NISM-Series-XV - Research Analyst Certification Exam - 18
NISM-Series-XV - Research Analyst Certification Exam - 18
Q 1. Why would companies consider consolidating their shares?
a) To reduce the face value of shares
b) To increase the number of outstanding shares
c) To maintain a low share price
d) To improve market perception
e) To decrease the paid-up capital
Q 2. How long is a research analyst or research entity required to preserve records according to Regulation 25(2)?
a) One year
b) Three years
c) Five years
d) Seven years
e) Ten years
Q 3. Which industry in the Indian context is cited as an example of going through all the business life cycle phases?
a) Telecom industry
b) Automobile industry
c) Call taxi services
d) Software industry
e) Retail industry
Q 4. How is the value of a company assessed in a two-stage valuation approach using FCFE models?
a) By assuming a constant growth rate for cash flows
b) By estimating the FCFE for all periods in the high growth phase and valuing the perpetual stream of FCFE post-maturity
c) By using the Gordon growth model for the entire valuation
d) By focusing only on the terminal value
e) None of the above
Q 5. What is emphasized as a key guideline for analysts when communicating their findings to clients?
a) Include biased views for a more engaging report
b) Using complex language to sound more professional
c) Making assumptions without stating the m clearly
d) Being realistic and basing suggestions on facts and figures
e) Promoting conflicts of interest to benefit the analyst
Q 6. What is the primary focus of Performance analysis in the context of industry evaluation?
a) Business structure
b) Numerical ratios
c) Conduct of businesses
d) Behavioral aspects of industry players
e) Financial metrics for investors/owners
Q 7. Why is business valuation considered a subjective exercise?
a) Due to complicated quantitative models
b) Lack of generally accepted standards
c) Timeless valuation
d) Precision of estimates
e) Wide variations in ROCE and ROE
Q 8. How is the payment of dividends handled once the conversion of Foreign Currency Convertible Bonds (FCCBs) into equity occurs?
a) Dividends are not paid to investors
b) Dividends are paid in foreign currency
c) Dividends are paid to Indian Rupees with conversion obligations lying with the investors
d) Dividends are paid in the home country's currency
e) Dividends are paid in the currency of the country where the bonds were issued
Q 9. In an industry characterized by intense competition, the result will be _____ pricing power and ______ incomes for the industry participants.
a) Lower; higher
b) Lower; lower
c) Higher; higher
d) Higher; lower
e) Unpredictable; unpredictable
Q 10. What does Beta measure in the context of market risk?
a) Company fundamentals
b) Expected market returns
c) Volatility in the investment relative to the market
d) Risk of an investment that can be diversified away
e) Historical stock prices
Q 11. What distinguishes hard underwriting from soft underwriting in the context of underwriters?
a) Hard underwriting involves a commitment after the pricing is determined
b) Soft underwriting involves a commitment at the initial stages of the IPO
c) Hard underwriting comes with the option to exit during certain events
d) Soft underwriting limits the risk to the underwriter
e) Hard underwriting is a commitment given once the IPO is listed
Q 12. Why is disclosing all income that an independent director earns from a company important for corporate governance?
a) This ensures compliance with tax regulations
b) It prevents unscrupulous related party transactions
c) It enhances audit committee efficiency
d) It reduces auditor fees
e) It allows shareholders to evaluate the true degree of independence
Q 13. Why is discipline emphasized in the writing process of research reports?
a) To meet tight deadlines during quarterly results season.
b) To enhance financial modeling skills.
c) To access exclusive information.
d) To simplify the delivery of the report.
e) To improve communication with management.
Q 14. How is the Book Value per share calculated?
a) By multiplying the number of shares by their face value
b) By dividing net worth by the number of outstanding shares
c) By calculating the dividend declared on each share
d) By adding the market price and face value of a share
e) By subtracting the realizable value of assets from the face value of a share
Q 15. What does "deferred revenue" represent in the context of a balance sheet?
a) Present value of lease payments payable
b) Mark-to-market losses arising from derivative contracts
c) Future obligation to be provided towards a revenue transaction that has already happened
d) Amount set aside for a liability that is yet to be fully quantified
e) Amount repayable towards borrowing due beyond one year
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