Nism Series 15 Model Paper

NISM SERIES XV - RESEARCH
ANALYST CERTIFICATION EXAM

NISM SERIES XV – RESEARCH ANALYST
CERTIFICATION EXAM : REAL FEEL MOCK TEST
About PASS4SURE.in
PASS4SURE is a professional online practice test bank for various NSE NCFM, NISM and BSE exams. The team
behind PASS4SURE has decades of experience in the financial and stock markets and have succeeded in preparing
practice question bank which will help not only to pass the exams easily but also get good knowledge of the
subject.
Our online mock exams contain questions which are carefully analysed by the experts and have a high probability
of being asked in the exams. Thus all PASS4SURE questions are highly valued and contribute to an almost 100%
success rate.
We do not believe in offering you thousands of questions but most important 400 – 500 practice questions and
answers. PASS4SURE understands that time and money is valuable for our students, so we regularly update all our
exams. The old questions are deleted and new important questions are added. Our LAST DAY REVISION test are
on the spot. This is done to ensure that the students learns what is most important and pass the exams. You do
not have to try again and again wasting time and money.
Our simple aim is to simplify the NCFM, NISM and BSE exams. ALL THE BEST.
IMPORTANT – The viewing rights for this downloaded Question Bank will automatically
expire after 60 days from the date of purchase.
TEST DETAILS – The NISM Research Analyst Module exam is a 100 mark exam with 60% as passing marks. The
question paper will consist of 100 multiple choice questions. There is 0.25% negative marking. The time duration is
120 Minutes.
All Rights Reserved. No Part of this documents may be reproduced, stored in a retrieval system, or transmitted, in any form or
by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission from
PASS4SURE.in. For any clarification regarding this document or if you feel there are errors in the question bank, please write
us at info@pass4sure.in
THIS IS A MOCK EXAM TO TEST YOUR PREPARATIONS.

PLEASE SOLVE THESE 100 QUESTIONS IN 2 HOURS.
Question 1 An agent who buys and sells shares in a recognised stock exchange is
known as ______ .
(a) Depository Participant
(b) Underwriter
(c) Merchant Banker
(d) Stock Broker
Question 2 In the SCP Analysis, 'Performance' includes which of the following ?
(a) Return on Capital Employed
(b) Return on Equity
(c) dependence of the business on government policies
(d) Both 1 and 2
Correct Answer 1 Stock Broker

Answer Trading members or Stock Brokers are registered members of a Stock
Explanation Exchange. They facilitate buy and sell transactions of investors on stock
exchanges.
Correct Answer 2 Both 1 and 2

Answer Businesses with High return on capital/equity are the ones which create wealth
Explanation for shareholders/owners in the long run. While analyzing performance of
an industry, analysts will look at these financial and other ratios.
Question 3 The Market Capitalisation of a firm is Rs 50 lakhs and it has a total debt
of Rs 10 lakhs. The cash in hand is Rs 3 lakhs. What is the Enterprise
Value of the firm ?
(a) Rs 43 Lakhs
(b) Rs 57 Lakhs
(c) Rs 63 Lakhs
(d) Rs 50 Lakhs
Question 4 Over pricing of securities by the market is favourable to the investors -

State True or False ?
(a) TRUE
(b) FALSE
Correct Answer 3 Rs 57 Lakhs
Enterprise Value (EV) is the theoretical takeover price of a firm.

Answer Enterprise value (EV) = Market value of equity (Market capitalization) +
Explanation Market value of debt – cash and cash equivalents
EV = 50 L + 10 L - 3 L
= 57 Lakhs
Correct Answer 4 FALSE.
Markets usually give a fair pricing to the securities.

Answer So when a security is under priced, an investor can buy it and sell it when its
Explanation fairly priced.
If a security is over priced, the only way to benefit from it is to sell it and buy
it back when its fairly priced. But this is Short Selling which speculators
indulge in and not investors.
Question 5 The current inventory of a company is Rs 2000. The average age of

inventory for this company is 10 days. Calculate the Sales of the company
over the last year. (Assume 365 days in a year)
(a) Rs 36500
(b) Rs 25000
(c) Rs 73000
(d) Rs 56500
Question 6 Efficient Market Hypothesis (EMH) propagates that share prices

incorporate and reflect all relevant information - State True or False ?
(a) FALSE
(b) TRUE
Correct Answer 5 Rs 73000
Inventory Turnover ratio gives the number of times inventory is rolled over by
Answer a company.
Explanation Since the average age of inventory is 10 days, this means in 365 days the
inventory is rolled 36.5 times (365/10). This is the Inventory turnover.
Inventory Turnover = Sales / Inventory
36.5 = Sales / 2000
Sales = 36.5 x 2000 = Rs 73000
Correct Answer 6 TRUE

Question 7 Research Analysts who are individuals or partnership firms shall have net
tangible assets of value not less than Rs. _____ .
(a) Rs 1 lakh
(b) Rs 2 lakhs
(c) Rs 5 lakhs
(d) Rs 10 lakhs
Question 8 Which technological factor(s) help a country attract investors ?
(a) Availability of technology savvy population
(b) Institutions driving technology based initiatives
(c) Less technological support
(d) Both 1 and 2
Correct Answer 7 Rs 1 lakh

Answer Availability of technology savvy population and institutions driving
Explanation technology based initiatives and infrastructure help a country attract investors.
Question 9 Calculate the Sales of a business with the following data : EPS = 5
No. of shares outstanding = 50000 EBIT% is 40% EBIT is 400% of Net
Profit.
(a) Rs 50 Lakhs
(b) Rs 25 Lakhs
(c) Rs 12.50 lakhs
(d) Rs 20 lakhs
Question 10 "The bye-laws of the stock exchanges are same across exchanges and need
to be approved by SEBI". State whether True or False.
(a) TRUE
(b) FALSE
Answer EPS = Net Profit / No. of Shares

Explanation So Net Profit = EPS x No. of Shares
= 5 x 50000
Net Profit = Rs. 2,50,000
EBIT is 400% of Net Profit
So EBIT = Rs 10,00,000 ( 250000 x 400 / 100 )
EBIT is 40% of Sales
Thus Sales = Rs. 25,00,000 ( 100 x 1000000 / 40 )
Correct Answer 10 FALSE

