NISM 15 Research Analyst Mock Test 19: 600 MCQ Series (Full Detailed Version)
NISM Series XV: Mock Test 19 (Set 19 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 1. In India, the Department of Revenue exercises control over matters relating to __________.
Options:
A. All direct and indirect taxes of Indian Government
B. Utilization of proceeds of disinvestment
C. Both of the above
D. None of the above
View Correct Answer & Detailed Explanation
Explanation:
Department of Revenue: This department handles the matters relating to all the Direct and Indirect Taxes through two statutory Boards namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC).
Note: The Department of Disinvestments is concerned with the financial policy relating to the utilization of proceeds of disinvestment.
Q 2. Increased medical insurance cover will be considered as __________ for Healthcare industry in SWOT analysis.
Options:
A. Strength
B. Weakness
C. Opportunity
D. Threats
View Correct Answer & Detailed Explanation
Explanation:
Opportunities are created through the external environment.
Increased medical insurance will lead to more people getting better medical treatment in hospitals as cost will not be a concern.
Therefore, industries involved in healthcare like hospitals and pharma will benefit from this growth opportunity.
Q 3. A company has Book Value per share of Rs. 18. Its Market capitalization is of Rs. 50 lakhs and Networth of Rs. 10 lakhs. Calculate the Price to book value ratio of this company.
Options:
A. 2.78
B. 10
C. 5
D. 12
View Correct Answer & Detailed Explanation
Explanation:
Price to Book Value (P/B) ratio can be calculated using the formula:
Market capitalization / Networth
Calculation:
50,00,000 / 10,00,000 = 5
Q 4. Which of these sections should be included in a company research report?
Options:
A. Share holding pattern of the company and its financial indicators
B. Complete industry overview and peer group analysis
C. Both of the above
D. None of the above
View Correct Answer & Detailed Explanation
Explanation:
The major sections of a research report include:
1. Company business
2. Peer group analysis
3. Shareholding pattern
4. Key strengths and concerns
5. Industry overview
6. Company fundamentals
7. Key financial indicators and financials.
Q 5. The Market Capitalisation of a company is Rs 8,00,000. Its Price to Book value ratio is 10 and the Book Value per share is Rs. 14. Calculate the Net Worth of the company.
Options:
A. Rs. 40,000
B. Rs. 50,000
C. Rs. 60,000
D. Rs. 80,000
View Correct Answer & Detailed Explanation
Explanation:
Price to Book Value ratio = Market capitalization / Net worth
Substituting the values:
10 = 8,00,000 / Net-worth
Net-worth = 8,00,000 / 10 = 80,000
Q 6. The Networth of a business is Rs. 2,00,000 and the debt on Balance Sheet is Rs 2,00,000. The Market Capitalisation is Rs. 8,00,000. Calculate the Capital Employed by the business.
Options:
A. Rs. 2,00,000
B. Rs. 10,00,000
C. Rs. 6,00,000
D. Rs. 4,00,000
View Correct Answer & Detailed Explanation
Explanation:
Capital Employed can be calculated using:
Total Equity + Total Debt
Calculation:
Capital Employed = 2,00,000 (Networth) + 2,00,000 (Debt) = 4,00,000.
Note: Market capitalization is not used for calculating book-value based Capital Employed.
Q 7. Study of __________ is essential to understand the income, investments and employment in an economy.
Options:
A. Capital Markets
B. Foreign Direct Investment (FDI) inflows
C. Microeconomics
D. Macroeconomics
View Correct Answer & Detailed Explanation
Explanation:
Macroeconomics is the study of "the big picture" in the economy.
It helps us understand the general state of the economy - Domestic Production, Consumption, Price levels, Growth, and Quality of life.
It also explains the drivers of income, savings, investments, and employment at a national level.
Q 8. If there is __________ in the economy, its most likely to aid the government in following expansionary fiscal policy.
