NISM Series-XV Research & Analyst
Mock Test DemoIFMC Institute

Investors can earn both rent on their property and return on their capital invested - State True or False ?

The EBIT of a company is Rs 400000 and the EBIT % is 40% of the business. What is the Net Profit of the company if the Net Profit margin is 10%

Explanation: The EBIT is Rs 400000 which is 40% of the business ie. sales. So Sales = Rs 10,00,000 (400000 / 40 x 100) Net Profit margin is 10% ie 10% of Rs 1000000 = Rs 100000

Focus of microeconomics is on factors that influence aggregate supply and demand in an economy such as unemployment rates, gross domestic product (GDP), overall price levels, inflation, savings rate, investment rate etc. State whether True or False.

Explanation: Microeconomics focuses on individual households and firms. Macroeconomics deals with the economy as a whole. In other words, the focus of macroeconomics is on factors that influence aggregate supply and demand in an economy such as unemployment rates, gross domestic product (GDP), overall price levels, inflation, savings rate, investment rate etc.

During a slowdown in economies, unemployment rate _______ .

Explanation: When an economy is going through tough times, less jobs are created and so the unemployment rate rises.

Buy-side Analysts work for firms that provide investment banking, broking, advisory services for clients - State True or False ?

Explanation: Buy-side Analysts generate investment recommendations for their internal consumption viz. use by the fund managers within organization. They 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. Sell-side Analysts publish research reports on the securities of companies with specific recommendation to buy, hold, or sell. These analysts work for firms that provide investment banking, broking, advisory services for clients.

Price to book value ratio can be calculated using - Market price per share/ Book value per share OR - Market capitalization/ Book value of equity or net-worth - State True or False ?

______ has the right to buy an asset at a predetermined price.

Explanation: In Options, the buyers have the RIGHT but no obligations. A CALL BUYER has the right to buy an asset at a predetermined price A PUT BUYER has the right to sell an asset at a predetermined price.

__________ summarizes revenues and costs/expenses over a period of time.

A company which is like a monopoly and is not facing any threats of competition would be an ________ company for investors.

Which of the following items are found in an income statement?

Calculate the Capital Employed of a company if the networth is Rs 7,00,000 and debt in the balance sheet is Rs 4,00,000 and the market capitalisation is Rs 25,00,000.

Explanation: Capital Employed can be calculated using two formulas. 1) Capital Employed = Total Assets – Current Liabilities 2) Capital Employed = Total Equity + Total Debt Here we use the second formula. Capital Employed = Total Equity + Total Debt = 700000 + 400000 = 1100000

Mr. Rohit is an importer and need 5000 US Dollars after two months to make payments. He goes to the Foreign Exchange department of his bank and books USD 5000 - 2 months future. After two months he gets the USD 5000 from the bank and makes payments to the bank in Rupees equal to USD 5000. What type of contract is this ?

Explanation: OTC markets are the markets where trades are directly negotiated between two or more counterparties. In this type of market, the securities are traded and settled over the counter among the counterparties directly. There is no Stock Exchange or Currency Exchange etc. involved.

In __________ existing shares are replaced by the increased face value shares and reduced number to maintain the pre-corporate action total face value held by shareholders.

Explanation: Share consolidation is the reverse of Stock split. A stock consolidation of 5:1 means consolidation of 5 existing share into 1 share. For example, if an investor holds 500 shares of a company with face value of Rs. 2 each, a stock consolidation in the ratio of 5:1 will reduce the number of shares held by him from 500 to 100 but the face value of each share will go up to Rs. 10.

Are Puttable bonds a safe option for the investors in a rising interest rate scenario ?

Explanation: A Puttable bond gives the investor the right to seek redemption from the issuer before the original maturity date. This means the investor can sell back the bonds to the issuer before maturity. When interest rate rises, the investor would simply redeem the bonds and invest this money in higher coupon bonds.

Dividend is a small component of the total returns from the equity. State True or False?

Explanation: The main return from equity comes from capital appreciation ie. when the equity share prices rise.

Fundamental analysis includes which of the following?

The job of a Research Analyst is to collect and analyse data and give recommendations. He/she is not involved in interactions with the clients or companies - State True or False ?

Explanation: Job of a Research Analysts also involves close interaction with companies and clients.

A rise in National Income will surely lead to a rise in the standard of living of its citizens - State True or False ?

Explanation: National Income may increase but faster increase in population may reduce the per capita income; which means standard of living in the country has gone down. So an increase in the Per Capita Income is the true indicator of improvement in Standard of Living and not increase in National Income. Per Capita Income = National Income / Total population

The EBIT % of a company is 40% with EBIT levels of Rs 200000. The Net Profit margin of this company is 25%. No. of shares outstanding are 10000. Calculate the Earning per share (EPS).

Explanation: The EBIT is Rs 200000 which is 40% of the business ie. sales. So Sales = Rs 500000 (200000 / 40 x 100) Net Profit margin is 25% ie 25% of Sales Rs 500000 25% of Rs 500000 = 125000 EPS = Net Profit / No. of Shares = 125000 / 10000 = 12.5

The P/E ratio of a company is 3 and the price of its stock is Rs 15 per share. The company has declared a dividend of Rs 3. Calculate the EPS of this company.

Explanation: P/E ratio = Market Price of Stock / EPS Therefore EPS = Market Price of Stock / PE ratio = 15 / 3 = 5 (Dividend need not be considered, the current market price is relevant)

_______ parameters take care of aspects like business model, SWOT analysis, competition in the industry, technology aspects etc.

_________ quality (ies) is/are essential in a good Money Manager.

Securities and Exchange Board of India (Research Analyst) Regulations, 2014 are applicable to Fund Managers of Alternative Investments Funds - State True or False ?

Explanation: Investment Advisers, Asset Management Companies, Proxy Advisory Service providers and fund managers of Alternative Investment Funds shall not be required to be registered under the Securities and Exchange Board of India (Research Analyst) Regulations, 2014.

The objective(s) of all the regulators in a financial markets is / are ________.

Explanation: Objective of all regulators is to create a fair and competitive market place with intermediaries ensuring high standard of services to the market participants and promote and ensure orderly growth of financial markets.

Is it compulsory for a company listed on stock exchanges to have a Compliance Officer ?

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