Answer A Stock Exchange can have its own / different bye laws but the same has to be
Explanation approved by SEBI.
Question 11 Forward contracts are Exchange Traded Contracts -State True or False ?
(a) TRUE
(b) FALSE
Question 12 The total current assets of a company are Rs 80000, the Inventory is Rs
20000 and the Quick Ratio is 2, Calculate the Current Ratio.
(a) 2
(b) 2.15
(c) 2.66
(d) 3
Forward contracts are Over-the-counter (OTC) contracts. They are contractual

Answer agreement between two parties to buy or sell an underlying asset and there is
Explanation no Stock Exchange or any other Exchange involved.
Correct Answer 12 2.66
Quick Ratio = (Current Assets – Inventories) / Current liabilities

Answer 2 = 80000 - 20000 / Current liabilities
Explanation 2 = 60000 / Current liabilities
Current liabilities = 60000 / 2 = 30000
Current Ratio = Current Assets / Current liabilities
= 80000 / 30000
= 2.66
Question 13 Inflation risk is a Systematic Risk - State True or False ?
(a) TRUE
(b) FALSE
Question 14 Some very important regulatory aspect(s) have to be looked into by

analyst while analyzing businesses in India include ________ .
(a) Policy regarding cancellation of licenses
(b) FDI in multi brand retail
(c) Environment policies
(d) All of the above

Answer Systematic risk refers to those risks whose impact is felt across investment
Explanation categories. These risks are also known as non-diversifiable risks, because they
cannot be eliminated through diversification.
Changes in government policy, external factors, wars or natural calamities,
Inflation risk, exchange rate risk, interest rate risk and reinvestment risk are
systematic risks.
Correct Answer 14 All of the above

Question 15 The price of the stock of M/s PQR Ltd is Rs 100 and the PE ratio is 20.
Find the amount retained by the company if the retention ratio is 30%.
(a) Rs 5
(b) Rs 30
(c) Rs 2.3
(d) Rs 1.5
Question 16 _________ is/are the important parameters to observe by an analyst in the

IT (Information Technology) and related sectors.
(a) Concentration of geographies of clients
(b) USDINR rate
(c) Attrition rate among employees
Correct Answer 15 Rs 1.5

Answer PE Ratio = Stock Price / EPS
Explanation 20 = 100 / EPS
Thus the Earning Per Share is 100 / 20 = Rs 5
Out of this Rs 5 earnings, the company retains 30% = Rs 1.5
Answer USDINR rate, attrition rate among employees, concentration of revenues with
Explanation selected clients, concentration of geographies etc. are important parameters
to watch out for in IT and related sectors.
Question 17 Research Analysts facilitates the decision making by the investors in both
investments and disinvestment's - State True or False ?
(a) TRUE
(b) FALSE
Question 18 Who is the manager of Indian Government's debt borrowings ?
(a) RBI
(b) Ministry of Corporate Affairs
(c) Ministry of Finance
(d) Department of Revenue
Answer Research Analyst provide in-depth knowledge on the status of a company /

Explanation industry etc by studying various Macro/Micro factors and financial ratios.
Based on these, the investors can take decisions on buying and selling the
stocks etc.
Correct Answer 18 RBI
Answer Reserve Bank of India is the Government's debt manager.

Explanation
Question 19 Per Capita Income is a true indicator of _________ .
(a) National Income of a country
(b) Standard of living in a country
(c) Imports - Exports of a country
(d) Financial performance of a country
Question 20 Initial margin charged by the Clearing Corporation is a percentage of

transaction value arrived at based on concept of â€œValue At Riskâ€•
philosophy -State True or False ?
(a) TRUE
(b) FALSE
Correct Answer 19 Standard of living in a country

Answer Per Capita Income = National Income / Total Population.
Explanation Which is the amount of money that is being earned per person in a country.
Higher the Per Capita Income, higher the Standard of Living.

Question 21 __________ helps us understand drivers of income, savings, investments

and employment in an economy.
(a) Microeconomics
(b) Macroeconomics
(c) Both Microeconomics and Macroeconomics
(d) None of the above
Question 22 Corporate Governance basically takes into account the efficiency aspect
of the management - State True or False ?
(a) TRUE
(b) FALSE
Correct Answer 21 Macroeconomics

Answer Corporate Governance basically takes into account the integrity and
Explanation transparency aspect of the management.
Question 23 When one invests in Equity Shares, which of the below options is certain ?
(a) Quantum of cash flow is known
(b) Timing of cash flow is known
(c) Amount of Capital Appreciation is known
Question 24 The analysis done more from the perspective of a business which is
looking to setup unit offshore and analyzing several countries to choose
from is known as ________ .
(a) PESTLE Analysis
(b) SCP Analysis
(c) BCG Analysis
Correct Answer 23 None of the above

Answer When one invests in Equity Shares, whether he will make a profit or loss is
Explanation uncertain. So one can never predict the quantum or timings of cash flows.
Correct Answer 24 PESTLE Analysis

Answer PESTLE Analysis stands for Political, Economic, Socio-cultural,
Explanation Technological, Legal and Environmental Analysis.
To do business in any country, a business must know each of the above factors
very well and how changes in any/either of these would impact business.
Question 25 Strengths and Weaknesses are _________ elements of a business.
(a) Internal
(b) External
(c) Physiological
Question 26 SEBI has given guidelines for Research Analyst with the main intention of
_________ .
(a) Research Analyst to follow all compliance rules
(b) Investors never lose money in the market
(c) building confidence among the investors
(d) Both for building confidence and investors never losing their money
Correct Answer 25 Internal

Answer In the Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis,
Explanation Strengths and Weaknesses are internal to the company, Opportunities and
Threats deal with the external environment of the business.
Correct Answer 26 building confidence among the investors

Answer The prime objective of these regulations is to protect investors and enhance
Explanation confidence in the market. However investors not losing money can never be
gauranteed due to movements of the markets.
Question 27 Which of the following is not true about investing ?
(a) Basically all types of investment will result in capital appreciation over a long
period of time
(b) Basically all types of investment carry risk of capital erosion
(c) Investment in equity is riskier than investing in bonds
Question 28 The Depository Receipts which are issued in India and listed on an Indian
Stock Exchange with foreign stocks as underlying shares are known as
_______.
(a) American Depository Receipts (ADRs)
(b) Global Depository Receipts (GDRs)
(c) Indian Depository Receipts (IDRs)
(d) None of the Above
Correct Answer 27 Basically all types of investment will result in capital appreciation over a long
period of time
Correct Answer 28 Indian Depository Receipts (IDRs)

