15 = 5
∴ P = 75
P/E = 10
∴ 75/ E = 10
∴ Earnings per share (EPS)= 75/10 = 7.5
ROE = EPS/ BVPS
∴ ROE = 7.5/15
∴ ROE = 0.5 = 50%

Which statement provides information about the company's financial performance for a period?
0/1

Balance Sheet

Profit and Loss Statement

Statement of changes in shareholder's equity
None of the Above

Correct answer
Profit and Loss Statement
Feedback

A Profit and Loss Statement is a financial document that summarizes a company's revenues, expenses, and
profits (or losses) over a specific period, typically a quarter or a year.

What type of information does a cash flow statement provide?

1/1

Company's financial performance

Financial position of a company
Company's assets and liabilities
Various sources and applications of cash within a specific period

Feedback

A cash flow statement summarizes how cash moves in and out of a company over a defined period.

What ratio measures a company's ability to meet short-term obligations?

1/1
Current Ratio

Debt-to-Equity Ratio
Return on Investment
All of the above
Feedback

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets. It
is calculated by dividing current assets by current liabilities.

What is the purpose of the Statement of Changes in Shareholder's Equity?

1/1

To outline sources and uses of cash

To provide information on the company's financial position
To summarize the company's income and expenses
To track changes in funds belonging to shareholders

Feedback

The Statement of Changes in Shareholder's Equity shows the changes in funds belonging to shareholders over
a period.

Non-current assets typically represent assets that are expected to provide benefits over a short
period, usually less than one year.
1/1

True
False

Feedback

Non-current assets are assets that are not expected to be converted to cash or used up within one year of the
balance sheet date.

When does Goodwill typically arise on a balance sheet?

1/1

When assets depreciate in value

When liabilities exceed assets
When a company acquires another business

When inventory decreases in value

Feedback

Goodwill arises when a company acquires another business and the amount paid exceeds the fair value of net
assets acquired.

What is Current Liability?

1/1

Obligations of the company that have been fulfilled after one year.
Obligations of a company that needs to be fulfilled within one year.

Obligations of a company that are not related to financial matters.

Obligations of the company that are related to shareholder dividends.
Feedback

Current liabilities are obligations of a company that are expected to be settled within one year or one
operating cycle, whichever is longer.

What does Working Capital represent in balance sheet analysis?

0/1

Shareholder equity + Long-term liabilities

Long-term assets - Long-term liabilities
Total assets - Total liabilities
Current assets - Current liabilities

Correct answer
Total assets - Total liabilities
Feedback

Working Capital measures a company's short-term financial health by calculating the funds available for day-
to-day operations. It is derived by subtracting current liabilities from current assets.

What does Minority interest signify in a company's financial reports?

1/1

Income from subsidiary companies

Profits belonging to external shareholders of a subsidiary company

Dividends paid to minority stakeholders

Tax benefits for minority shareholders
Feedback
Minority interest refers to the portion of profits in a subsidiary company that belongs to external shareholders,
not owned by the parent company.

What types of items are considered "Exceptional items / non-recurring items"?

1/1

Regular operational expenses

Operating income
Taxes from non-core operations
Unusual income or expenses not part of routine operations

Feedback

Exceptional items represent uncommon, significant income or expenses not part of a company's regular
operations. They include unusual gains or losses arising from extraordinary events, not typical in routine
business activities, like one-time restructuring costs, legal settlements, or gains/losses from asset sales.

Wha What does EBITDA stand for in financial analysis? t is Current Liability?
1/1

Earnings Beyond Investment, Tax, and Depreciation Assets

Earnings Before Income Tax, Depreciation, and Amortization
Earnings Before Interest, Taxes, Dividends, and Assets
Earnings Before Interest, Taxes, Depreciation, and Amortization

Feedback

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization in financial analysis.

Which type of cash flow involves activities related to business operations?

1/1

Operating cash flows

Financing cash flows

Investing cash flows
Accrued cash flows
Feedback

Operating cash flows encompass cash transactions directly associated with a company's core business
activities.

What does a positive value in investing cash flows typically indicate?

1/1

Buying assets
Redeeming debt
Selling assets

Issuing equity
Feedback

Positive investing cash flow represents an inflow of cash due to selling assets.

A business generated sales of Rs. 5,00,000 with a net profit margin of 25%. If the return on
equity is 20%, what would be the equity capital of the business?
1/1

Rs. 6,25,000

Rs. 6,50,000
Rs. 6,00,000
Rs. 7,75,000
Feedback

Net Profit Margin = Net Profit/ Sales

∴ Net Profit = Net Profit Margin * Sales

∴ Net Profit = 0.25 * 5,00,00

∴ Net Profit = 1,25,00

ROE = Net Profit/ Equity Capital

∴ Equity Capital = Net Profit/ ROE

∴ Equity Capital = 125000/0.20 = Rs. 6,25,000

The debt-to-equity ratio of a firm is 3:1, and the total assets is Rs. 12,00,000. If the return on
equity is 15%, what would be the net profit of the company?
1/1

Rs. 45,000

Rs. 10,000
Rs. 70,000
Rs. 49,000
Feedback

Debt(D)/Equity(E) = 3/1

∴ D = 3*E ………..(1)

Total Assets= Debt + Equity

∴ 12,00,000 = 3E + E ……….. from (1)

∴ 4E = 12,00,000

∴ Equity = 12,00,000/4

∴ Equity = 3,00,000

ROE = Net Profit/ Equity

∴ Net Profit = ROE * Equity

∴ Net Profit = 0.15* 300000 = Rs. 45,000

If a business has a Net Worth of Rs. 10,00,000 and the Net Profit is Rs. 120,000, what is the
Return on Equity (ROE)?
1/1

15%
8%
10%
12%

Feedback

ROE = Net Profit / Net Worth

∴ ROE = 1,20,000 / 10,00,000 = 12%

How is the Debt/Equity (D/E) ratio calculated?

1/1

Long Term Debt / Net Sales

Long Term Debt / Net-worth

Current Assets / Current Liabilities

EBIT / Interest Expense
Feedback
The Debt/Equity (D/E) ratio is calculated as Long Term Debt divided by Net-worth.

What is the significance of an Interest Coverage Ratio?

0/1

Indicates liquidity status

Determines leverage effectiveness
Evaluate inventory management

Analyzes profitability trends

Correct answer
Determines leverage effectiveness
Feedback

Interest Coverage Ratio assesses how many times a company's earnings cover its interest obligations.

What does the Quick Ratio primarily exclude in its calculation?

1/1

Cash
Current Liabilities
Inventories

Accounts Receivable
Feedback

Quick Ratio excludes Inventories from its computation to determine immediate liquidity.

Which ratio indicates the frequency of asset utilization for generating revenues?
1/1

Inventory Turnover
Asset Turnover

Accounts Payable Turnover

Accounts Receivable Turnover
Feedback

Asset Turnover measures how efficiently assets are used to generate sales

What might a high Inventory Turnover ratio indicate for a company?

1/1

Low demand for the company's products

Higher profitability
Slow conversion of sales into cash
Efficient inventory management

Feedback

A high Inventory Turnover ratio suggests effective management of inventory.

What might a high Inventory Turnover ratio indicate for a company?

1/1

Efficient inventory management

Low demand for the company's products

Higher profitability
Slow conversion of sales into cash
Feedback

A high Inventory Turnover ratio suggests effective management of inventory.

