Sample Questions

NISM-Series-15: Research Analyst Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 Which of these is currently viewed as a "matured" industry within the Indian economy?

A. Oil and Gas industry Correct Answer
B. E-Commerce industry
C. Bio-tech industry
D. Fintech industry

Explanation:

A matured industry is well-established with stable growth. Oil and Gas fits this, while the others are still in high-growth phases.

Marks: 1

Q2 Which valuation approach is suitable for a buyer who has choice between buying versus making (creating the asset)?

A. Cash flow based valuation.
B. Relative valuation.
C. Cost based valuation. Correct Answer
D. Market price based valuation.

Explanation:

Cost-based valuation is relevant when a buyer can choose to build a similar asset instead of buying the existing one.

Marks: 1

Q3 An estimate of a company's earnings for a future period, usually the current or next fiscal year, is known as what?

A. Historical earnings
B. Trailing earnings
C. Forward earnings Correct Answer
D. Current earnings

Explanation:

Forward earnings are projections or estimates of a company's future earnings performance.

Marks: 1

Q4 How is the value of equity derived once the value of business is estimated using the FCFF model?

A. By adding debt and subtracting cash.
B. By subtracting minority interest, preferred share capital and debt, and by adding cash, cash equivalents and short term investment. Correct Answer
C. By multiplying Enterprise Value by the Debt/Equity ratio.
D. By discounting terminal value.

Explanation:

Enterprise Value represents the total value of the firm's operations; equity value is derived by subtracting the value of other claims and adding non-operating assets like cash.

Marks: 1

Q5 If the cost of equity is 11%, the cost of debt is 8%, and equity makes up 60% of the capital, what is the Weighted Average Cost of Capital (WACC)?

A. 8.9%
B. 10.7%
C. 9.8% Correct Answer
D. 10.1%

Explanation:

WACC is calculated by multiplying the weight of each source of capital by its cost. Here: (0.60 * 11%) + (0.40 * 8%) = 6.6% + 3.2% = 9.8%.

Marks: 1

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