NISM Research Analyst XV Mock Exam FinanceInsights has created a mock test for the NISM Research Analyst XV mock exam. Questions are based on NISM Research Analyst XV Workbook Version - Mar 21. This mock test is based on the structure of the Research Analyst XV exam. There are 92 questions carrying 1 mark each and 2 case studies (each case having 4 questions of 1 mark each), adding to a total of 100 marks. The exam should be completed in 2 hours. The passing score is 60 marks i.e. 60%. There is negative marking of 25% of marks assigned to the question for each wrong answer. Click Next to continue. 1. Depository receipts can have two-way fungibility. What does this mean? a) Shares can be bought in the local market and converted into Depository Receipts to be traded in foreign markets. b) Depository receipts can be bought in the foreign market and converted into shares to be traded in local markets. c) Depository receipts can be converted into shares and vice versa, and traded in the same market. Only a and b Only b and c All of the above 2. National income of an economy can be measured through which of the following methods? (from NISM) Product method Income method Expenditure method All of the above 3. The fiscal deficit is bridged by the government through market borrowings, both short term and long term. State whether true or false. (from NISM) TRUE FALSE 4. Let's say risk free return is 5 percent, and a scheme with standard deviation of 0.5 percent earned a return of 7 percent. Calculate its Sharpe Ratio. 3 4 5 5. When expected/possible conversions into equity shares are considered (such as ESOPs, convertible debentures, etc.) to calculate EPS, it's termed as-- basic EPS diluted EPS expanded EPS 6. _____ valuation is used to value an asset based on expected future cash flows that can be generated by the asset. Income based Intrinsic Returns based 7. Sharpe's performance measure divides the portfolio's risk premium by the _________. Standard deviation of the rate of return Variance of the rate of return Slope of the fund's characteristic line Risk free rate 8. Consider a business with net worth of Rs 1 lakh, debt of Rs 1 lakh. Market capitalization is Rs 5 lakh, cash and cash equivalents are nil and ROCE is 45% per annum. What is the EV to capital employed ratio? What return can an investor expect? EV/Capital employed is 1; Return expectation is 15% EV/Capital employed is 3; Return expectation is 15% EV/Capital employed is 3; Return expectation is 30% 9. What is the formula for EBITDA margin? EBITDA x Net Sales EBITDA x Gross Revenues EBITDA / Net Sales EBITDA / Gross Revenues 10. The rate at which RBI borrows money to banks is called -- repo rate reverse repo rate 11. ______ measures the maximum loss one may suffer given a particular level of confidence. Beta Delta Value at Risk (VaR) 12. SEBI has standardized the symbols used by credit rating agencies. TRUE FALSE 13. Minimum Alternate Tax (MAT) is payable by companies whose tax on total income is less than ____of ‘book profit’. 10% 15% 20% 14. Analysis and decision making, the two imperative parameters involved in are affected by which of the following factors? (from NISM) Management ethics Revenues and costs Efficiency of operations All of the above 15. When exceptional items are eliminated from the company's profit, it's termed as-- real profit operational profit adjusted profit 16. A person appointed by a stock broker as an agent to reach out to investors scattered across the country is called _______. Dealer Authorized person Stock agent 17. To invest in the Indian stock markets without registering with SEBI, foreign investors are issued _____ by FPIs. Promissory Notes Participatory Notes Preferential Notes 18. A company's rights issue must be open for subscription for a minimum period of ___ days and maximum period of ___ days. 7; 15 15; 30 30; 45 19. A research analyst who is a body corporate or limited liability partnershp firm should have a networth of at least Rs ______. 10 lakh 25 lakh 50 lakh 1 crore 20. Amortisation means the gradual write off of _____ asset over the period of its life. tangible intangible any 21. Price to earnings ratio of a business is 10, price to book value ratio of this busniess is 5, book value per share is Rs 15 and outstanding number of shares is 10,000; what would be the return on equity of this business? (from NISM) 25% 75% 50% 20% 22. The current account portion of the balance of payments consists of-- FDI, FII, loans, etc. imports and exports 23. A bond is issued at a face value of Rs 100 and coupon of 10% p.a. The interest rates in the market have increased subsequently. This bond is likely to quote at: (from NISM) a price above face value the face value a price that reflects its credit risk below face value 24. What does industry structure in Structure Conduct Performance (SCP) analysis refer to? (from NISM) Industry growth rate Relationship among the various players in the industry Market size All of the above 25. Companies eligible to issue DVRs are those which have declared dividend of at least ___ over the preceding 3 years. Also, DVRs should not exceed ___ of the post-issue paid up capital of the company. 