Case Study 1:
Case Study 1:

1) In 2XX8, Company A had finished products and work-in-progress (WIP) items worth Rs. 290
lakhs in its inventory. What is the estimated value of its finished products and work-in-progress
at the end of 2XX9?
1/1

Rs. 320 lakhs

Rs. 220 lakhs
Rs. 255 lakhs

Rs. 250 lakhs

Feedback
Changes in the inventory of finished goods and WIP of company A for 2XX9 = - Rs 35 Lakhs

∴ 2XX9 Value of finished products and WIP = 2XX8 Value of finished products and WIP + 2XX9 Changes in
the inventory of finished goods and WIP 2XX9

= Rs. 290 Lakhs + (- Rs. 35 Lakhs)

= Rs 255 Lakhs

Case Study 1:

2) Which company is more likely to have increased its prices at a higher rate and why?
0/1

Company A is likely to have raised prices more because it earned a higher net profit.
Company B might have raised prices more because its sales grew faster than Company A.
Company A might have increased prices more because its cost of materials compared to sales decreased
while it remained constant for Company B.
Company B is likely to have raised prices more because its net profit margin grew by 23% compared to
15% for Company A.

Correct answer
Company A might have increased prices more because its cost of materials compared to sales decreased
while it remained constant for Company B.
Feedback

Option B is correct due to changes in the cost of materials compared to sales for both companies.

Company A
In 2XX8, the cost of raw materials to sales ratio was (3,024.7 / 8,642.0) = 35.07%.
In 2XX9, it decreased to (3,003.0 / 9,100.0) = 32.99%.*

Company B:
In 2XX8, the cost of raw materials to sales ratio was (2,185.2 / 6,427.0) = 33.91%.
In 2XX9, it remained constant at (2,558.2 / 7,524.0) = 34.01%.

This ratio measures how much of the revenue goes into raw materials. Company A reduced this ratio from
35.07% to 32.99% between 2XX8 and 2XX9, indicating better cost management.

In contrast, Company B's ratio remained relatively constant at around 34%.

Therefore, Company A likely increased prices more efficiently due to better control over material costs.

Case Study 1:

3) What's the closest difference between the EBITDA margin ratios of Company A and
Company B for 2XX9?
1/1

Company B’s EBITDA margin is 450 bps higher than Company A’s EBITDA margin.
Company A’s EBITDA margin is 518 bps higher than Company B’s EBITDA margin.

Both companies have very similar margins.

Company A’s EBITDA margin is 427 bps higher than Company B’s EBITDA margin.h
Feedback

EBITDA Margin = EBITDA / Operating Revenue

Company A:

- EBITDA for 2XX9 = Rs. 4514.7 lakhs

- Operating Revenue for 2XX9 = Rs. 9,100.0 lakhs
- EBITDA Margin for 2XX9 ≈ 49.61%

Company B:

- EBITDA for 2XX9 = Rs. 3343.4 lakhs

- Operating Revenue for 2XX9 = Rs. 7,524.0 lakhs
- EBITDA Margin for 2XX9 ≈ 44.43%

Difference = 49.61% - 44.43% = 5.18%

1 basis point (bps) equals 0.01%. Therefore, the difference in EBITDA margins is about 518 bps.

Case Study 1:

4) Which company has a higher level of financial leverage?

0/1

Company B has higher financial leverage as it has a higher Debt/Asset ratio.

Company B has higher financial leverage since it has higher finance costs.

Company A has higher financial leverage because it has a higher Debt/Asset ratio.
Company A has higher financial leverage due to a higher level of debt.

Correct answer
Company B has higher financial leverage as it has a higher Debt/Asset ratio.
Feedback

Financial leverage measures how much a company depends on borrowed funds. To determine this, we use the
Debt/Asset ratio, calculated as Total Debt divided by Total Assets.

Company A:

- Debt/Asset Ratio ≈ 34.98%

Company B:

- Debt/Asset Ratio ≈ 39.99%

Comparing the ratios, Company B has a higher Debt/Asset ratio, around 39.99%, indicating a greater
reliance on debt financing compared to its total assets. Therefore, Company B has a higher level of financial
leverage.

Case Study 1:

5) Which option is closest to the operating profit of Company B for the year ending 2XX9?
0/1

Rs. 3,124.8 lakhs

Rs. 2,929.6 lakhs
Rs. 3,343.4 lakhs
Rs. 3,945.5 lakhs

Correct answer
Rs. 3,124.8 lakhs
Feedback

Operating profit (EBIT) is the measure of a company's earnings from its primary business activities, excluding
interest and taxes. To calculate it:
Operating Profit = EBIT = Net profit + Interest + Taxes
= 1962.80 + 966.8 + 195.2 = Rs. 3,124.8 lakhs

Case Study 1:

6) Which combination of factors has contributed to Company A having a higher return on equity
(ROE) compared to Company B?
0/1

Efficient inventory management

Slow conversion of sales into cash
Low demand for the company's products
Higher profitability

Correct answer
Efficient inventory management
Feedback
Return on equity (ROE) measures a company's profitability concerning shareholders' investment. It's
calculated as (Net Profit / Shareholders' Equity) * 100.

Factors contributing to higher ROE for Company A:

1. Net Profit Margin: This ratio shows the profit earned from sales. A higher net profit margin indicates better
profitability from sales.
2. Activity Ratio: Also known as asset turnover ratio, it measures how efficiently a company uses its assets to
generate sales. A higher activity ratio indicates better asset utilization.

When both the net profit margin and activity ratio are higher for Company A, it generates more profit from
sales and uses its assets more efficiently, resulting in a higher ROE than Company B.

Therefore, combining a higher net profit margin and a higher activity ratio favored Company A's higher ROE.

Case Study 2:
Case Study 2:

1) The closest value to the capital expenditure incurred by the company in 2XX7 is:
1/1

Rs. 245.1 lakhs

Rs. 241.2 lakhs
Rs. 300.5 lakhs
Rs. 246.2 lakhs
Feedback

To calculate the capital expenditure for 2XX7, we need to consider the change in fixed assets from the
beginning to the end of 2XX7 and add depreciation and amortization.

Fixed assets at the beginning of 2XX7: Rs. 2,407.0 lakhs

Fixed assets at the end of 2XX7: Rs. 2,412.0 lakhs
Depreciation and amortization in 2XX7: Rs. 241.2 lakhs

Capital Expenditure in 2XX7 = Fixed assets at the end of 2XX7 - Fixed assets at the beginning of 2XX7 +
Depreciation and amortization

Capital Expenditure in 2XX7 = (2,412.0 - 2,407.0) + 241.2 = Rs. 5.0 lakhs + Rs. 241.2 lakhs = Rs. 246.2
lakhs

Case Study 2:

2) The estimated revenue for 2XX8, assuming it grows at the same rate as observed in 2XX7, is
closest to:
1/1

Rs. 9,582 lakhs

Rs. 9,545 lakhs

Rs. 9,512 lakhs
Rs. 9,614 lakhs
Feedback

To estimate 2XX8 revenue using the growth rate from 2XX7:

- 2XX7 revenue: Rs. 9,100 lakhs

- 2XX6 revenue: Rs. 8,642 lakhs

Percentage Growth Rate = ((2XX7 revenue - 2XX6 revenue) / 2XX6 revenue) * 100
Percentage Growth Rate = ((9,100 - 8,642) / 8,642) * 100 ≈ 5.3%

Estimated 2XX8 Revenue = 2XX7 revenue + (Percentage Growth Rate 2XX7 revenue)
Estimated 2XX8 Revenue ≈ 9,582 lakhs

Therefore, the closest estimated revenue for 2XX8, considering the same growth rate as 2XX7, is Rs. 9,582
lakhs

Case Study 2:

3) The company expects that the revenue of 2XX8 is likely to be Rs.9,500 lakhs. It further
estimates a 25 bps decrease in EBITDA margin compared to the previous year. Which of the
following is closest to the estimated EBITDA for 2XX8 as per the company guidance?
1/1
Rs. 4,689 lakhs
Rs. 4,605 lakhs

