NISM 15 Research Analyst Mock Test 16: 600 MCQ Series (Full Detailed Version)
NISM Series XV: Mock Test 16 (Set 16 of 24)
Dhaval’s Personal Advice for Aspirants:
Practice and understand these 25 questions. If you can't understand the theory or the logic, just mug it up (memorize it) because these are very important and sure-shot questions that will appear in the exam!
Q 26. __________ will count as a strength in SWOT analysis.
Options:
A. Growing economy
B. Falling interest rates
C. Strong financial position of the company
D. All of the above
View Correct Answer & Detailed Explanation
Explanation: Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis : Strengths refer to internal capabilities of the company that allows it to exploit external opportunities and withstand threats.
Here, the strong financial position is the internal strength of the company. Growing economy and low interest rates are external factors.
Q 27. A Government is said to be implementing Expansionary Fiscal policy when __________.
Options:
A. the Government's spending is lower than its income
B. the Government's spending exceeds its income
C. the Government's income and expenditure are in equilibrium
D. None of the above
View Correct Answer & Detailed Explanation
Explanation: Expansionary fiscal policy – Fiscal measures when government's spending exceeds its income. This policy stance is usually undertaken during recessions/slow moving economy.
Q 28. The market price of a share is Rs. 42 and the PE ratio is 14. The dividend payout ratio is 50%. Calculate the dividend per share for this company.
Options:
A. Rs. 3 | B. Rs 2.5 | C. Rs. 4 | D. Rs. 1.5
View Correct Answer & Detailed Explanation
Explanation:
Price Earning (PE) Ratio = Market Price / Earning Per Share (EPS)
14 = 42 / EPS
So EPS = 42/14 = 3
Dividend Payout Ratio = Dividend Per Share / EPS
50% = Dividend Per Share / 3
So Dividend Per Share = 3 X 50% = Rs. 1.5
Q 29. A shoe making company reported sales revenues of Rs 1,00,000 inclusive of indirect taxes of Rs. 15000 and direct taxes of Rs. 10000. Calculate the net sales?
Options:
A. Rs. 1,00,000 | B. Rs. 75,000 | C. Rs. 85,000 | D. Rs. 1,25,000
View Correct Answer & Detailed Explanation
Explanation: All indirect taxes have to be deducted from the Gross Sales to get the Net Sales figure as these taxes are collected by the business for the government and don't belong to the business. Eg: GST
Net Sales = Sales - Indirect Taxes = 1,00,000 - 15,000 = Rs. 85,000
(Direct taxes are income tax, MAT etc. which do not form a part of the sales)
Q 30. The formula for calculating Growth adjusted Price to Earnings ratio (PEG Ratio) is __________.
Options:
A. [Price x EPS] / Growth rate
B. [Price / EPS] x Growth rate
C. [Price / EPS] / Growth rate
D. Market price X Outstanding shares
View Correct Answer & Detailed Explanation
Explanation: Growth Adjusted Price to Earning Ratio (PEG) = [Current price of stock / Earnings Per Share] / Growth rate.
Example: Two businesses with P/E ratios 12 and 28. They have growth potentials of 10% and 40%.
PEG ratio 1: 12/10 = 1.2.
PEG ratio 2: 28/40 = 0.7.
The second stock is cheaper due to its high growth rate despite having a higher PE.
Q 31. Securities are shortlisted under the Additional Surveillance Mechanism (ASM) based on __________.
Options:
A. Company's networth
B. Valuation of the security
C. Variation in price and volume of securities
D. Market capitalisation of the security
View Correct Answer & Detailed Explanation
Explanation: SEBI and stock exchanges use Additional Surveillance Measures (ASM) to monitor securities showing unusual price movement and high volumes, which may be indicative of speculative behaviour. Shortlisting helps in protecting investors and maintaining market integrity.
Q 32. Which accurately represents the requirement under Regulation 16 of the Research Analyst Code of Conduct?
Options:
A. Analyst is allowed to invest in unlisted entities
B. Analyst is prohibited from investing in any unlisted company
C. Analyst must not invest in unlisted firms engaged in the same business as those tracked
D. None of the above
View Correct Answer & Detailed Explanation
Explanation: According to Regulation 16, a research analyst must avoid any conflict of interest. It prohibits trading or investing in the securities of unlisted companies which are in the same sector or industry as the companies they cover or recommend.