10%; 25% 15%; 25% 10%; 20% 26. Corporate governance takes into account which aspect of the management? (from NISM) Integrity Profitability Efficiency All of the above 27. Equity Linked Debentures (ELDs) provide capital protection to investors. TRUE FALSE 28. What is the formula used to arrive at the intrinsic value of a high growth company? Present value of free cash flow for first 5 years + terminal value Present value of free cash flow during high growth period - terminal value Present value of free cash flow during high growth period + terminal value 29. Calculate the enterprise value based on the given information. Market capitalisation = Rs 10 lakh; Total debt = Rs 3 lakh. Cash = Rs 4 lakh. (from NISM) 11 lakh 9 lakh 13 lakh 6 lakh 30. What is the formula for interest coverage ratio? EBITDA/Interest cost EBIT/Interest cost PAT/Interest cost 31. 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 _______. (from NISM) Bonus issue Rights issue Public issue Preference issue 32. As per SEBI regulations, in an IPO, at least ____ of shares should be allocated to retail investors. 25% 35% 40% 33. PESTLE analysis stands for-- Political, Ergonomic, Socio-cultural, Technological, Legal, Environmental Political, Economic, Socio-cultural, Technological, Legal, Environmental Political, Economic, Social causes, Technological, Legal, Environmental 34. The byelaws of the stock exchange are same across exchanges and need to be approved by SEBI. State whether true or false. (from NISM) TRUE FALSE 35. _______ the Sharpe Ratio, better the scheme is considered to be. Higher Lower 36. The _____ of an equity share is the discounted value of its future benefits to the investors. (from NISM) intrinsic value replacement value market value face value 37. ABC Ltd declared dividend of Rs 25 per share. The company’s stock was quoting at Rs 450 per share. What is the stock’s dividend yield? 5.56% 5.25% 5.12% 38. Efficient Market Hypothesis (EMH) propogates that share prices incorporate and reflect information about only corporate financials. TRUE FALSE 39. As per regulations, all records should be maintained by a research analyst for a minimum period of ______ year(s). one three five 40. To calculate the uncertainty/unpredictability of risk, one should use-- median of return of assets standard deviation of return of assets average return of assets 41. As per Michael Proter's five force model, bargaining power of buyers and suppliers is-- horizontal force vertical force 42. Anchoring bias occurs when people rely on _________. (from NISM) pre-existing information when they make decisions collect all available information when they make decisions do not make use of any information when they make decisions make forecast about the future prospects 43. A research analyst participating as an underwriter of an IPO shall not publish/distribute a research report/makepublic appearance regarding the company before expiry of _____ days from date of the offering. 15 25 30 44. When a business is planning to set up offshore, which analysis would be more suitable? Michael Porter's Five Force Model PESTLE analysis BCG matrix SCP analysis 45. A company has to pay dividend within ___ days of its declaration. 7 15 30 46. Which ratios can be used to measure the liquidity of a company's equity shares? a) Stock turnover ratio b) Traded value turnover ratio c) Sales turnover ratio d) Market capitalisation turnover ratio a) and b) a) and c) a) and d) All of the above 47. Changing the structure of share capital of a company by increasing the par value of its shares in a defined ratio and correspondingly reducing the number of shares to maintain the paid up / subscribed capital is known as ________. Stock split Spin off Share consolidation Share swap 48. What is the formula to calculate stock turnover ratio? Number of free float shares / number of shares traded during a given period Number of shares traded during a given period / number of free float shares Number of shares traded during a given period / number of free float shares 49. Indicated above are the financials of Company A and Company B. Use Dupont Analysis to assess which company has performed better. Company A Company B 50. It's not possible to calculate gross profit for Indian companies. TRUE FALSE 51. Beta measures— A stock’s value compared to the relevant market index A stock’s volatility compared to the relevant market index A stock’s return expectations compared to the relevant market index 52. _____ measures the sensitivities of a bond's price to a small change in interest rates. Beta Duration Delta 53. Which entity settles stock market transactions and keeps track of corporate action on behalf of clients? Depositories Depository participants Custodians 54. An industry where rivalry is high, the end result will be ____ pricing power and _____ incomes for the industry participants. (from NISM). lower; higher lower; lower higher; higher higher; lower 55. If VaR (1%) of a portfolio is 12%, it indicates that there is ___ chance of the loss in the porfolio exceeding 12%. 