Rs. 2,647 lakhs

Rs. 4,475 lakhs
Feedback

To estimate the EBITDA for 2XX8 based on the company's guidance:

- EBITDA margin in 2XX7: 49.61%

- Expected decrease in EBITDA margin: 25 bps (0.25%)

Step 1: Calculate the estimated EBITDA margin for 2XX8:

EBITDA margin in 2XX8 = EBITDA margin in 2XX7 - 35 bps

∴EBITDA margin in 2XX8 = 49.61 - 0.25 ≈ 49.26%

Step 2: Use the estimated EBITDA margin to calculate the estimated EBITDA for 2XX8:
Estimated EBITDA for 2XX8 = (EBITDA margin in 2XX8 / 100) * Estimated revenue for 2XX8
Estimated EBITDA for 2XX8 ≈ (49.26 / 100) * 9,350 ≈ Rs. 4,605 lakhs

Case Study 2:

4) The company estimates that its networking capital ratio (i.e., net working capital as a % of
revenue) in 2XX8 will likely remain the same compared to the previous year. With an expected
revenue of Rs. 9,350 lakhs in 2XX8, which of the following is closest to the increase or decrease
in working capital?s:
1/1

Rs. 10.3 lakhs

Rs. 62.5 lakhs

Rs. 27.8lakhs
Rs. 200.0 lakhs
Feedback

Net working capital ratio in 2XX7 = (Net working capital / Revenue) * 100 = (2275 / 9100) * 100 = 25%

If the expected revenue in 2XX8 is Rs. 9,350 lakhs and the net working capital ratio remains the same at 25%,
then:
Net working Capital = 9,350 * 25% = Rs. 2,337.5 lakhs

Change in Networking capital = Rs. 2,337.5 lakhs - Rs. 2,275 lakhs = Rs. 62.5 lakhs

Therefore, the closest estimate for the increase or decrease in working capital for 2XX8, considering the net
working capital ratio remains the same, is Rs. 62.5 lakhs.
Case Study 2:

5) The company is expected to repay Rs. 175 lakhs of debt in the middle of the financial year
2XX8. Assuming the company’s average interest rate remains unchanged, which of the
following is closest to the expected finance cost for 2XX8?
0/1

Rs. 110.12 lakhs

Rs. 144.3 lakhs

Rs. 232.32 lakhs

Rs. 173.26 lakhs

Correct answer
Rs. 173.26 lakhs
Feedback

Given:
Interest Rate for 2XX7 = (Finance Cost / Total Capital) * 100 = (180.4 / 4687) * 100 ≈ 3.84%

When the company repays Rs. 175 lakhs of debt:

Total Capital changes to 4687 - 175 = 4512

Using the same interest rate of 3.84%:

Expected Finance Cost for 2XX8 = Total Capital * Interest Rate
Expected Finance Cost for 2XX8 ≈ 4512 * 0.0384 ≈ Rs. 173.26 lakhs

Therefore, the closest estimate for the expected finance cost for 2XX8, assuming the average interest rate
remains the same, is Rs. 173.26 lakhs.

Case Study 2:

6) The profit for 2XX8 is estimated to be Rs. 4,120 lakhs and the company is expected to pay an
interim dividend of Rs. 760 lakhs and a special dividend of Rs. 980 lakhs during the year. No
other dividend, shares buyback, or issue of shares are expected. Which of the following is the
closest to the estimated book value of equity at the end of 2XX8?
1/1

Rs.4,233.7 lakhs
Rs.4,120.0 lakhs
Rs.5,426.6 lakhs

Rs.5567.9 lakhs
Feedback

Equity in 2XX8 = Rs. 3,046.6 lakhs

Profit for 2XX8 = Rs. 4,120 lakhs
Interim Dividend = Rs. 760 lakhs
Special Dividend = Rs. 980 lakhs

Book Value of Equity at the end of 2XX8 = Equity in 2XX8 + Profit for 2XX8 - Interim Dividend - Special
Dividend

∴ Book Value of Equity at the end of 2XX8 = 3,046.6 + 4,120 - 760 - 980 = Rs. 5,426.6

An eligible investor transferring the rights or its entitlement without receiving any consideration
is referred to as _________.
0/1

Renunciation of Rights
Selling of Rights

Shorting Rights
Dilution of rights

Correct answer
Renunciation of Rights
Feedback

When an eligible investor transfers the rights or entitlement to buy additional shares in a company without
receiving any consideration (payment), it is referred to as "Renunciation of Rights." In this process, the
investor renounces their right to purchase additional shares, and another party can then exercise those rights.

The Companies Act mandates that a company seeking additional capital through a share issuance
must initially extend the offer to its current shareholders and this offer of shares is termed
______.
1/1

Preference Issue
Public Issue
Bonus Issue
Rights Issue

Feedback

When a company wants to raise more capital by issuing shares and offers them first to existing shareholders,
it's called a "Rights Issue."
Altering the share capital structure of a company involves increasing the par value of its shares in
a specified ratio and concurrently decreasing the number of shares to uphold the
paid-up/subscribed capital, and this process is referred to as __________.
1/1

Share swap
Share Consolidation

Spin off
Stock Split
Feedback

Changing the structure of a company's share capital by increasing the par value of shares in a specific ratio
while reducing the number of shares to maintain the paid-up/subscribed capital is known as "Share
Consolidation."

When companies provide additional shares to their current shareholders without any
consideration, it is referred to as _________.
1/1

Stock dividend

Special dividend
Cash dividend
Interim dividend
Feedback

When a company gives more of its shares to current shareholders for free, it's called a "Stock dividend."

Delisting of shares involves the __________ removal of the company's shares from being listed
on a stock exchange.
1/1

None of the above

Permanent

Temporary
Voluntary
Feedback

Delisting of shares involves the "permanent" removal of the company's shares from being listed on a stock
exchange.
Is it correct that for a company to qualify for a share buyback, it must not have defaulted on
interest payments? True or False?
0/1

True
False

Correct answer
True
Feedback

For a company to qualify for a share buyback, it is generally correct that it must not have defaulted on interest
payments. This condition ensures that the company is in good financial standing and able to meet its financial
obligations.

When companies unite to create a new entity and the merged companies no longer exist, what
are they called?
0/1

Consolidation
Merger

Acquisition
Buyout

Correct answer
Consolidation
Feedback

When companies come together to form a new entity, and the original merged companies cease to exist
independently, it is referred to as "Consolidation." In a consolidation, the combined companies operate as a
single, new entity.

A rights issue is available for subscription for a minimum duration of ____ days.
1/1

7
10
30
15
Feedback

A rights issue is available for subscription for a minimum duration of 15 days. During this period, existing
shareholders have the opportunity to exercise their rights to purchase additional shares at a specified price
before the offer is opened to the public

Which provisions regulate corporate actions?

1/1

Provisions of the Companies Act, 2013

All of the options

Terms of the listing agreement entered into with the stock exchange
Relevant regulations of SEBI
Feedback

All corporate actions are regulated by multiple provisions, including those in the Companies Act, 2013,
relevant SEBI regulations and terms of listing agreements with stock exchanges.

Is it true or false that bonus shares are issued to existing shareholders without any consideration
from them?
1/1

True

False
Feedback

Bonus shares are indeed issued to existing shareholders without any consideration from them. These shares
are distributed as a form of reward or benefit by the company, and existing shareholders receive additional
shares without having to make any additional payment.

What are corporate actions?

1/1

Routine business activities

Actions related to the business only
Actions that impact stakeholders

Changes in the market structure

Feedback

Corporate actions include actions beyond routine business activities that directly affect stakeholders.
Which regulatory bodies oversee corporate actions?
0/1

Companies Act and SEBI

SEBI and RBI
SEBI and Stock Exchanges

RBI and Stock Exchanges

Correct answer
Companies Act and SEBI
Feedback

Corporate actions are regulated by provisions of the Companies Act, 2013, and relevant regulations of SEBI.

