NISM-Series-XV - Research Analyst Certification Exam - 16

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Q 1. What is a characteristic of deep cyclical industries during recessionary conditions?

a) Minimal impact on sales

b) Steady growth in sales

c) Significant drop in sales

d) Extreme cyclicality in revenues

e) Consistent demand irrespective of economic cycles
 
Q 2. Why is accurate company valuation crucial before a share swap occurs?

a) To determine the CEO's salary

b) To calculate the company's tax liability

c) To assess employee performance

d) To establish a fair swap ratio

e) None of the above
 
Q 3. Who are the primary clients of Buy-side Analysts?

a) Investors and institutions

b) Investment bankers and regulators

c) Media and consolidators of information

d) Mutual and hedge funds

e) Research originators and boutique firms
 
Q 4. What might provide comfort to businesses and investors in a country's legal environment?

a) Arbitrary changes in legal aspects

b) Inconsistency in legal frameworks

c) Transparency and enforcement of laws

d) Rapid changes in legal policies

e) Lack of protection for businesses
 
Q 5. What does the EV to capital-employed ratio aim to assess?

a) Return on Invested Capital

b) Market capitalization

c) Return on Capital Employed

d) Earnings per share

e) Net Asset Value per share
 
Q 6. What is the medium through which Exchange Traded Funds (ETFs) are traded?

a) Direct issuance of mutual funds

b) Over-the-counter (OTC) markets

c) Direct issuance by issuers

d) Stock Exchange

e) Fixed maturity periods
 
Q 7. What is the purpose of MAT credit mentioned in the text?

a) To reduce future tax obligations

b) To increase current tax obligations

c) To avoid paying taxes

d) To deceive the government

e) To encourage certain business practices
 
Q 8. What does Market Risk refer to?

a) Loss of value due to adverse price movements

b) Default risk of a bond issuer

c) Operational challenges in a company

d) Fluctuations in currency exchange rates

e) Changes in raw material costs
 
Q 9. How does the Over-the-Counter (OTC) market differ from the exchange-traded market?

a) OTC markets involve electronic order-matching systems, while Exchange Traded Markets rely on direct negotiations.

b) In OTC markets, securities are traded directly among counterparties, while Exchange Traded Markets involve stock exchanges.

c) OTC markets guarantee settlement through clearing corporations, while exchange-traded markets settle directly between counterparties.

d) OTC transactions are settled by the clearing house, while exchange-traded markets have no settlement process.

e) OTC markets are limited to specific types of securities, while exchange-traded markets cover all types.
 
Q 10. What risk does economic recession pose for businesses?

a) Increased customer concentration

b) Decline in the fortunes of many businesses

c) Technological advancements

d) Regulatory headwinds

e) Deregulation of an industry
 
Q 11. What is the key advice given by great investors?

a) Predict future stock prices based on market movements.

b) Ignore market price movements for disciplined investing.

c) Follow the emotional assessments of Mr. Market.

d) Sway emotions based on economic cycles.

e) Accept losses during bear markets for long-term gains.
 
Q 12. What is the principal amount on which interest is computed in an interest rate swap?

a) the total notionality of the trade

b) the fixed rate paid by one party

c) the spread added to the Treasury bill rate

d) the net obligation of the borrower

e) Quarterly interest rate
 
Q 13. When a company is owned and controlled by another company, what type of financial statement is prepared to present the combined financial performance of both companies?

a) Stand-alone financial statement

b) Individual financial statement

c) Combined financial statement

d) Separate financial statement

e) Consolidated financial statement
 
Q 14. What is the primary responsibility of the Ministry of Finance in the Indian Financial Market?

a) Execution of monetary policies.

b) Protection of investor interests.

c) Management of state finances.

d) Oversight of disinvestment policies.

e) Formulation and monitoring of macroeconomic policies.
 
Q 15. What does Debt Capital refer to in the financial context?

a) Capital provided by equity investors

b) Capital provided by the government

c) Capital provided by lenders for fixed-rate interest

d) Capital provided by issuing equity securities

e) Capital provided by foreign investors

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