Question 29 Which of the following is not included in ‘Unfair Trade Practice’ ?
(a) Misleading Advertisement
(b) Publicly known information
(c) Manipulation
(d) Publishing Falsehood
Question 30 Price to earnings ratio of a business is 8, price to book value ratio of this
business is 4, book value per share is Rs. 12 and outstanding number of
shares are 8000, what would be the return on equity of this business?
(a) 30%
(b) 38%
(c) 50%
(d) 62%
Correct Answer 29 Publicly known information
Correct Answer 30 50%
Answer Price to Book Value = Stock Price / Book Value

Explanation So Stock Price = Price to Book Value X Book Value
Stock Price = 4 X 12 = Rs 48
PE = Stock Price / EPS
So EPS = Stock Price / PE
EPS = 48 / 8 = 6
Return on Equity = (EPS / Book Value) X 100
= (6 / 12) x 100 = 50%
Question 31 Inflation will lead to _________ in price levels in the economy.
(a) Decrease
(b) Increase
(c) no change
Question 32 Growth adjusted Price to Earnings Ratio (PEG Ratio) is calculated as

_________ .
(a) [Current price of stock/ Earnings Per Share] / Growth rate
(b) [Current price of stock/ Earnings Per Share] X Growth rate
(c) [Current price of stock/ Earnings Per Share] + Growth rate
(d) [Current price of stock X Earnings Per Share] / Growth rate
Correct Answer 31 Increase

Answer Inflation is defined as the general increase in price levels of goods and services
Explanation in the economy leading to an erosion of purchasing power of money.
Correct Answer 32 [Current price of stock/ Earnings Per Share] / Growth rate
Answer To understand the difference between a normal PE Ratio and PEG Ratio, lets
Explanation take an example.
There are two businesses with P/E ratios 12 and 28. They have different
growth potentials of 10 % and 40 % for next few years. If we look at PE Ratio,
we will derive that the stock with PE of 12 is cheaper than the stock with PE
28.
However if we calculate the PEG ratio ie - 12/10 and 28/40 , we will find that
the second stock is cheaper due to the high growth rate of the company.
Question 33 A company has a sales of Rs 28000 and from this they have a operating
profit of Rs 3900. If the corporate tax is at 30%, calculate the net profit
margin of the company. ( There is no interest expense )
(a) 9.75%
(b) 10.80%
(c) 13.20%
(d) 16.75%
Question 34 The Networth of a business is Rs 5,00,000 and the debt on Balance Sheet
is Rs 3,00,000. The Market Capitalisation is Rs 10,00,000. Calculate the
Capital Employed of this business.
(a) Rs 12,00,000
(b) Rs 8,00,000
(c) Rs 5,00,000
(d) Rs 2,00,000
Correct Answer 33 9.75%

Answer Net Profit is the final profit ie. after Interest and tax.
Explanation In this question, to get Net Profit, we shall have to deduct the tax from
Operating Profit.
So 3900 less 30 % Tax ( 3900 - 1170 ) = 2730 is the Net Profit
Net Profit margin is the Net profit as a % of Sales
Sales = Rs 28000
NP = Rs 2730
2730 / 28000 x 100 = 9.75%
Correct Answer 34 Rs 8,00,000

Answer Capital Employed can be calculated using two formulas.
Explanation 1) Capital Employed = Total Assets – Current Liabilities
2) Capital Employed = Total Equity + Total Debt
Here we use the second formula.

= 500000 + 300000 = 800000
Question 35 When a dividend is declared during the financial year, its called as
_______ .
(a) Mid Year Dividend
(b) Final Dividend
(c) Interim Dividend
(d) Stock Dividend
Question 36 Which of the following options is NOT true with respect to Equity
Capital?
(a) Equity shareholders get voting rights
(b) The company has no obligation to pay any dividend
(c) The Equity share holders have the first right of claim on the company's assets
in case of liquidation
(d) Equity is perpetual
Correct Answer 35 Interim Dividend

Answer When a company declares dividend in between a finacial year its called
Explanation Interim Dividend and when its announced at the end of the year, its called
Final Dividend.
Correct Answer 36 The Equity share holders have the first right of claim on the company's assets
in case of liquidation
Answer The Equity share holders have one of the LAST claim on the company's assets
Explanation in case of liquidation.
Question 37 In PESTLE Analysis, healthy public finances and a consistent fiscal policy
are considered under _______ .
(a) Economic Factors
(b) Political Factors
(c) Technological Factors
(d) Socio-Cultural Factors
Question 38 Calculate the Market Capitalisation of a company with the following data
: Paid Up Capital - Rs 50 Lakhs Face Value of Shares - Rs 5 PE Ratio - 8
EPS - Rs 5
(a) Rs 350 Lakhs
(b) Rs 580 Lakhs
(c) Rs 400 Lakhs
(d) Rs 450 Lakhs
Correct Answer 37 Political Factors

Answer No. of Shares of the Company = 50,00,000 / 5 = 10 lakhs
Explanation PE = Market Price / EPS
Market Price = PE X EPS
= 8 x 5 = 40
Market Capitalisation = Market Price x No. of shares
= 40 x 10,00,000 = Rs 40000000
Question 39 Foreign Direct Investment (FDI) is welcomed by all the developing

economies as it ___________ .
(a) brings in new products and services
(b) brings in new managerial skills
(c) access to traditional technologies
(d) both 1 and 2
Question 40 __________ is also concerned with the financial policy relating to the
utilization of proceeds of disinvestment.
(a) Department of Financial Services
(b) Department of Expenditure
(c) Department of Disinvestments
Correct Answer 39 both 1 and 2
Answer FDI brings in new and latest technologies and not traditional technologies.
Explanation
Correct Answer 40 Department of Disinvestments
Answer The Department of Disinvestments is responsible for systematic policy