What happens in a merger?

0/1

Both companies cease to exist

The acquiring company absorbs the target

The target buys the acquiring company
Assets and liabilities remain separate

Correct answer
The acquiring company absorbs the target
Feedback

In a merger, the acquirer absorbs the target, which ceases to exist.

What is a motive behind M&A activities related to synergy?

1/1

Decreased market share

Reduced revenue
Greater economic benefits

Increased competition
Feedback

M&A activities aim for synergy, combining efficiencies for greater economic benefits.
How can an acquiring company achieve geographical diversification?
1/1

Through consolidation
By reducing market share
By acquiring companies in different geographies

Through increased revenue

Feedback

Acquiring companies in different geographies provides a competitive advantage.

What is the purpose of SEBI (Substantial Acquisition of Shares and Takeover) Regulations,
1997?
1/1

To regulate mergers
To protect public shareholders

To mandate dividends
To regulate acquisitions
Feedback

SEBI regulations provide triggers and requirements for protecting public shareholders.

Share consolidation increases the face value of shares in a defined ratio.

1/1

To restructure debt terms within the company's capacity

To declare bankruptcy
To increase interest rates
To repay all debts immediately
Feedback

Loan restructuring helps a company in financial distress restructure debt within its capacity.

What occurs in a spin-off?

1/1

A company carves out a business into a separate company

Existing companies absorb a new one
Companies merge to form a new one
The target company buys the acquiring company
Feedback

A spin-off involves creating a new company for an existing business.

What does a scheme of arrangement involve?

1/1

Debt restructuring
Share consolidation
Court-monitored settlement

Geographical diversification
Feedback

A scheme of arrangement is a court-monitored settlement between a company and its creditors or members.

What is a motive for a company to engage in share buyback?

1/1

To increase equity
To improve EPS and BVPS

To decrease leverage
To dilute promoters' holding
Feedback

Share buyback can improve earnings per share (EPS) and book value per share (BVPS).

In the context of delisting, what is a voluntary delisting?

1/1

Shares removed due to compliance issues

Forced removal of shares
Shares removed by the company's choice

Delisting without public shareholders' approval

Feedback

Voluntary delisting occurs when a company chooses to remove its shares from the stock exchange.
What is a delisted company's responsibility toward minority shareholders?
1/1

Forced exit at the time of delisting

No exit options for minority shareholders
Right to sell shares to promoters

Automatic transfer of shares to promoters

Feedback

Minority shareholders have the right to sell their shares to promoters after delisting.

When can a company apply for relisting its shares according to SEBI regulations?
1/1

Immediately after delisting

Five years after delisting in compulsory cases
After one year of delisting
Five years after delisting in voluntary cases

Feedback

A company can apply for relisting five years after voluntary delisting.

What does a share swap involve?

1/1

Swapping shares without valuation

Exchange of something in court
Exchange of shares during a takeover

Exchanging cash for shares

Feedback

Share swap involves exchanging shares during a merger or acquisition.

What is the primary advantage of a stock split for a company?

1/1

Greater participation by investors

Higher face value of shares
Increased market value per share
Reduced liquidity in the market
Feedback

Stock splits lead to greater liquidity in the market, allowing more investors to participate.

In a share consolidation, what happens to the face value of shares and the number of outstanding
shares?
1/1

Face value decreases, outstanding shares decrease

Face value decreases, outstanding shares increase
Face value increases, outstanding shares decrease

Face value increases, outstanding shares increase

Feedback

Share consolidation increases the face value while decreasing the number of outstanding shares.

What does the term "buyback of shares" mean for shareholders?

0/1

Issuance of new shares

Conversion of shares to bonds

Forced selling of shares
Enhanced market value of shares

Correct answer
Enhanced market value of shares
Feedback

Buyback of shares can lead to an increase in market value per share.

What does a stock split ratio of 1:5 mean?

1/1

One share for five investors

One-fifth of a share for each investor
Each share is split into five shares

Five shares for one investor

Feedback

A stock split ratio of 1:5 means each existing share is split into five shares

How does a rights issue impact shareholders ownership when they exercise the right?
0/1

It increases proportionate ownership

It has no impact on ownership

It decreases proportionate ownership
It transfers ownership to new investors

Correct answer
It has no impact on ownership
Feedback

When existing shareholders fully exercise their rights to buy additional shares during a rights issue, they
maintain their proportionate ownership in the company. Their percentage of total shares remains the same as
before the rights issue because they are buying a proportionate amount of the new shares being issued.

How is a share consolidation different from a stock split?

1/1

It reduces face value

It improves per-share data
It increases face value

It increases the number of shares

Feedback

Share consolidation increases the face value of shares in a defined ratio.

ABC Ltd has a profit margin of 6.9% on sales of Rs.2,42,00,000. Assume the firm has debt of
Rs.95,00,000 and total assets of Rs.1,61,00,000. What is the firm’s ROE?
1/1

20.2%
22.7%
25.3%

19.1%
Feedback
Net Income=0.069×2,42,00,000=16,698,000

Shareholders’ Equity=1,61,00,000−95,00,000=66,00,000

ROE≈66,00,00016,698,000≈0.253

ROE≈0.253×100%≈25.3%

ABC Ltd has a profit margin of 7.5% on sales of Rs.1,80,00,000. Assume the firm has debt of
Rs.85,00,000 and total assets of Rs.1,30,00,000. What is the firm's Return on Assets (ROA)?
1/1

8.2%
11.5%
10.4%

12.8%
Feedback

Net Income=0.075×1,80,00,000=13,50,000

ROA=Net Income/Total Assets

ROA=13,50,000/1,30,00,000≈0.1038
ROA≈0.1038×100%≈10.38%

When using the Free Cash Flow to the Firm (FCFF) method, which discount rate is employed to
determine the value of a business (Enterprise Value) ?
1/1

Return on Equity
Market Rate on Debt
Weighted Average Cost of Capital (WACC)

Risk-Free Rate
Feedback

WACC is used because it represents the average cost of financing for a company, considering both equity and
debt. It reflects the required rate of return that investors and creditors expect.

When using the Free Cash Flow to Equity (FCFE) method, which discount rate is employed to
determine the equity value of a business?
1/1

Cost of Equity
Return on Equity
Market Rate on Debt
Risk-Free Rate
Feedback

The Cost of Equity represents the rate of return required by equity investors to compensate for the risk
associated with their investment. Using the Cost of Equity in the FCFE method helps in discounting the
projected future cash flows available to equity holders, providing an estimate of the equity value of the
business.

ABC Ltd has an income of Rs.10,50,000, and its share price is Rs. 20. The company has
2,50,000 shares. Calculate the price-earnings ratio (P/E ratio).
1/1

5.2
4.75

6.8
3.5
Feedback

EPS = Income / Number of Shares

= 10,50,000 / 2,50,000
= 4.2

Calculate P/E ratio:

P/E ratio = Share Price / EPS
= 20 / 4.2
≈ 4.76

ABC Ltd has a book value of Rs. 15,00,000 and its share price is Rs. 25. The company has
1,00,000 shares. Calculate the Price to Book Value ratio (P/B ratio).
1/1

1.8
1.67

2.0
1.25
Feedback

Price to book value = market capitalisation/ book value

Or price / book value per share

BVPS = 1500000/100000 = 15

P/BV = 25/15 =1.67

XYZ Ltd has total sales of Rs. 30,00,000 and its share price is Rs. 18. The company has 2,00,000
shares. Calculate the Price to Sales ratio (P/S ratio).
1/1

0.9
1.2

0.6
1.5
Feedback

Sales per Share = Total Sales / Number of Shares

= 30,00,000 / 2,00,000
= 15

P/S ratio = Share Price / Sales per Share

= 18 / 15
= 1.2

Analysts can have a different valuation figures using discounting cash flow valuation method.
1/1

True

False
Feedback

Different valuation figures can arise from the Discounted Cash Flow (DCF) method as it relies on various
subjective inputs and assumptions, allowing analysts to have diverse perspectives and interpretations.

