NISM-Series-XV - Research Analyst Certification Exam - 2

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Q 1. What is the main focus of understanding the economic cycle?

a) Predicting unpredictable changes in the industry

b) Short-term outlook regarding sales volume and prices

c) Determining highly predictable patterns in production

d) Analyzing temporary trends that eventually reverse

e) Identifying long-term changes occurring in the economy
 
Q 2. What are the potential motives for a company to engage in the buyback of shares?

a) To increase equity

b) To decrease leverage

c) To boost stock value if undervalued

d) To increase dilution in promoters’ holding

e) To accumulate excess cash
 
Q 3. 5: What is prohibited in advertisements to avoid unfair comparisons with other intermediaries?

a) Statements based on assumptions or projections

b) Statements that are consistent with the risk profile

c) Superlative terms such as "Best" or "No. 1"

d) Inclusion of factual details of awards received

e) Statements that directly or indirectly discredit other advertisements or intermediaries
 
Q 4. What contributes to the high bargaining power of suppliers in the sugar industry, especially in the Indian context?

a) Limited number of suppliers and buyers

b) Dependence on critical inputs from suppliers

c) High competition in the industry with product differentiation

d) Availability of substitutes for sugar

e) Low switching costs for customers
 
Q 5. 3: According to Peter Lynch, how should investors interpret a PEG ratio less than 1?

a) the stock is overvalued

b) the stock is undervalued

c) the stock has low growth potential

d) the stock has high debt

e) the stock has a low PE ratio
 
Q 6. What is the primary purpose of issuing Debentures/Bonds/Notes?

a) To represent fractional ownership in a business venture

b) To create liquidity in the securities market

c) To raise long-term debt

d) To provide a mechanism for issuers to exit

e) To facilitate direct issuance by companies
 
Q 7. What are some of the key constraints for the IT services/BPO/KPO sector during periods of high growth?

a) Regulatory Capital

b) Bench Strength

c) Net Interest Margin

d) Capacity and Utilization Rate

e) Average Price Growth
 
Q 8. 5: Why might a fixed deposit with a bank be considered a lower-risk product?

a) It has a longer investment horizon

b) It offers a higher rate of return

c) the bank is likely to default on interest payments

d) the dividend is uncertain

e) the return of capital invested is uncertain
 
Q 9. What role does SEBI play in the primary market, specifically in the context of an IPO?

a) SEBI determines the profitability of companies.

b) SEBI imposes timelines for issuing securities in the primary market.

c) SEBI decides the allocation price for shares in an IPO.

d) SEBI regulates only retail investor participation in IPOs.

e) SEBI facilitates direct transactions between issuers and investors.
 
Q 10. How does the Covid-19 pandemic illustrate the relevance of SWOT analysis?

a) It emphasizes the importance of market trends

b) It highlights the significance of customer preferences

c) It showcases the impact of external threats on businesses

d) It demonstrates the strength of companies in the face of challenges

e) It underscores the need for financial diversification
 
Q 11. 1: What is loss aversion bias in investment behavior?

a) the tendency to strongly prefer acquiring gains to avoiding losses.

b) the tendency to be risk-averse and avoid all investments.

c) the preference for holding onto losing stocks despite potential gains.

d) the desire to take action and embrace risk in the face of potential losses.

e) an unbiased evaluation of portfolio performance.
 
Q 12. What characterizes Cash trades in the securities market?

a) Settlement occurs the day after the trading day (T+1)

b) Settlement occurs on the spot date, two business days after the trade date

c) Settlement occurs on the same trading day (T+0)

d) Settlement involves payment and delivery in the foreign exchange market

e) Cash trades are not common in financial markets
 
Q 13. What sources of information may provide insights into a company's strategic direction and long-term goals?

a) Discussion with suppliers, vendors, consumers, and competitors

b) Research Reports from various other sources – media reports

c) Management interviews on the internet

d) Competitors’ website

e) Conference Call transcripts
 
Q 14. 2: What does the checklist suggest about understanding the business in qualitative parameters?

a) It's unnecessary for investment analysis.

b) It's only for technology-related businesses.

c) This is crucial for investment analysis.

d) It's not important for revenue models.

e) It's only applicable to small businesses.
 
Q 15. How is the Price to Earnings Ratio (PE Ratio) calculated?

a) Earnings per share / Market price per share

b) Market capitalization / Net profit

c) Dividend Per Share (DPS) / Earnings per share

d) Net Profit / Number of shares outstanding

e) Market price per share / Earnings available to serve both equity and debt holders
 
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