Explanation approach to disinvestment and privatization of Public Sector undertakings.
The department is also concerned with the financial policy relating to the
utilization of proceeds of disinvestment.
Question 41 What do the investors usually earn ?
(a) They get returns on their capital invested
(b) They get rent on their property
(c) They get income based on the services they offer
(d) Both 1 and 2
Question 42 Some investors look for information to prove that they are right - Which
behavioural bias is this ?
(a) Ownership bias
(b) Herd mentality
(c) Confirmation bias
(d) Anchoring

Answer Employees earn wages and salaries, Professionals earn their income based on
Explanation their services, Entrepreneurs earn profits and Investors earn return on their
capital and rent on their land.
Correct Answer 42 Confirmation bias

Answer Confirmation bias, which is also called 'my side bias', is the tendency to search
Explanation for or interpret information in a way that confirms one's beliefs. For example,
when a trader buys a stock for a reason and that reason doesn’t work out so the
trader makes up another one for owning the position.
Question 43 The mispricing which is favourable to investors is _______ .
(a) Under pricing
(b) Over pricing
(c) both 1 and 2
Question 44 The job of an Research Analyst is to ________ .
(a) Collect and Analyze the data
(b) Take investment decisions
(c) Manage the investments
Correct Answer 43 Under pricing

Answer Markets usually give a fair pricing to the securities. Fundamental analysts
Explanation maintain that market may misprice securities in the short run but in the long
run, prices would merge with the securities’ fair value or intrinsic value.
So when a security is under priced, an investor can buy it and sell it when its
fairly priced.
Correct Answer 44 Collect and Analyse the data

Answer Research Analyst do extensive Research (collection of information from
Explanation various sources) and then Analysis (processing of data to take decisions)
They do not take the investment decisions but help their clients take
investment decisions.
Question 45 The Net Profit margin of a company is 25%. The EBIT % of this
company is 50% with EBIT levels of Rs 450000. No. of shares outstanding
are 30000. Calculate the Earning per share (EPS).
(a) 15
(b) 11.5
(c) 9.8
(d) 7.5
Question 46 The PAT of a company is Rs 5,40,000 and the number of outstanding

shares are 6000. The current price of the stock is Rs 280. Calculate the
P/E Ratio.
(a) 280
(b) 3.11
(c) 4.53
(d) 90

Answer The EBIT is Rs 450000 which is 50% of the business ie. sales.
Explanation So Sales = Rs 900000 (450000 / 50 x 100)
Net Profit margin is 25% ie 25% of Sales Rs 900000
25% of Rs 900000 = 225000
EPS = Net Profit / No. of Shares
= 225000 / 30000 = 7.5

Answer Price to Earnings Ratio (PE Ratio) = Market price per share / Earnings per
Explanation share (EPS)
We know the Market Price and have to calculate the EPS
EPS = Net Income / No. of Outstanding Shares
= 540000 / 6000
= 90
PE Ratio = Market price per share / EPS
PE = 280 / 90 = 3.11
Question 47 Old companies which have a long track record give confidence to the
investors because _________ .
(a) these companies have seen many business cycles
(b) these companies have more knowledge and experience within to meet new
challenges
(c) these companies have very good historical financial
(d) Both 1 and 2
Question 48 Careful analysis of historical financials is not required in which business

analysis ?
(a) Valuation
(b) Quantitative
(c) Qualitative

Answer Old companies give confidence to investors as these companies have seen
Explanation many business cycles and are hence having more knowledge and experience
within to meet new challenges.
Correct Answer 48 Qualitative

Answer Quantitative parameters would consist of financial aspects such as ratio
Explanation analysis, analysis of cash flows etc.; Valuation parameters would consist of
intrinsic value, P/E, P/BV, margin of safety aspects.
Qualitative parameters take care of aspects like business/revenue model,
SWOT analysis, competition in the industry, technology aspects etc.
So only Quantitative and Valuation analysis of business require analysis of
historical financials.
Question 49 Code of conduct is defined in the Schedule ____ of Research Analyst

Regulations.
(a) I
(b) II
(c) III
(d) IV
Question 50 Investment Operation requires a through research due to the below

mentioned reasons EXCEPT -
(a) understanding the investment options available
(b) determining their suitability for the needs of the investors
(c) get fast and quick returns on investments
Correct Answer 49 III
Correct Answer 50 get fast and quick returns on investments

Answer An investment operation is one which, upon thorough analysis promises safety
Explanation of principal and an adequate return. Operations not meeting these requirements
are speculative.
Investing requires adequate efforts in terms of research and understanding the
investment options available, determining their suitability for the needs of the
investors and their appropriate value.
Question 51 The Corporate Action of __________ will lead to change in the per share
data (earning per share, book value per share, market price per share
etc.)
(a) Stock Split
(b) Bonus Issue
(c) Stock Consolidation
Question 52 The Total Assets of a company are Rs 35000 and the Total Liabilities are
Rs 18000. Calculate the Equity to Asset Ratio.
(a) 1.51
(b) 0.8
(c) 0.48
(d) 1.94

Answer In case of Bonus Shares, per share data (earning per share, book value per
Explanation share, market price per share etc.) will witnesses immediate deterioration as
total number of shares go up without any economic change in the profit and
loss statement or balance sheet.
Same is the case with Stock Split.
In Stock Consolidation. as total no. of shares go down without any economic
change in the Profit and Loss account or Balance Sheet, per share data
(earning per share, book value per share, market price per share etc.) witnesses
immediate improvement.

Answer Equity = Assets - Liabilities
Explanation = 35000 - 18000
= 17000
Equity to Asset Ratio = Equity / Assets
= 17000 / 35000
= 0.48
Question 53 The importance and use of microeconomics is/are ___________.
(a) Microeconomics deals with the understanding and working of a free market
economy
(b) Microeconomics helps us understand how the prices of the products and
services get determined in an economy
(c) Microeconomics helps us understand how individuals and firm behave with
regard to prices and how goods and services in an economy are distributed
among its various participants.
Question 54 Companies Act requires that a company which wants to raise further
capital through an issue of shares must first offer them to the existing
shareholders and such an offer of shares is known as ______.
(a) Preference Issue
(b) Bonus Issue
(c) Public Issue
(d) Rights Issue
Correct Answer 54 Rights Issue

Question 55 The focus area(s) for an analyst while analysing an Economy would be
______ .
(a) Changes in various macro-economic factors like - National income, Inflation,