Cash flows before any payments are made on the debt outstanding is known as Free cash flows
of the firm (FCFF).
0/1

True
False
Feedback
Free Cash Flows of the Firm (FCFF) represent the cash generated by a company before making any payments
on its outstanding debt. It includes cash available for both equity and debt holders.

What are the components of Capital Asset Pricing Model (CAPM) ?

1/1

All of them

Company beta
Risk free rate of return
Return expected on stock market portfolio
Feedback

CAPM incorporates the company beta, expected return on the stock market portfolio, and the risk-free rate,
providing a framework for calculating the expected return on an asset.

The Earnings Multiplier model is considered more reliable than the Discounted Cash Flow
(DCF) model in volatile economic conditions.
1/1

False

True
Feedback

The Earnings Multiplier model (like P/E ratio) may be more sensitive to market sentiment and less reliable
than DCF in volatile economic conditions.

Abby Corp reports that its assets are valued at Rs.250,00,000, its liabilities are Rs.80,00,000, and
it has issued 8,00,000 shares of stock. What is the book value for a share of abby Stock?
1/1

Rs. 25.25
Rs. 30
Rs. 37.5
Rs. 21.25

Feedback

Book Value per Share = Total Equity / Number of Shares

Result:
In this case, (250,00,000 - 80,00,000) / 8,00,000 = Rs. 21.25
If interest rates in the economy rise, the price of the bond would ________
1/1

Rise
Fall

Feedback

Rising interest rates lead to a decrease in bond prices, as existing bonds with lower yields become less
attractive compared to newly issued bonds offering higher yields.

In the discounted cash flow model, only cash inflows contribute to the valuation of a business,
and outflows are excluded.
0/1

False
True
Feedback

DCF involves subtracting cash outflows from cash inflows to determine free cash flows, which are then
discounted for business valuation.

The formula for WACC is ___________

1/1

[k(e) x (1-T) x w(e)] + [K(d) x W(d)]

[k(e) x w(e)] + [K(d) x (1+T) x W(d)]
[k(e) x w(e)] + [K(d) x (1-T) /W(d)]
[k(e) x w(e)] + [K(d) x (1-T) x W(d)]

Feedback

WACC is the weighted average of the cost of equity and the after-tax cost of debt, considering their respective
weights in the capital structure. The formula [Ke x We] + [Kd x (1-Tx) x Wd] precisely represents this
weighted combination, where Ke is the cost of equity, Kd is the cost of debt, We is the weight of equity, Wd is
the weight of debt, and (1-Tx) accounts for the tax shield on debt.

There are two companies x, y with P/E ratios of 25 and 18. But they have different growth
potentials of 20% and 12% for next few years. Which of the companies is cheaper on the basis of
PEG ratio?
0/1
Company Y

Both companies are equally cheap

Company X
It cannot be determined

Correct answer
Company X
Feedback

The Price/Earnings to Growth (PEG) ratio is calculated by dividing the P/E ratio by the growth rate. A lower
PEG ratio suggests that a stock is cheaper relative to its growth potential. In this scenario, Company X has a
lower PEG ratio (25/20) compared to Company Y (18/12), indicating that Company X is relatively cheaper
based on the PEG ratio, considering both P/E and growth potential.

Free cash flows for equity (FCFE) is computed as __________

0/1

EBIT – Tax + Depreciation & Non-cash charges (+,-) working capital – capital expenditure incurred-
Interest + Net borrowing
EBIT – Tax + Depreciation & Non-cash charges + working capital + capital expenditure incurred
EBIT – Tax + Depreciation & Non-cash charges (+,-) working capital – capital expenditure incurred

EBIT + Tax + Depreciation & Non-cash charges – working capital + capital expenditure incurred

Correct answer
EBIT – Tax + Depreciation & Non-cash charges (+,-) working capital – capital expenditure incurred-
Interest + Net borrowing
Feedback

FCFE represents the cash available to equity holders after covering taxes, operational expenses (EBIT), and
investments. Adjustments include adding back depreciation and non-cash charges, accounting for changes in
working capital, net borrowing and subtracting capital expenditures and interest.

An investor purchased 600 shares of a company for Rs. 36,000. The face value of these shares is
Rs. 10. Calculate the dividend yield on the invested amount if the company declares a 150%
dividend.
1/1

20%
12.5%
25%

16%
Feedback

Dividend Yield is calculated by dividing the annual dividend per share by the stock's market price and
multiplying by 100. In this case, the annual dividend per share is Rs. 15 (150% of face value Rs. 10), and the
market price per share is Rs. 60 (Rs. 36,000/600 shares). Dividend Yield = (15/60) * 100 = 25%.

The market valuation of Company PQR is Rs. 80,000. The total obligations on the balance sheet
are Rs. 20,000, and the available cash and equivalents are Rs. 12,000. Calculate the Firm's
Valuation.
1/1

Rs. 72,000
Rs. 88,000

Rs. 92,000
Rs. 108,000
Feedback

The Enterprise Value is determined by summing the market valuation, total liabilities, and subtracting cash
and equivalents. In this scenario, Enterprise Value = Rs. 80,000 (market valuation) + Rs. 20,000 (total
obligations) - Rs. 12,000 (cash and equivalents) = Rs. 88,000

The Sustainable Growth Rate (SGR) is a measure of a company's ability to grow its sales,
earnings, and dividends at a consistent rate without having to increase debt or equity. Which of
the following is used in the calculation of SGR?
0/1

Earnings Before Interest and Taxes (EBIT)

Retention Ratio

Dividend Payout Ratio

Return on Investment (ROI)

Correct answer
Earnings Before Interest and Taxes (EBIT)
Feedback

The Sustainable Growth Rate (SGR) is calculated using the Retention Ratio, which represents the proportion
of earnings retained in the business rather than distributed as dividends. The formula for SGR involves
multiplying the Return on Equity (ROE) by the Retention Ratio. Therefore, the correct answer is c. Retention
Ratio. This ratio indicates how much of the earnings are reinvested in the company to fuel growth without
relying on additional debt or equity.
Price to book value ratio is calculated using which of the following equation?
1/1

Either a or b
Both a & b

Price to book value ratio = Market price per share / Book value per share
Price to book value ratio = Market capitalization / Book value of equity or net-worth
Feedback

The Price to Book Value ratio can be calculated using either the market price per share divided by book value
per share or market capitalization divided by book value of equity or net worth.

If the P/BV ratio is 5, the number of shares is 100,000, total equity is 20 Lakh, and the dividend
is 2 with a dividend payout of 50%, what is the P/E ratio?
1/1

15
20
30
25

Feedback

The P/E ratio is calculated as P/BV ratio times the Book Value per Share divided by EPS, resulting in a P/E
ratio of 25.