Q 33. What is the term used when a foreign firm establishes new operations in another country through investment?
Options:
A. Foreign Portfolio Investment
B. Foreign Aid
C. Foreign Direct Investment
D. Foreign Institutional Investment
View Correct Answer & Detailed Explanation
Explanation: When a foreign company invests in India to set up new business operations (like building a factory or opening offices), it is called Foreign Direct Investment (FDI).
FDI involves long-term investment and active management/control. It differs from Foreign Portfolio Investment (FPI), which involves investing in stocks without direct control.
Q 34. A company has 80,000 shares. EPS is Rs. 6, and P/E ratio is 12. Assuming zero debt and zero cash, what is the Enterprise Value (EV)?
Options:
A. Rs. 34,75,000 | B. Rs. 68,22,000 | C. Rs. 45,00,000 | D. Rs. 57,60,000
View Correct Answer & Detailed Explanation
Explanation:
Step 1: Calculate Market Price per Share. MP = EPS x P/E = 6 x 12 = Rs. 72.
Step 2: Calculate Market Capitalisation. Market Cap = 72 x 80,000 = Rs. 5,760,000.
Step 3: Calculate EV. EV = Market Cap + Debt - Cash.
Since debt/cash are zero: EV = 57,60,000 + 0 - 0 = Rs. 5,760,000.
Q 35. From a shareholder's perspective, which of the following is likely to enhance the attractiveness of a business?
Options:
A. High threats from substitutes
B. Significant entry barriers for new competitors
C. Both of the above
D. None of the above
View Correct Answer & Detailed Explanation
Explanation: Significant barriers to entry (like patents, brand loyalty, regulatory licenses) protect the business from new competitors, leading to sustainable profits. High threat of substitutes makes a business less attractive as customers can easily switch.
Q 36. According to SEBI regulations, what is the minimum waiting period required between compulsory delisting and subsequent relisting?
Options:
A. 3 years | B. 5 years | C. 7.5 years | D. 10 years
View Correct Answer & Detailed Explanation
Explanation: As per SEBI (Delisting of Equity Shares) Regulation of 2009, a company can apply for relisting (i) five years after delisting in the case of voluntary delisting and (ii) ten years after delisting in the case of compulsory delisting.
Q 37. What is the time limit for a company to distribute dividends after declaring them?
Options:
A. 15 days | B. 20 days | C. 30 days | D. 45 days
View Correct Answer & Detailed Explanation
Explanation: As per the Companies Act, 2013 - A company must pay the declared dividend within 30 days from the date of its declaration. Failure to do so leads to penal consequences.
Q 38. An individual may not function as a Research Analyst unless they have secured __________.
Options:
A. Certificate of Registration
B. Certificate of Practice
C. Certificate of Implementation
D. All of the above
View Correct Answer & Detailed Explanation
Explanation: According to SEBI's Research Analysts Regulations, 2014, no person shall act as a Research Analyst or represent themselves as one unless they have obtained a Certificate of Registration from SEBI.
Q 39. Calculate Net Profit margin: Sales are 250% of operating profit, while Net Profit is one-fourth of operating profit.
Options:
A. 10% | B. 15% | C. 20% | D. 25%
View Correct Answer & Detailed Explanation
Explanation:
Let Operating Profit = 100.
Then: Sales = 2.5 x 100 = 250.
Net Profit = 1/4 x 100 = 25.
Net Profit Margin = (25 / 250) x 100 = 10%.
Q 40. Identify the correct statement with respect to Interest rate risk.
Options:
A. Interest up, bond prices fall, equities up
B. Interest up, bond prices up, equities fall
C. Interest up, both equities and bonds up
D. Interest up, both equities and bonds fall
View Correct Answer & Detailed Explanation
Explanation:
Bonds: Inverse relationship. Rates up → Prices down.
Equities: Higher rates increase borrowing costs (lower profits) and make fixed-income instruments more attractive relative to stocks.
Q 41. While evaluating the strength of support and resistance levels, which is NOT used as a qualifying measure?