Options:
A. Low Fiscal Deficit
B. High Fiscal Deficit
C. Stagflation
D. Hyper inflation
View Correct Answer & Detailed Explanation
Explanation:
Expansionary fiscal policy involves pumping more money into the economy to boost demand (usually during recession).
A low fiscal deficit means the government has "fiscal room" or surplus capacity to spend without needing immediate heavy borrowings.
Q 9. What will a good management talk about with the research analyst?
Options:
A. It will talk about opportunities and challenges to its business
B. It will talk about how its stock will perform in future in the stock markets
C. It will talk about future financials to influence the analyst's sentiments
D. All of the above
View Correct Answer & Detailed Explanation
Explanation:
A good management maintains integrity and will not try to speak about stock performance or manipulate analyst sentiments.
They focus on discussing the fundamental opportunities and risks in the business landscape.
Q 10. An industry which has few substitutes, very less competition and less bargaining power of buyers will have strong pricing power and __________.
Options:
A. Low profit margins
B. High profit margins
C. Nil profit margins
View Correct Answer & Detailed Explanation
Explanation:
According to Porter's Five Forces, an industry with low competition, high barriers to entry, weak buyers/suppliers, and few substitutes allows companies to command higher prices, leading to superior profit margins.
Q 11. When two companies combine together to form a totally new company and the previous companies cease to exist, it is known as __________.
Options:
A. Merger
B. Consolidation
C. Acquisition
D. Takeover
View Correct Answer & Detailed Explanation
Explanation:
In a consolidation, two companies combine to form a brand new entity, and both original companies disappear.
In a merger, one company is absorbed into another. In an acquisition, one company buys a majority stake in another, but both usually continue to exist as parent/subsidiary.
Q 12. Which department of Ministry of Finance administers policies relating to pension reforms, life and general insurance, public sector banks etc?
Options:
A. Department of Expenditure
B. Department of Financial Services
C. Department of Revenue
D. Department of Economic Affairs
View Correct Answer & Detailed Explanation
Explanation:
The Department of Financial Services (DFS) covers Banks, Insurance, Financial Services provided by government/private agencies, pension reforms, and Industrial Finance for MSMEs.
Q 13. A foreign investor has invested in the existing financial instruments of a country. This is known as __________.
Options:
A. Foreign Direct Investment
B. Foreign Portfolio Investment
C. Foreign Aid
D. Foreign Financial Participation
View Correct Answer & Detailed Explanation
Explanation:
FPI: Passive investment in existing financial instruments (equity/bonds) without participating in management.
FDI: Active investment where the entity participates in decision-making and business operations.
Q 14. What is 'KEY MAN RISK'?
Options:
A. Risk of conflict between CEO and Chairman
B. Risk of dependency on a key individual for business operations
C. Risk of security personnel not performing duties
D. Risk of giving responsibilities to individuals rather than a group
View Correct Answer & Detailed Explanation
Explanation:
Keyman risk arises when decision-making is highly concentrated in one person.
If that person leaves or is unavailable, the business process can be derailed because there is no broad-based delegation.
Q 15. __________ refers to the possibility that a company will be unable to honour its debt obligations.
Options:
A. Market Risk
B. Liquidity Risk
C. Business Risk
D. Credit Risk
View Correct Answer & Detailed Explanation
Explanation:
Credit Risk (or default risk) is the probability that a borrower (bond issuer) will fail to make required interest or principal payments on time.
Q 16. If the price of an equity share is more than the fair value, then the share is considered as __________.
Options:
A. a generator of higher returns
B. fairly priced
C. under priced
D. over priced
View Correct Answer & Detailed Explanation
Explanation:
If the current market price (CMP) exceeds the calculated intrinsic or fair value, the asset is considered overvalued or overpriced.
Q 17. What is insider information?