Now, calculate the Book Value BookValueperShare= TotalEquity/NumberofShares

=20,00,000/100,000=20

EPS= Dividend/PayoutRatio

EPS =2/0.5 = 4

P/E Ratio=P/BV Ratio× EPS/BookValueperShare =5×20/4=25

Case Study 1:
Case Study 1:

1) PE ratio for Company B is higher than that of Company A. Which of the following are
plausible reasons to justify such higher PE ratio of Company B?
1/1

EPS growth rate for Company B is higher than EPS growth rate for Company A and

higher growth justifies higher PE ratio

Company B is relative smaller company, and the smaller base justifies higher PE ratio
Company B has high financial leverage which justifies higher PE ratio
None of the above statements are true
Feedback

A higher EPS growth rate can justify a higher PE ratio as investors may expect higher future earnings

Case Study 1:
2) Which of these two companies appear cheaper based on the PEG ratio? Use the expected
growth rate for 2XX9 for the calculation.
0/1

Company A is cheaper as its PEG ratio is 1.05x compared to 0.91x for Company B
Company B is cheaper as its PEG ratio is 0.91x compared to 1.05x for Company A
Company A is cheaper as its PEG ratio is 2.91x compared to 1.07x for Company B

Company B is cheaper as its PEG ratio is 1.07x compared to 2.91x for Company A

Correct answer
Company B is cheaper as its PEG ratio is 0.91x compared to 1.05x for Company A
Feedback

A lower PEG ratio indicates better value for the growth rate, and in this case, Company B has a lower PEG
ratio.

Case Study 1:

3) Which of the following is closest to the market value of equity (i.e., market capitalization) of
Company A?
0/1

Rs.3,046 lakhs

Rs.30,000 lakhs
42,600 lakhs
None of the above

Correct answer
42,600 lakhs
Feedback

P/E = Market cap/ net profit

15.4= Market cap/2763.1
Market cap = 15.4 * 2763.1 = 42551
Closet match is 42,600 Lakh

Case Study 1:

4) The market cap of Company B based on its last traded price is Rs.36,000 crores. Which of the
following is closest to its EV/EBITDA based on forecast for 2XX9?
1/1

7.17x
9.74x
8.14x
9.54x

Feedback

EV = Market value of equity + mv of debt - cash & cash equivalent

EV = 36000 + 1,626.8 - 57 = 37569
EBITDA = 3938
EV/EBITDA = 37569/3938 = 9.54X

Case Study 1:

5) The average PE ratio of peers in the industry is 16x based on 2XX9 earnings. The analyst
believes that Company B deserves to trade at 20% premium compared to its peers because of its
low risk and high growth potential. Which of the following is closest to the fair price of its
share?
1/1

Rs.428.7
Rs.514.8
Rs.617.8

Rs.643.6
Feedback

P/E Ratio = Price per share/ EPS

16 = price/ 32.2
price = 32.2* 16
price = 515.2
premium adjusted price = 515.2*(1+ 20%)

Case Study 2:
Case Study 2:

1) The AGM of the company approved dividend for the recently concluded year and it was just
paid. If the dividend is expected to grow at a constant rate of 7%, which of the following is
closest to the fair price of the share, assuming cost of equity of 14%?
1/1

Rs.133
Rs.192
Rs.208

Rs.204
Feedback

Using Dividend discount model/gorden growth model → Price = D1/k(e) - g

D1 = 17 * 0.8 (eps*payout ratio) *(1+7%) ( dividend growth) = 14.55
Price = 14.55/(14%-7%) = 208

Case Study 2:

2) Based on the following information, calculate the cost of equity of the company? Risk free
rate: 5% Expected return from the market: 9% Beta of the company: 1.3
1/1

8.20%
10.2%

10.8%
16.0%
Feedback

Exp return = R(f) + beta*(expected return - risk free rate)

exp return = 5% + 1.3 (9% - 5%)
10.2%

Case Study 2:

3) The fair value of total assets of the company is expected to be Rs.10,000 lakhs while the
liabilities are worth the same as shown in the balance sheet. If the cost of equity is 10% and cost
of debt (net of tax) is 7%, which of the following is closest to the weighted average cost of
capital?
0/1

8.0%

9.5%
11.0%
12.5%

Correct answer
9.5%
Feedback
w(debt) = 1598/10000 = 0.1598
w(equity) = 1-w(debt) = 1-0.1598 = 0.8402
wacc = k(e)*w(e) + k(d)*(w(d)
wacc= 10%* 0.8402 + 7%*0.1598
wacc= 9.52%

Case Study 2:

4) The FCFF of the company for next year is estimated at 2,400 lakhs. It is expected to grow at
10% in the year after that and is expected to grow at 4% perpetually post that. If the weighted
average capital is 12.0%, which of the following is closest to the fair value of the firm
(Enterprise value)?
0/1

Rs.43,333 lakhs
Rs.34,835 lakhs

Rs.36,516 lakhs
Rs.40,700 lakhs

Correct answer
Rs.36,516 lakhs
Feedback

FCFF for year 1 = 2400*(1+10%)

terminal value= cashflow at end of year 2/ wacc- growth
terminal vale at year 1 = (2400*(1+10%)(1+4%))/ (12%-4%)
all future cashflow at year 1 = 2460 +34320 = 36780
enterpise value today = all Cashflow/ (1+wacc)^number of years
ev = 36780/1.12
ev = 36516

Calling feature in bonds refers to ____________.

0/1

Is most common when there is an anticipation of declining interest rates.

Favors investors.
Is not in the interest of issuers.
Is most common when there is an anticipation of rising interest rates.

Correct answer
Is most common when there is an anticipation of declining interest rates.
Feedback
Bonds with a calling feature are often redeemed by issuers when they expect interest rates to fall, which is
advantageous for them. This practice is common in anticipation of declining interest rates.

____________ bias can hinder investors from taking advantage of market corrections.
0/1

Projection

Herd Mentality
Anchoring
Confirmation

Correct answer
Herd Mentality
Feedback

Herd mentality bias refers to the tendency of investors to follow the crowd or imitate the actions of others,
even if it may not be rational. This behavior can prevent investors from making independent decisions and
taking advantage of market corrections.

Business risk, also referred to as operating risk, arises due to factors impacting the company's
operations. State whether True or False.
1/1

True

False
Feedback

The correct answer is True. Business risk, or operating risk, results from factors affecting a company's
operations.

Dividend represents a minor portion of the overall returns generated from equity. State whether
True or False.
1/1

True

False
Feedback

True. While dividends contribute to returns, they are a small part of the total gains from investing in stocks.
What does an investor expect from an investment?
1/1

Only capital preservation

Only high returns
Both returns and capital preservation

Neither returns nor capital preservation

Feedback

An investor expects both returns and, more importantly, the preservation of the capital invested.

How is Return on Investment (ROI) calculated for a particular period?

0/1

(Net profit / Investment)

(Total Returns / Total Cost) x 100

(Dividends + Sales Proceeds) / Total Cost
(Net profit / Total Cost) x 100

Correct answer
(Total Returns / Total Cost) x 100
Feedback

ROI is calculated as (Total Returns / Total Cost) x 100 for a particular period.

How is Compound Annual Growth Rate (CAGR) calculated?

1/1

(End Value / Beginning Value) x 100

{(End Value / Beginning Value)^(1/n)} - 1

(Total Returns / Total Cost) x 100

(Net profit / Investment) x 100
Feedback

CAGR is calculated using the formula {(End Value / Beginning Value)^(1/n)} - 1

What is the relationship between risk and return in investing?

1/1
Independent factors
Risk and return are unrelated
Direct correlation

Inverse correlation
Feedback

Risk and return are directly correlated in investing, meaning higher returns usually come with higher risk.

Why is a fixed deposit with a bank considered a lower risk product?

1/1

Higher interest rates

Guaranteed returns

Low market demand

Regulatory environment prevalent in the industry
Feedback

Bank fixed deposits are considered lower risk because the bank is unlikely to default on interest payment or
return of capital.

What does inflation risk refer to in investing?

1/1

Loss of capital invested

Volatility in market prices
Decline in purchasing power of money

Uncertainty in dividend payments

Feedback

Inflation risk is the risk that money received on an investment may be worth less when adjusted for inflation.

What is the impact of rising interest rates on bond prices?

1/1

Bond prices rise

Bond prices decline

No impact on bond prices

Bond prices become unpredictable
Feedback
Bond prices and interest rates have an inverse relationship; when interest rates rise, bond prices tend to fall.