1% 11% 13% 56. ABC Ltd bought PQR for Rs 2838 crore. The fair value of PQR's assets was calculated at Rs 3200 crore. How was the difference accounted for in ABC's books? as capital reserves as goodwill as deferred expenses 57. A borrower has to pay floating rate interest on his loan. However, the borrower prefers fixed rate. He can use _______ to switch to fixed rate of interest. interest rate swap interest rate futures interest rate options 58. Along with SEBI and other regulators under Companies Act, RBI also regulates the Equity Shares Market. State whether True or False. (from NISM) TRUE FALSE 59. When an asset is valued based on discounting future cash flows by the risk free rate plus a suitable risk premium, it is termed as ______ valuation. Real world valuation Risk neutral valuation 60. Company deducts tax at source at the rate of 10% on dividends payable exceeding ______. Rs 2500 Rs 5000 Rs 10000 61. If income tax payable by a company is less than ___ of the book profits, it will have to pay ___ of book profits to the government. 18.5%; 16.5% 16.5%; 16.5% 18.5%; 18.5% 62. Insolvency and Bankruptcy Code (IBC) envisages that every insolvency proceeding should be completed within ____ since initiation of the process. 60 days 180 days 1 year 63. “Retail Individual Investor” is defined as an investor who bids/applies for securities for up to Rs ___lakh. 1 2 3 64. Quantitative research can be used for both fundamental and technical analysis. TRUE FALSE 65. An investor purchases a bond at Rs 104, earns Rs 8 as coupon, which he reinvests at 7% for 1 year and finally sells the bond at Rs 110 after 1 year. Calculate the Holding Period Returns (HPR). 13% 13.50% 14% 66. The tyre industry in a country is comprised of three organized players and several unorganized players. A sample survey revealed that around 20% of total sales came from the organized sector. The three major companies reported revenue of Rs 6000 crore, Rs 8000 crore and Rs 10,000 crore, respectively, for the year 2019. Which of the following is closest to the fair estimate of overall size of the tyre market in that country for the year 2019? (from NISM) Rs 48,000 crore Rs 24,000 crore Rs 30,000 crore Rs 36,000 crore 67. Which analysis uses the labels 'Stars', 'Cash Cows', 'Question Marks', 'Dogs'? Michael Porter's Five Force Model PESTLE analysis BCG matrix SCP analysis 68. _____ bias can prevent investors from benefiting from market corrections. (from NISM) Projection Herd Mentality Anchoring Confirmation 69. A research analyst/research entity shall not publish/distribute research analysis/report or make public appearances regarding a company for which he has acted as manager/co-manager within a period of ____ days immediately following the day of IPO pricing / ____ days immediately following the day of FPO pricing. 30; 7 40; 10 60; 15 70. Tax rate for Indian companies is ___ of taxable profits (___ if the company's total turnover is below ____ in a financial year). 30%; 25%; Rs 200 crore 30%; 25%; Rs 400 crore 30%; 20%; Rs 400 crore 71. If a research analyst/ research entity/ its associates or relatives have actual/beneficial ownership of ___ percent or more securites of the subject company at the end of the month immediately preceding the date of publication of the research report / public appearance, the same should be disclosed. 1% 5% 10% 72. Business risk is also known as operating risk, because this risk is caused by factors that affect the operation of the company. State whether True or False. (from NISM) TRUE FALSE 73. Disclosure of equity holdings by directors and key personnel have to be made within ___ days of their appointment. 3 7 15 74. Which of the following measures the ability of the company to satisfy its short term obligations as and when they become due? (from NISM) Current ratio High return on equity High return on capital employed Inventory turnover ratio 75. A primary market issue of a company can be a public issue or a private issue. No, only public issue It can be both 76. Duration measures the sensitivity of the price of a bond to changes in _______. GDP growth rate inflation rate interest rate 77. Calculate the current yield for a 10 year 8.24% coupon bond selling for Rs. 103.00 per Rs. 100 par value. 8.00% 8.12% 8.25% 78. Under which method is national income measured as an aggregated flow of goods and services in the economy from different sectors? product method income method expenditure method 79. XYZ Ltd issued zero coupon bonds whose details are: issue date: Oct 2009; maturity date: Series 1 in July 2011, Series 2 in December 2011; Maturity value: Rs 100; issue price: Series 1: Rs 85.80; Series 2: 82.55. What is the implied rate of each series? Series 1: 9.12%; Series 2: 9.25% Series 1: 9.15%; Series 2: 9.25% Series 1: 9.15%; Series 2: 9.22% 80. SEBI regulations stipulate that independent directors should constitute at least ____ of the board if the chairman is an executive director. In all other cases, ____ of the board should be comprised of independent directors. 