Options:
A. Recency | B. Frequency (number of touches) | C. Latency | D. Volume
View Correct Answer & Detailed Explanation
Explanation: Factors like recency, number of touches, and volume are standard technical metrics. Latency is a computing/network term and has no relevance in assessing price levels in technical analysis.
Q 42. Out of the following, which is treated as a Capital Account transaction?
Options:
A. External commercial borrowing by Indian enterprise
B. Money sent by NRIs to India
C. Money received by Indian exporters
D. None of the above
View Correct Answer & Detailed Explanation
Explanation: Capital account transactions involve changes in assets or liabilities (borrowings, FDI, loans). Remittances and export earnings are revenue/current account transactions.
Q 43. In which behavioural bias do investors tend to search for information that proves they're correct?
Options:
A. Loss-aversion bias | B. Confirmation bias | C. Herd mentality | D. Gambler's fallacy
View Correct Answer & Detailed Explanation
Explanation: In confirmation bias, investors seek out information that supports their existing beliefs while ignoring contradictory evidence.
Q 44. According to the BCG matrix, segments in slow-growing markets with high competition and low cash flows are:
Options:
A. Stars | B. Question marks | C. Dogs | D. Cash cows
View Correct Answer & Detailed Explanation
Explanation: In the BCG matrix, businesses with low market growth and low market share are classified as dogs. They generate low cash flows and have limited future potential.
Q 45. When a company plans a Scheme of Arrangement, which authority is the right one to approach?
Options:
A. High Court | B. NCLT | C. ROC | D. Supreme Court
View Correct Answer & Detailed Explanation
Explanation: For mergers, demergers, or compromises, companies in India must approach the National Company Law Tribunal (NCLT) for approval under the Companies Act.
Q 46. In a research report, the section that typically includes competitive landscape analysis is the __________ section.
Options:
A. Company analysis | B. Valuation | C. Economy analysis | D. Industry analysis
View Correct Answer & Detailed Explanation
Explanation: The industry analysis section examines the overall market environment, including competition, barriers to entry, and growth drivers.
Q 47. When the US Dollar Index rises, which outcome is most likely?
Options:
A. Other currencies weaken
B. Appreciation of the US dollar
C. Commodity prices rise
D. All of the above
View Correct Answer & Detailed Explanation
Explanation:
- US dollar appreciates (the index rises when dollar strengthens).
- Other currencies depreciate relative to the dollar.
- Commodities priced in dollars become more expensive for non-dollar buyers, often leading to global price rises.
Q 48. Which statement correctly describes the use of Third-party market research reports for equity research?
Options:
A. Should not be used
B. May be used if analyst forms independent conclusions
C. Only quantitative info may be used
D. Only for forecasts
View Correct Answer & Detailed Explanation
Explanation: Analysts shouldn't simply copy reports. They must apply their own judgment and form independent professional views based on the information.
Q 49. In the DCF framework, how does an increase in the risk-free rate affect the value of equity shares?
Options:
A. Fair value would rise
B. Fair value would decline
C. Converge towards face value
D. No bearing
View Correct Answer & Detailed Explanation
Explanation: If the risk-free rate goes up, the discount rate used to value future cash flows increases. A higher discount rate reduces the present value of those cash flows, causing the share value to drop.
Q 50. A financially strong company saw profits fall last year due to a weak economy. In SWOT analysis:
Options:
A. Treat as opportunity
B. Represents a threat
C. Not a major internal weakness as it resulted from external factors
D. Highlights a weakness
View Correct Answer & Detailed Explanation
Explanation: SWOT analysis distinguishes between internal (Strengths/Weaknesses) and external (Opportunities/Threats). Since the company is internally strong and the decline was external (weak economy), it isn't an internal weakness.
Mock Test 16 of 24 Complete. 400 questions done! Fantastic effort.
Dhaval Visariya
AMFI Registered Distributor (ARN-327925) | Software Developer & Finance Enthusiast
Connect with me:
LinkedIn |
Telegram |
YouTube |
GitHub |
Medium
Disclaimer: I am an AMFI Registered Mutual Fund Distributor. Views expressed here are for educational purposes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
📧 Contact: info.apollofinancialservices@gmail.com
Comments
Post a Comment