Interest rate and Unemployment rate
(b) Flows from Foreign Direct Investment (FDI) and Foreign Portfolio Investors
(FPIs)
(c) Savings and investment patterns
Question 56 SEBI can take which of the following action against an intermediary?
(a) Issue a warning or censure
(b) Suspend the registration of the intermediary
(c) Cancel the registration of the intermediary
Answer The focus areas for an analyst while analysing an Economy are :
Explanation - Changes in various macro-economic factors like - National income, Inflation,
Interest rate and Unemployment rate
- Fiscal and Monetary Policies and their impact on the economy
- Flows from Foreign Direct Investment (FDI) and Foreign Portfolio Investors
(FPIs)
- Savings and investment patterns
- Global factors that impact the GDP growth based on export and import
transactions

Question 57 The Market Capitalisation of a company is calculated as _________ .
(a) Book Value of the Share X The No. of shares outstanding
(b) Market Price of the Share X The No. of shares outstanding
(c) EPS of the Share X The No. of shares outstanding
(d) Face Value of the Share X The No. of shares outstanding
Question 58 The P/E ratio of a company is 20 and the price of its stock is Rs 340 per
share. The company has declared a dividend of Rs 20. Calculate the EPS
of this company.
(a) Rs 20
(b) Rs 17
(c) Rs 16
(d) Cannot be calculated as insufficient data
Correct Answer 57 Market Price of the Share X The No. of shares outstanding
Answer Market Capitalisation is arrived at by multiplying the market price with the
Explanation number of outstanding equity shares.
Correct Answer 58 Rs 17
Answer P/E ratio = Market Price of Stock / EPS
Explanation Therefore EPS = Market Price of Stock / PE ratio
= 340 / 20
= 17
(Dividend need not be considered, the current market price is relevant)
Question 59 Buy-side Analysts generally work for money managers like mutual funds,
hedge funds, pension funds, or portfolio managers that purchase and sell
securities for their own investment accounts or on behalf of their clients -
State True or False ?
(a) TRUE
(b) FALSE
Question 60 Warrants are options that entitle an investor to buy _______ of the issuer
company after a relatively _____ period of time at a given price.
(a) bonds , long
(b) common stock , long
(c) bonds , short
(d) common stock , short
Answer Buy-side Analysts generate investment recommendations for their internal

Explanation consumption - For eg Mutual Funds who take buying & selling decisions on
their own for their clients.
Sell-side analysts work for firms that provide investment banking, broking,
advisory services for clients. They merely recommend and the client has to
take the decision.
Correct Answer 60 common stock , long
Answer Warrants are options that entitle an investor to buy equity shares of the issuer
Explanation company after a specified time period at a given price. These are usually long
term instruments.
Question 61 A ‘ _________ Wall’ policy separates 'insider areas' from 'public areas'
in a firm.
(a) Indian
(b) Chinese
(c) Berlin
(d) Hard Rock
Question 62 The SEBI Act empowers SEBI to take following actions EXCEPT -
(a) Impound and retain the proceeds or securities in respect of any transaction
which is in violation or prima facie in violation of regulations
(b) Develop and Administer certification exam
(c) Suspend trading in a security at a Stock Exchange
(d) Suspend an office bearer of a SEBI registered entity
Correct Answer 61 Chinese
Answer To prevent the misuse of confidential information the organisation shall adopt
Explanation a “Chinese Wall” policy which separates those areas of the organisation/firm
which routinely have access to confidential information ie. “insider areas”
from those areas which deal with sale/marketing/investment advice or other
departments providing support services considered public areas.
The employees in the insider area shall not communicate any Price Sensitive
Information to anyone in the public area.
Correct Answer 62 Develop and Administer certification exam
Answer SEBI directly does not develop and administer the certification exam. It has
Explanation appointed NISM for this purpose.
Question 63 M/s Highgrowth Industries Ltd has total assets of Rs 40,00,000 and a Net
Income of Rs 3,00,000. The EPS is 0.60 and the Price to Book Value is 8.
The Return on Equity is 25%. Find the current market price of the
company's share.
(a) Rs 9.60
(b) Rs 14.40
(c) Rs 17.60
(d) Rs 19.20
Question 64 What are the qualities of a good research analyst ?
(a) Ability to read and comprehend financial statements and reports
(b) Good communication Skills â€“ Written and Verbal
(c) Good Excel/spreadsheet and other data analytical tools
Correct Answer 63 Rs 19.20

Answer Earning Per Share = Net Income / No. of Shares
Explanation So : No. of Shares = Net Income / EPS
No. of shares = 300000 / .60 = 5,00,000
Return on Equity ie. Net Profit is 25% of Equity. Net Profit is Rs 300000
So Equity will be 300000 / 25 x 100 = 12,00,000
Book Value = Equity / No of Shares = 1200000 / 500000 = 2.4
Price to Book Value (P/BV) = Current Market Price / Book Value

So Current Market Price = P/BV x Book Value
= 8 x 2.4 = 19.20

Answer Qualities that are desired in a good research analyst are:
Explanation
- Good with numbers
- Good Excel/spreadsheet and other data analytical tools
- Clarity in financial concepts
- Ability to read and comprehend financial statements and reports
- Ability to ask pertinent questions
- Attention to details
- Communication Skills – Written and Verbal
Question 65 Job of Research Analysts involves ________ .
(a) collection of data and its scientific analysis
(b) close interaction with companies
(c) close interaction with clients
Question 66 The formula for calculating the Book Value per share of a company is
______ .
(a) Net Worth of the Co / Number of Outstanding Shares
(b) Net Profit / Equity
(c) Equity plus Reserves
(d) Equity less Debts

Answer Research Analysts collect data/information from various sources, analyze the
Explanation collected data/information and make their recommendations. Job of analysts
also involves close interaction with companies and clients.
Correct Answer 66 Net Worth of the Co / Number of Outstanding Shares

Answer Book value per share means the theoretical amount of money each share
Explanation would get in case the company was to wind up.
To compute book value per share, net-worth of the company is divided by the
number of outstanding shares.
Question 67 The current price of a stock is Rs 180 and the last EPS was Rs 10, what
will be its Price to Earning ratio ?
(a) 1800
(b) 180
(c) 18
(d) 1.8
Question 68 Free cash flows to the firm (FCFF), is computed as
(a) EBIT - Tax + Depreciation & Non-cash charges + Increase(Decrease) in

working capital - Capital Expenditure Incurred (Sale of assets)
(b) EBIT - Tax + Depreciation & Non-cash charges * Increase(Decrease) in