45%; 1/3rd 50%; 1/3rd 50%; 2/3rd 81. Which category of AIFs invest in areas which the government or regulators consider as socially or economically desirable? Category 1 AIF Category II AIF Category III AIF 82. As per Employees' Provident Fund (EPF) rules, employees must contribute ___ of their basic pay plus dearness allowance every month. 10.50% 12% 12.50% 83. As per the Insolvency and Bankruptcy Code (IBC), any creditor of a firm can bring in insolvency proceedings against a company if the undisputed amount outstanding is more than Rs ______. 1 lakh 10 lakh 50 lakh 1 crore 84. Once a stock is short listed for Additional Surveillance Measures (ASM), the applicable margin on the security is raised to ___%. 50% 60% 80% 85. __ percent of assets of an Infrastructure Investment Trust (InvIT) should be held in revenue generating infrastructure projects. 70% 80% 90% 86. According to Companies Act, 2013, an offer to subscribe to securities made to less than ___ persons is called private placement of securities. 25 50 100 87. The time span over which price and volume are observed factors in the impact of long term factors that influence prices over a period of time. State whether true or false. (from NISM) TRUE FALSE 88. Call risk is most prevalent when interest rates are _____. falling rising volatile 89. What is the earnings yield if the price of a stock is Rs 195 and EPS is Rs 13? (from NISM) 15% 6.67% 0.067% 0.15% 90. Which entity provides full novation of contracts between buyers and sellers for trades on the stock exchange? Core Trade Guarantee Corporation Clearing corporation The stock exchanage 91. A pooled investment vehicle with the mandate to invest in companies at the early stage of development with the potential of long term growth is called ______. private equity mutual fund venture capital fund 92. Calculate the YTM of a bond whose tenure is 10 years, maturity date is 1-Jan-2032, settlement date is 1-Jan-2022, coupon is 8%, Market price is Rs 102, FV is Rs 100 and coupon frequency is semi annual. 7.34% 7.52% 7.71% 93. Case study: You have been given comparative financials of two companies for the past two years. Company A had Rs 320 lakh worth of finished goods and WIP in its inventory at the end of financial year 2xx8. Which of the following is closest to its inventory of finished goods and WIP at the end of 2xx9?Both the companies are in the same industry and are of reasonably similar sizes. Answer the subsequent questions based on the information in the table. (from NISM) Rs 220 lakh Rs 285 lakh Rs 355 lakh Rs 440 lakh 94. You have information that companies in the industry increased selling price of their output. However, different companies increased their prices at different rates. Which of the two companies is likely to have increased their price at a higher rate and why? Company B is likely to have increased the price more as its sales grew faster than that of A. Company A is likely to have increased the price more as its cost of materials to sales ratio decreased year over year, while it remained constant for Company B. Company B is likely to have increased the price more as its net profit margin increased by 23% compared to only 15% growth for Company A. Company A is likely to have increased the price more as it earned higher net profit. 95. Which of the following is closest to operating profit of Company B for the year ending 2xx9? Rs 2929.6 lakh Rs 3124.8 lakh Rs 3343.4 lakh Rs 3945.5 lakh 96. Which of the two companies have higher level of financial leverage? Company A has higher financial leverage as it has higher level of debt. Company A has higher financial leverage as it has higher Debt/Asset ratio. Company B has higher financial leverage as it has higher Debt/ Asset ratio. Company B has higher financial leverage as it has higher finance cost. 97. Case study: You have been given the financial statement for the last reported year for a company. Answer the subsequent questions based on that. 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 5%, which of the following is closest to the fair price of the share, asuming cost of equity of 12%? Rs 113 Rs 142 Rs 194 Rs 204 98. Which of the following is closest to the free cash flow to firm for 2xx8? Rs 1624 lakh Rs 1677 lakh Rs 1747 lakh Rs 1800 lakh 99. Based on the following information, calculate the cost of equity of the company. Risk free rate: 6%; Expected return from the market: 10%; Beta of the company: 1.2. 7.20% 10.80% 12% 18% 100. The FCFF of the company for the next year is estimated at Rs 2,000 lakh. It is expected to grow at 10% in the year after that and is expected to grow at 5% perpetually post that. If the weighted average capital is 11%, which of the following is closest to the fair value of the firm (Enterprise value)? Rs 33,333 lakh Rs 34,835 lakh Rs 42,087 lakh Rs 42,700 lakh Please fill in the comment box below. 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