What is the primary factor causing business risk in a company's operations?

1/1

Shrinkflation
Employee costs

Interest rates
Inflation
Feedback

Business risk is caused by factors affecting the operations of a company, including employee costs.

How is risk commonly defined in terms of uncertainty and unpredictability?

1/1

Rate of return
Standard deviation

Sensitivity
Value at Risk (VaR)
Feedback

Risk is often defined as uncertain and unpredictabe and in this context, it is calculated as the standard
deviation of the return of the assets.

What does Beta measure in the context of market risk?

1/1

Sensitivity of stock prices to interest rates

Sensitivity of bond prices to market performance
Systematic risk of a security relative to the market

Duration of a bond's price to small changes in interest rates

Feedback

Beta measures the systematic risk of a security by comparing its volatility to the market, indicating how much
the security's price will move with the market.

What is sensitivity analysis used for in securities analysis?

0/1
Assessing market risk
Identifying critical variables in a valuation model
Calculating Value at Risk (VaR)

Measuring systematic risk

Correct answer
Identifying critical variables in a valuation model
Feedback

Sensitivity analysis helps identify critical variables in a valuation model and assesses how the output will vary
under different scenarios for these variables.

What does the Margin of Safety refer to in investing?

1/1

Difference between value and prices

Difference between expected and actual returns

Level of diversification
Rate of return on investments
Feedback

Margin of Safety, popularized by Benjamin Graham, refers to the difference between the intrinsic value and
prices when securities are bought at a price significantly below their intrinsic value.

According to conventional financial theory, what do participants strive to maximize?

0/1

Emotional well-being
Wealth prudently
Financial theory

Market logic

Correct answer
Wealth prudently
Feedback

Conventional financial theory suggests that participants strive to maximize their wealth prudently.

What is the Dean of Wall Street, Benjamin Graham's view on markets?

1/1
Highly logical and predictable
More psychological and less logical

Completely irrational and emotion-free

Driven solely by economic factors
Feedback

Benjamin Graham stated that markets are more psychological and less logical, acknowledging the influence of
emotions.

What is the Loss-aversion bias in behavioral finance?

1/1

Preference for avoiding gains

Tendency to strongly prefer avoiding losses

Willingness to take risks for gains

Desire for higher returns
Feedback

Loss-aversion bias refers to the tendency of investors to strongly prefer avoiding losses rather than acquiring
gains.

What is Confirmation bias in investing?

1/1

Tendency to search for information that confirms beliefs

Tendency to avoid confirming information

Preference for contradictory information
Ignoring information entirely
Feedback

Confirmation bias involves prioritizing information that confirms one's existing beliefs or hypotheses.

What does Ownership bias, also known as the endowment effect, reflect?
1/1

Higher value placed on owned positions

Preference for diversified portfolios

Willingness to sell owned positions at any cost
Disregard for owned positions
Feedback

Ownership bias reflects the tendency to place a higher value on a position just because it is owned.

Is it accurate to say that employee costs are a source of Business Risk? True or False?
1/1

False
True

Feedback

Yes, it is correct to say that employee costs are a source of Business Risk.

What risk does the investment encounter when finding a buyer takes a long time and is delayed?
0/1

Liquidity risk
Credit risk

Default risk
Reinvestment risk

Correct answer
Liquidity risk
Feedback

When it takes a long time to find a buyer for an investment, the risk faced is called liquidity risk. This means
the asset cannot be quickly sold without a significant reduction in its price.

Following others for investment is an example of __________ bias.

1/1

Anchoring
Projection bias
Confirmation bias
Herd Mentality

Feedback

Following the crowd in investment decisions is an example of Herd Mentality bias. This means making choices
based on the actions of others rather than individual analysis.
Is it true or false that Unsystematic risk is also called undiversifiable risk?
1/1

True
False

Feedback

Unsystematic risk refers to the specific risks associated with a particular company or industry, and it can be
reduced through diversification. Since diversification involves spreading investments across different assets or
securities, it helps mitigate the impact of company-specific or industry-specific risks. Therefore, unsystematic
risk is diversifiable, not undiversifiable

What category of risk does alterations in tax structure exemplify?

1/1

Political Risk

Country Risk
Market risk
Inflation risk
Feedback

The alterations in the tax structure are considered political risks as they are influenced by government policies
and decisions.

Which of the subsequent risks is not associated with unsystematic factors?

1/1

Inflation risk

Liquidity risk
Business risk
Credit risk
Feedback

Inflation risk is not typically associated with unsystematic factors. Unsystematic risks are specific to a
particular company or industry, and inflation risk is generally considered a systematic risk that affects the
overall economy rather than individual businesses.

If VaR(1%) of a portfolio is 20%, then which one of the following is correct:

0/1
It means there is 99% probability of making 80%

It means there is 1% probability that loss would exceed 20%

It means there is 20% probability of losing at least 1%
None of the options

Correct answer
It means there is 1% probability that loss would exceed 20%
Feedback

VaR at a certain confidence level measures the maximum loss one may suffer. If the VaR (Value at Risk) at a
1% level for a portfolio is 20%, it implies: There is a 1% probability that losses could surpass 20%.

Which of the following is considered an unhealthy practice in Securities Markets?

1/1

Transparency
Surveillance
Disclosure
Insider Trading

Feedback

Insider trading involves the buying or selling of stocks by individuals who have access to non-public, material
information about a company. This practice is considered unhealthy and illegal because it gives unfair
advantages to those with privileged information, undermining the fairness and integrity of the securities
markets.

Which institution in India holds the responsibility for implementing monetary policy?
1/1

Reserve Bank of India

Federal Bank of India

State Bank of India
A and B both
Feedback

The Reserve Bank of India (RBI) is the central bank of the country and is tasked with formulating and
implementing monetary policy.

Which institution was established primarily to promote old age income security by regulating
pension funds' establishment and development?
1/1
Insurance and Regulatory Development Authority
Association of Mutual Funds in India
Securities Exchange Board of India
Pension Fund Regulatory Development Authority

Feedback

The Pension Fund Regulatory and Development Authority was established to promote old age income security
through the development and regulation of pension funds. It oversees the National Pension System (NPS) and
other pension-related schemes in the country.

What is the Code of conduct of the Research Analyst

1/1

Confidentiality
Professional standard
Compliance
All of the above.

Feedback

All of the above collectively form the Code of Conduct that research analysts should uphold in their
professional activities.

Which regulatory body oversees the pension sector in India?

1/1

PFRDA

SEBI
IRDAI
All of the options
Feedback

The Pension Fund Regulatory and Development Authority (PFRDA) is the regulatory body responsible for
supervising and regulating pension-related matters in India.

Which entity is primarily responsible for promoting investors' education and training
intermediaries within the securities market?
1/1

RBI
SEBI
Ministry of Finance
National Stock Exchange (NSE)
Feedback

SEBI is the regulatory body in India that oversees the securities and stock market. One of its key functions is to
promote investor education and ensure proper training for intermediaries operating within the securities
market.

Which functions are primarily associated with the Reserve Bank of India (RBI)?
1/1

Regulation and supervision of the financial system

Issuance of currency
Management of monetary policies
All of the options

Feedback

Regulation and supervision of the financial system, issuance of currency, and management of monetary
policies are all the primary functions of RBI

Which responsibilities fall under the jurisdiction of the Department of Economic Affairs?
1/1

Formulating and monitoring India's macroeconomic policies.

Managing the Government of India's expenditure.

Handling matters concerning both Direct and Indirect Taxes.
Overseeing the systematic approach to disinvestment and privatization of Public Sector undertakings.
Feedback

The Department of Economic Affairs is involved in formulating and overseeing India's macroeconomic
policies, which encompass fiscal and monetary policies aimed at regulating the broader aspects of the
country's economy.