(c) EBIT - Tax + Depreciation & Non-cash charges - Increase(Decrease) in

(d) EBIT - Tax + Depreciation & Non-cash charges / Increase(Decrease) in

Correct Answer 67 18
Answer Price to Earning (P/E) Ratio = Current Stock Price / EPS

Explanation = 180 / 10
= 18
Correct Answer 68 EBIT - Tax + Depreciation & Non-cash charges - Increase(Decrease) in

(Please remember the formula)

Question 69 An industry which does not face the threat of new competitors coming in
would be an attractive industry for investors/owners - State True or
False ?
(a) TRUE
(b) FALSE
Question 70 The most important priority for an investor would be ______ .
(a) Capital Appreciation
(b) Return on capital
(c) Safety of capital

Answer Less competition means freedom in pricing etc. leading to more profits. Such
Explanation industry is an attractive proposition for investors.
Correct Answer 70 Safety of capital

Answer All Investment decisions are evaluated on the basis of risk and return.
Explanation
The preservation or safety of the capital invested is the most important
parameter in evaluating an investment. The investor should be assured that he
will atleast get his principal back. Then comes the matters of returns and
capital appreciation.
Question 71 A company increases the prices of its products yet the demand does not
fall. This could be due to ________ .
(a) pricing power of the business
(b) brand loyalty of the customers
(c) addiction of the consumers on the company's products
Question 72 __________ is NOT a department of Ministry of Finance.
(a) Department of Economic Affairs
(b) Department of Disinvestments
(c) Reserve Bank of India
Correct Answer 71 Registrars and Transfer Agents
Answer The RTA maintains investor records.

Explanation The appointment of RTA is done by the AMC. It is not compulsory to
appoint a RTA and the AMC can choose to handle this activity in-house.
Correct Answer 72 Reserve Bank of India
Answer Ministry of Finance comprises of five departments :

Explanation Department of Economic Affairs
Department of Expenditure
Department of Revenue
Department of Financial Services
Department of Disinvestments
Question 73 _________ contains policy measures of the Government which deal with
government’s revenues and expenses.
(a) Fiscal Policy
(b) Monetary policy
(c) Foreign Exchange Policy
(d) Annual Budget
Question 74 _________ is always issued at a discount.
(a) Amortization Bonds
(b) Puttable bond
(c) Callable bond
(d) Zero-Coupon Bond
Correct Answer 73 Fiscal Policy

Answer Fiscal policy contains policy measures of the Government which deal with
Explanation governments’ revenues and expenses.
Actions of the Central bank (RBI) are known collectively as Monetary policy.
Correct Answer 74 Zero-Coupon Bond

Answer Zero coupon bonds are issued at a discount to their face values and are
Explanation redeemed at par.
Therefore, the return on these bonds is not in the form of interest but in the
form of difference between the issue price and redemption value.
Question 75 If a stock has exceeded its Target Price, an analyst may recommend
__________.
(a) Selling the stock
(b) Buying the stock
(c) Holding on to the stock
Question 76 The formula for calculating 'Return on Capital Employed' is _________ .
(a) PAT / Net-worth
(b) PAT / Capital Employed
(c) EBIT/ Capital Employed
(d) EBIT/ Net Sales
Correct Answer 75 Selling the stock

Answer Target price is that price, which if achieved, would result in an investor
Explanation recognizing the best possible outcome for his or her investment.
This is the price at which the investor would like to exit his or her existing
position so that he or she can realize the most reward.
For eg. - A analyst recommends buying XYZ stock at Rs 100 with a target
price of Rs 160. So when the price rises to Rs 160, the target has been
achieved and the analyst will recommend selling the stock at Rs 160.
Correct Answer 76 EBIT/ Capital Employed

Answer ROCE = Earnings Before Interest & Tax / Capital Employed
Explanation Capital Employed = Total Assets – Current Liabilities or Total Equity + Total
Debt
Question 77 When does the per share data (earning per share, book value per share,
market price per share etc.) witnesses immediate deterioration.
(a) In case of a Bonus Issue
(b) In case of a Stock Split
(c) In case of Stock Consolidation
(d) Both 1 and 2
Question 78 What is the earnings yield, if the price of a stock is Rs. 540 and EPS is Rs.
32 ?
(a) 5.92%
(b) 0.06%
(c) 16.87%
(d) 0.17%

Answer In case of Bonus Shares, per share data (earning per share, book value per
Explanation share, market price per share etc.) will witnesses immediate deterioration as
total number of shares go up without any economic change in the profit and
loss statement or balance sheet.
Same is the case with Stock Split.
In Stock Consolidation. as total no. of shares go down without any economic
change in the Profit and Loss account or Balance Sheet, per share data
(earning per share, book value per share, market price per share etc.)
witnesses immediate improvement.
Correct Answer 78 5.92%

Answer Earning Yield is the reverse of P/E Ratio.
Explanation Earning Yield = Earnings Per Share (EPS)/Current price of stock
= 32 / 540
= 0.0592 = 5.92 %
Question 79 The sales of a company is 200% of Operating Profit. The Net Profit is
one fourth of sales. What is the Net Profit % of Operating Profit ?
(a) 50%
(b) 40%
(c) 45%
(d) 30%
Question 80 Some companies perform very well in an industry as compared to others

because of their _______ .
(a) unique ways of mitigating risks and maximizing returns
(b) unique Value Proposition
(c) unique Selling Points

Answer Lets assume that the Sales are Rs 100.
Explanation Sale are 200% of Operating Profit ie. double of Operating Profit, So
Operating Profit will be 50.
Net profit are 1/4 of Sales = 100 / 4 = 25
So the Net Profit % of Operating Profit = 25 / 50 x100 = 50%

Question 81 Unhealthy practice in the Securities Markets includes which of the

following?
(a) Insider Trading
(b) Disclosure
(c) Transparency
(d) Surveillance
Question 82 _________ captures the sources and uses of funds in the business over a
period of time.
(a) Balance Sheet
(b) P/L A/c
(c) Income Statement
(d) Cash flow statement
Correct Answer 81 Insider Trading