Options:
A. Knowledge about the number of employees working in an organisation
B. Details of all unpublished information about the organisation
C. Its the price sensitive information about the company which is not available to the general public
D. Its the personal intellectual property of the organisation
View Correct Answer & Detailed Explanation
Explanation:
As per SEBI, unpublished price sensitive information (UPSI) is information not generally available that can materially affect the price of securities if it were released.
Q 18. Which of these is a Current Asset?
Options:
A. Goodwill
B. Inventory
C. Intangible assets under development
D. Plant and Equipment
View Correct Answer & Detailed Explanation
Explanation:
Current assets are expected to be converted to cash within one operating cycle (usually 1 year).
Examples include Inventory, Cash, and Bank balances. Property, Plant, and Goodwill are Non-Current Assets.
Q 19. Which of these factors will be studied by a fundamental research analyst?
Options:
A. History of price movement in the share
B. Trends and patterns in the historical prices
C. Macro economic fundamentals
D. Historical trends in the volume of share trading
View Correct Answer & Detailed Explanation
Explanation:
Fundamental analysis involves studying the economy, industry, and company.
Technical analysis focuses on price patterns and volume. Macro fundamentals (unemployment, inflation, GDP) are core to the fundamental approach.
Q 20. Which committee is responsible for reviewing the financial statements of the company and for nominating the auditors?
Options:
A. Audit committee
B. Nomination committee
C. Remuneration committee
D. Board committee
View Correct Answer & Detailed Explanation
Explanation:
The Audit Committee is a key part of corporate governance, ensuring audit independence by reviewing financials and overseeing the auditor nomination process.
Q 21. How is per capita income of a country calculated?
Options:
A. National Income / Total population
B. Total population X National Income
C. Total population / National Income
D. National Income X Total population
View Correct Answer & Detailed Explanation
Explanation:
Per Capita Income is the average income earned by each person in the nation. Formula: Total National Income / Total Population.
Q 22. The umbrella market in India is dominated by three major players who have a combined revenue of Rs. 1500 crores. It is estimated that other players contribute to 40% of the market share. Calculate the total market size?
Options:
A. Rs. 1020 crores
B. Rs. 3500 crores
C. Rs. 2100 crores
D. Rs. 2500 crores
View Correct Answer & Detailed Explanation
Explanation:
If "others" have 40%, the "major players" have 60%.
60% = 1500 crores.
Total Market (100%) = (1500 / 60) * 100 = 2500 crores.
Q 23. A fundamental research analyst will study which of these factors?
Options:
A. Macro economic fundamentals
B. Trends and patterns in the historical prices
C. History of price movement in the share
D. Historical trend in share trading volumes
View Correct Answer & Detailed Explanation
Explanation:
Fundamental analysts prioritize the underlying health of the economy, sector, and company.
Factors like supply/demand, GDP, and inflation are fundamental, whereas price trends and volumes (B, C, D) are the focus of Technical Analysts.
Q 24. Miss. Z invests Rs. 30,000 at the rate of 8% per annum. What would be the future value of such investment after 5 years?
Options:
A. Rs. 37,816
B. Rs. 42,560
C. Rs. 53,100
D. Rs. 44,079
View Correct Answer & Detailed Explanation
Explanation:
Formula: FV = PV (1 + r)^n
PV = 30,000 ; r = 0.08 ; n = 5
FV = 30,000 * (1.08)^5
FV = 30,000 * 1.4693 = 44,079.
Q 25. To know the amount of funds that a company has borrowed during the preceding financial year, which of these sections will provide the best source?
Options:
A. Operating cash flows
B. Total net cash flows
C. Financing cash flows
D. Investment cash flows
View Correct Answer & Detailed Explanation
Explanation:
Cash flows are divided into:
1. Operating: Business operations (P&L items).
2. Investing: Purchase/Sale of assets.
3. Financing: Changes in liabilities and equity (borrowings, loan repayments, dividends).
Mock Test 19 of 24 Complete. 475 questions done! Keep going!
Dhaval Visariya
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