Which department is responsible for managing both Direct and Indirect Taxes?
1/1

Department of Expenditure
Department of Financial Services
Department of Revenue

None of the Above

Feedback

The Department of Revenue in India is responsible for administering various aspects of taxation, including
Direct Taxes (such as income tax) and Indirect Taxes (such as GST - Goods and Services Tax).

Are the stock exchanges' by-laws standardized across all exchanges and require approval from
SEBI?
1/1

True
False

Feedback

Bylaws of stock exchanges can vary between different exchanges based on their individual operational
requirements, market structure, and specific regulations.

Which department under the Ministry of Finance manages India's economic policies, Union
Budget preparation, and capital market operations?
1/1

Department of Expenditure
Department of Economic Affairs

Department of Revenue
Department of Financial Services
Feedback

This department manages India's economic policies, prepares the Union Budget, and handles operations in
the capital market, focusing on economic matters.

The department responsible for managing banking, insurance, and pension reforms is the:
1/1

Department of Financial Services

Department of Disinvestment
Department of Economic Affairs
Department of Revenue
Feedback

This department manages banking, insurance, and pension reforms initiated by the government.
What is the primary objective of the Reserve Bank of India (RBI) in administering the monetary
policy?
1/1

Rapidly increase money supply for economic growth

Ensure adequate money supply without causing inflation

Limit credit flow to the productive sectors

Maintain strict control over the currency system
Feedback

The RBI's primary concern is to facilitate economic growth and financial transactions by managing money
supply. However, it aims to maintain a balance where economic growth isn't too rapid to cause inflationary
trends.

Which of the following is NOT a function of SEBI?

1/1

Regulating the business in stock exchanges

Prohibiting fraudulent trade practices
Regulating the functioning of banks

Promoting investors' education and training

Feedback

SEBI's primary functions revolve around regulating the securities market, ensuring fair practices, and
protecting investors' interests, not the functioning of banks.

SEBI merged with which commission to regulate commodities markets in India?

1/1

Foreign Exchange Commission

Reserve Bank of India
Forward Markets Commission

Banking Regulation Commission

Feedback

SEBI merged with the Forward Markets Commission to regulate the commodities markets in India

What is IRDAI's primary mission concerning the insurance sector?

1/1

Increasing profit margins for insurance companies

Promoting orderly growth and ensuring policyholder protection

Limiting the scope of insurance products

Regulating re-insurance business only
Feedback

IRDAI's primary mission is to regulate, promote, and ensure the orderly growth of the insurance sector while
safeguarding the interests of insurance policyholders.

PFRDA was established to regulate which sector in India?

1/1

Insurance
Banking
Pension

Stock markets
Feedback

Pension Fund Regulatory and Development Authority (PFRDA) was established to regulate the pension sector
in India.

What primary responsibility does the PFRDA have concerning pension funds?
1/1

Promoting old age income security

Investment in stock markets

Managing insurance policies
Designing life insurance products
Feedback

The primary responsibility of PFRDA is to promote old age income security by establishing, developing, and
regulating pension funds.

The Securities Contracts (Regulation) Act, 1956 provides for:

1/1

Direct control over stock exchanges by the Central Government

Indirect control of securities market aspects by SEBI
Only control over issuers of securities
Regulating only direct transactions in securities
Feedback

The Securities Contracts (Regulation) Act, 1956 provides for indirect control of virtually all aspects of the
securities market to SEBI, covering instruments, intermediaries, issuers, and investors.

The primary objective of the SEBI Act of 1992 is to:

1/1

Increase market speculation

Protect the interests of investors in securities

Limit the functioning of mutual funds

Regulate foreign institutional investors only
Feedback

The primary objective of the SEBI Act of 1992 is to protect the interests of investors in securities and to
promote the development of, and regulate, the securities market.

What is the purpose of the "Chinese Wall" policy as per the Insider Trading Regulations?
1/1

To prevent access to market information

To separate departments dealing with public and confidential information

To encourage open sharing of sensitive data

To monitor the trading patterns of employees
Feedback

The "Chinese Wall" policy is aimed at separating areas dealing with confidential information (insider areas)
from those involved in sales/marketing/investment advice or other public areas, ensuring non-communication
of price-sensitive information.

The SEBI (Prohibition of Insider Trading) Regulations, 2015 define an insider as someone who:
1/1

Has access to public information

Trades frequently in securities
Has unpublished price-sensitive information

Has political affiliations

Feedback

According to the SEBI (Prohibition of Insider Trading) Regulations, 2015, an insider is defined as someone
who is connected to or in possession of unpublished price-sensitive information.

Which of the following acts is considered fraudulent under the SEBI regulations?
1/1

Making a reckless representation of securities

Concealing a material fact to induce someone to act to their detriment
Making a truthful representation in a careless manner
All of the above

Feedback

The SEBI regulations define fraud to include acts like concealing material facts to induce another person to
act to their detriment, making a reckless representation and in a careless manner.

What is prohibited under the SEBI regulations regarding dealing in securities?

1/1

Trading that creates a false appearance of market activity

Dealing in securities for beneficial ownership transfer
Inducing subscriptions with the intention of securing the minimum subscription
All of the above

Feedback

The regulations prohibit various activities such as creating false appearances, dealing in securities not for
beneficial ownership, and inducing subscriptions fraudulently.

Which regulation allows the Board to request applicants to provide additional information or
clarification?
1/1

Regulation 3
Regulation 4
Regulation 5

Regulation 6
Feedback

Regulation 5 empowers the Board to require applicants to furnish additional information or clarification for
the purpose of considering the application filed under sub-regulation (2) of Regulation 3.
True or False: The prime objective of the Research Analyst Regulations is to promote conflicts
of interest among investment analysts.
0/1

True
False
Feedback

The prime objective of the Research Analyst Regulations is not to promote conflicts of interest among
investment analysts. Instead, it aims to address and mitigate conflicts of interest, ensuring impartial and
reliable reports for investors.

What is the duration stipulated by the Insolvency and Bankruptcy Code (IBC) for the completion
of an insolvency proceeding since its initiation?
1/1

90 days
180 days

365 days
240 days
Feedback

The IBC envisages that every insolvency proceeding should be completed within 180 days since the initiation
of the process, although extensions have been granted in certain cases.

Which principle of the Code of Conduct emphasizes the importance of acting honestly and in
good faith?
1/1

Principle of Confidentiality
Principle of Diligence
Principle of Insider Trading
Principle of Honesty and Good Faith

Feedback

The Principle of Honesty and Good Faith highlights the ethical obligation of research analysts or entities to
act with integrity and sincerity in their professional conduct. It emphasizes the need for honesty and good faith
in all their activities and dealings within the realm of research analysis.
What activity is strictly prohibited for a research analyst, as mentioned in the Code of Conduct?
1/1

Insider trading or front-running

Publicly sharing the research report

Personal trading based on research reports
Distributing confidential information
Feedback

The Code of Conduct strictly prohibits research analysts or their employees from engaging in insider trading
or front running, ensuring that they do not trade securities based on non-public information or manipulate
markets for personal gain.

What is the time period provided for proxy advisors to comply with capital adequacy
requirements?
0/1

One year
Two years

Three years
Five years

Correct answer
Three years
Feedback

Proxy advisors are given a time frame of three years to comply with capital adequacy requirements as
specified in the regulations.

Who is responsible for monitoring compliance with the provisions of the Act, regulations, and
circulars issued by the Board within a research entity?
1/1

Chief Executive Officer (CEO)

Compliance Officer

Senior Research Analyst

Board of Directors
Feedback

A research entity must appoint a compliance officer responsible for monitoring compliance with the Act,
regulations, and circulars issued by the Board.