Answer As per SEBI - An “insider” is any person who is a connected person or one
Explanation who is in possession of or having access to unpublished price sensitive
information.
Regulation 3 of the SEBI (Prohibition of Insider Trading) Regulations 2015,
prohibits an insider from communicating, allowing and/or providing access to
unpublished price sensitive information to any person including other insiders
except in the course of the execution of their responsibilities and legal
obligations.
Correct Answer 82 Cash flow statement

Question 83 As per the Boston Consulting Group (BCG) Analysis, Tata Nano can be
considered as an example of a Question Mark, which succeeded - State
True or False ?
(a) FALSE
(b) TRUE
Question 84 Which of the below options is not true with respect to Stock Split ?
(a) In a stock split, there is a division of shares into multiple shares
(b) There is generally a boost in liquidity after the stock split
(c) Stock split is usually done when the price of a stock becomes quiet high
(d) Stock Split leads to increase in the wealth of shareholders
Answer In BCG Analysis, Question Marks Business segments in a fast growing

Explanation market, but having low market share. The right strategies can help the market
share of the business grow, but they also run the risk of consuming cash in the
process of increasing market share and in the end turning out to be not
enough cash generating.
Tata Nano is one such example as although it was in a fast growing market
and the Tata's had poured in a lot of investments, it is not very successful as
of date.
Correct Answer 84 Stock Split leads to increase in the wealth of shareholders

Answer Stock split does not lead to any increase in the wealth of shareholders. Its
Explanation merely an action of reducing the face value of shares there by multiplying the
number of shares leading to increase in liquidity.
The increase / decrease in the wealth of the shareholder will be determined by
the stock prices.
Question 85 A bond with face value Rs 5000 has a coupon rate of 10%. The expected
rate of return is also 10%. The value for this bond will be __________ .
(a) Greater than facevalue
(b) Less than facevalue
(c) Equal to facevalue
Question 86 Which of the following options is not a valuation parameter of a

company listed on a stock exchange ?
(a) The demand and supply of its securities in the stock exchange
(b) The P/BV Ratio
(c) The P/E Ratio
(d) The Intrinsic Value
Correct Answer 85 Equal to facevalue
Answer If expected rate of return by investors is same as of coupon rate, then bond
Explanation would have same value as facevalue.
If expected rate of return by investors is higher than the coupon rate, then
bond would have value less than facevalue and vice versa.
It is based on present and future value computations.
Correct Answer 86 The demand and supply of its securities in the stock exchange
Question 87 The operating profit margin of a business is 40% and the operating
profit is two times of Net Profit. Calculate the Net Profit margin.
(a) 30%
(b) 25%
(c) 27.50%
(d) 18%
Question 88 'Whether company has stable and growing 5 years dividend track
record' is a parameter to be considered in ___________ .
(a) Qualitative Parameters
(b) Quantitative Parameters
(c) Valuation Parameters
(d) Final Decision Parameters
Answer Lets assume the Net Profit to be Rs 100.

Explanation The Operating Profit is 2 times the Net Profit ie 100 x 2 = 200
The Operating Profit margin is 50% , this means its 50% of Sales or Sales is
double of Operating Profit.
So Sales = 200 x 2 = Rs 400
Net Profit is Rs 100 and Sales is Rs 400
So the Net Profit margin is 100 / 400 x 100 = 25%
Correct Answer 88 Quantitative Parameters
Answer Research reports are generally divided into three broad` sections – Qualitative
Explanation aspects, Quantitative aspects and then Valuation parameters.
Qualitative parameters take care of aspects like business/revenue model,
SWOT analysis, competition in the industry, technology aspects etc.
Quantitative parameters would consist of financial aspects such as ratio
analysis, analysis of cash flows , dividend history etc.
Valuation parameters would consist of intrinsic value, P/E, P/BV, margin
of safety aspects.
Question 89 A trader is expecting the interest rates to fall in the near future. Which
strategy he should use to benefit if his view turns out to be correct ?
(a) Buy long dated low coupon bonds
(b) Buy long dated high coupon bonds
(c) Buy short dated low coupon bonds
(d) Buy short dated high coupon bonds
Question 90 The Sale and Purchase of new issues of stocks happen in _______ .
(a) Primary Market
(b) Secondary Market
(c) Money Market
(d) Currency market
Correct Answer 89 Buy long dated high coupon bonds
Answer When interest rates fall, bond holders experience a rise in the price of bonds
Explanation as there is an inverse relationship between bond prices and interest rates.
As the trader is not sure when the fall in interest rates will be announce, he
should buy the long dated high coupon bonds.
Correct Answer 90 Primary Market
Answer The primary market, also called the new issue market, is where issuers
Explanation raise capital by issuing securities to investors.
The Issuers / Promoters sell their shares to the Public / Investors thro' an IPO
- Initial Public Offer.
Question 91 A high PE stock relative to the peer group numbers and the market PE,
is seen as a __________ stock.
(a) Cheap
(b) Expensive
(c) Under Valued
(d) Low Beta
Question 92 The formula for calculating Dividend Payout Ratio is __________ .

(a) Dividing the company's dividend per share by earnings per share
(b) Dividing the company's total dividend by Net Profit
(c) Dividing the company's EPS by total dividend
(d) Both 1 and 2
Correct Answer 91 Expensive
Answer The two formulae for calculating Dividend Payout Ratio are :
Explanation - Yearly Dividend Per Share / EPS
- Total Dividend / Net Income.
Question 93 An industry where rivalry is high, like the aviation and telecom space,
the end result will be ______ pricing power and _______ incomes for the
industry participants.
(a) Higher , Higher
(b) Lower , Lower
(c) Higher , Lower
(d) Lower , Higher
Question 94 Companies Buyback shares __________ .
(a) if it has excess cash and there are lack of profitable investment opportunities
(b) when the management thinks that the stock is undervalued.
(c) to reduce equity and resultantly increase the leverage in the company
Correct Answer 93 Lower , Lower
Answer Reasons of buy back of shares could be as follows:

Explanation
- To give a value boost to the stock if it is seen as undervalued.
- Excess cash and lack of profitable investment opportunities.
- Buyback as a confidence building measure.
- Buyback as a defensive strategy against a potential takeover.
- Buyback to reduce equity and resultantly increase the leverage in the
company.
- Buyback to diffuse the impact of dilution in promoters’ holding on account
of say Employee Stock Option Plans (ESOPs).
Question 95 Investment advisers work with investors to help them decide on asset
allocation and make a choice of investments based on ________.
(a) time horizon of investments
(b) assessment of their needs
(c) ability to bear risk
Question 96 Which of the below mentioned option(s) is true for CAGR ?
(a) CAGR means Compounded Annual Growth Rate
(b) CAGR is calculated as the sum of annual returns over the holding period
(c) CAGR does not take into account the timings of cash flows into account
Answer The CAGR method simply uses the beginning and ending value over a
Explanation holding period. It does not take into account the timings of cashflow.
The Internal Rate of Return (IRR) method considers multiple cash flows and
periods.
Question 97 The forecasting of stock prices based on their historical prices is called
______.
(a) Economic analysis
(b) Fundamental analysis
(c) Technical analysis
(d) Behavioral analysis
Question 98 M/s ABC Ltd has a P/E Ratio of 12 with a growth potential of 10% and
M/s XYZ Ltd has a P/E Ratio of 28 with a growth potential of 35% for
the next few years. Based on Growth Adjusted Price to Earnings Ratio
(PEG Ratio), which one is cheaper ?
(a) XYZ Ltd
(b) ABC Ltd
(c) PEG Ratio cannot determine the valuation
(d) Insufficient data
Correct Answer 97 Technical analysis
Answer In Technical Analysis, the approach is to forecast the direction of prices

Explanation through the study of patterns in historical market data - price , volume and
time.
Correct Answer 98 XYZ Ltd

Answer PEG Ratio = P/E Ratio / Growth Rate
Explanation PEG for ABC Ltd = 12 / 10 = 1.2
PEG for XYZ Ltd = 28 / 35 = 0.8
The company with lower PEG ratio is cheaper ie. XYZ Ltd
Question 99 _________ is the nodal agency of the Central Government to formulate

and monitor India’s macroeconomic policies.
(a) Department of Economic Affairs
(b) Department of Revenue
(c) Department of Financial Services
(d) RBI
Question 100 The growth rate can be calculated as the ________ of the retention rate
and the return on equity.
(a) product
(b) division
(c) summation
Correct Answer 99 Department of Economic Affairs

Department of Economic Affairs is the nodal agency of the Central
Answer Government to formulate and monitor India’s macroeconomic policies,
Explanation covering monetary and fiscal policy as well as the functioning of the Capital
Market including stock exchanges.
Correct Answer Product

100
Answer Growth Rate = Retention Rate X Return on Equity

Explanation
Practice Question Banks also available for :
NISM
NISM Series I: Currency Derivatives Certification Exam

NISM Series V A: Mutual Fund Distributors Certification Exam
NISM Series VI: NISM Series VI - Depository Operations Certification Exam
NISM Series VII: Securities Operations and Risk Management
NISM Series VII: Equity Derivatives Certification Exam
NISM Series III A: Securities Intermediaries Compliance Certification Exam
NISM Series X A : Investment Adviser (Level 1) Certification Exam
NISM Series X B: Investment Adviser (Level 2) Certification Exam
NISM Series X V: Research Analyst Certification Exam
NCFM
NCFM Financial Markets: A Beginners Module

NCFM Capital Market (Dealers) Module
NSE FIMMDA : Debt Market (Basic) Module
NCFM Derivative Market (Dealers) Module
BSE
Certificate on Security Market (BCSM)


Nism Series 15 Model Paper

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Nism Series 15 Model Paper

Загружено:

Авторское право:

Доступные форматы

NISM SERIES XV - RESEARCH

ANALYST CERTIFICATION EXAM

THIS IS A MOCK EXAM TO TEST YOUR PREPARATIONS.

(a) Depository Participant

(c) Merchant Banker

(d) Stock Broker

Question 2 In the SCP Analysis, 'Performance' includes which of the following ?

(a) Return on Capital Employed

(b) Return on Equity

(c) dependence of the business on government policies

(d) Both 1 and 2

Correct Answer 1 Stock Broker

Correct Answer 2 Both 1 and 2

Question 4 Over pricing of securities by the market is favourable to the investors -

Correct Answer 3 Rs 57 Lakhs

Enterprise Value (EV) is the theoretical takeover price of a firm.

Correct Answer 4 FALSE.

Markets usually give a fair pricing to the securities.

Question 5 The current inventory of a company is Rs 2000. The average age of

Question 6 Efficient Market Hypothesis (EMH) propagates that share prices

Correct Answer 5 Rs 73000

Correct Answer 6 TRUE

Question 8 Which technological factor(s) help a country attract investors ?

(a) Availability of technology savvy population

(b) Institutions driving technology based initiatives

(c) Less technological support

(d) Both 1 and 2

Correct Answer 7 Rs 1 lakh

Correct Answer 8 Both 1 and 2

(c) Rs 12.50 lakhs

Correct Answer 9 Rs 25 Lakhs

Answer EPS = Net Profit / No. of Shares

Correct Answer 10 FALSE

Correct Answer 11 FALSE

Forward contracts are Over-the-counter (OTC) contracts. They are contractual

Correct Answer 12 2.66

Quick Ratio = (Current Assets – Inventories) / Current liabilities

Question 13 Inflation risk is a Systematic Risk - State True or False ?

Question 14 Some very important regulatory aspect(s) have to be looked into by

(a) Policy regarding cancellation of licenses

(b) FDI in multi brand retail

(c) Environment policies

(d) All of the above

Correct Answer 13 TRUE

Correct Answer 14 All of the above

Question 16 _________ is/are the important parameters to observe by an analyst in the

(a) Concentration of geographies of clients

(b) USDINR rate

(c) Attrition rate among employees

(d) All of the above

Correct Answer 15 Rs 1.5

Correct Answer 16 All of the above

Question 18 Who is the manager of Indian Government's debt borrowings ?

(b) Ministry of Corporate Affairs

(c) Ministry of Finance

(d) Department of Revenue

Correct Answer 17 TRUE

Answer Research Analyst provide in-depth knowledge on the status of a company /

Correct Answer 18 RBI

Answer Reserve Bank of India is the Government's debt manager.

Question 19 Per Capita Income is a true indicator of _________ .

(a) National Income of a country

(b) Standard of living in a country