NISM Research Analyst Exam Preparation

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Questions and Answers

What is a primary requirement for suggestions made by research analysts?

They should include personal opinions on the subject company.

They need to utilize complex jargon to appear professional.

They should reflect the most optimistic forecast of the company.

They must be based on factual information and avoid bias. (correct)

Which skill is crucial for a research analyst dealing with financial data?

Ability to interpret numbers and identify trends. (correct)

High comfort in dealing with qualitative analysis.

Artistic understanding of company branding.

Expertise in social media marketing.

What should be disclosed prior to suggesting a company to clients?

Any client preferences regarding company suggestions.

The personal investment of the research analyst in the company. (correct)

The historical performance of the company.

The geographic location of the company's headquarters.

Why is it important for research analysts to avoid jargons in their reports?

Clients may not understand technical terms, leading to confusion. Signup and view all the answers

What ethical approach should research analysts adopt while conducting interviews?

Ensuring to take consent before recording communications. Signup and view all the answers

What is a critical step analysts should take before meeting with a company's management?

Review the company’s products and financial information Signup and view all the answers

Why is independence and neutrality important for analysts during research?

It ensures their analysis is based on factual information. Signup and view all the answers

What can analysts use to gain additional insights into a company's performance?

Their network of contacts related to the research Signup and view all the answers

What should analysts have prepared to utilize their time effectively with management?

A specific set of questions or a questionnaire Signup and view all the answers

Which of the following is not advisable for analysts when communicating with management?

Requesting confidential information Signup and view all the answers

Which aspect is essential to consider when preparing for a meeting with management?

Knowing the company's historical and financial context Signup and view all the answers

What is a significant outcome of having clarity of thoughts and good listening ability for analysts?

They can maintain a neutral perspective during discussions. Signup and view all the answers

Which group is not typically considered a relevant contact for analysts during research?

Top management only Signup and view all the answers

What is a primary responsibility of a research analyst?

Collecting and analyzing data for investment decisions Signup and view all the answers

Which factor is crucial in the process of analysis conducted by research analysts?

Data and information collected from various sources Signup and view all the answers

What information do research analysts require for evaluating investments?

Data on macro and microeconomic factors Signup and view all the answers

What qualities are expected from a good research analyst?

Strong analytical skills and attention to detail Signup and view all the answers

Why is the role of a research analyst likened to choosing a phone?

Both actions involve comparing multiple features to meet personal preferences Signup and view all the answers

What types of sources do research analysts utilize for economic information?

Government statistics and central bank data Signup and view all the answers

What aspect is least relevant to the research analyst's work?

Selecting personal investment preferences Signup and view all the answers

Which of the following is not typically a part of a research analyst's analysis process?

Arranging social events for stakeholder relationships Signup and view all the answers

What is the primary purpose of the NISM Certification Examination?

To assess the skills and knowledge of professionals in the securities market Signup and view all the answers

Which organization mandates the development of certifications under the Securities and Exchange Board of India (SEBI)?

National Institute of Securities Markets (NISM) Signup and view all the answers

What do NISM and SEBI explicitly disclaim regarding the information provided in their materials?

Total accuracy and completeness of the information Signup and view all the answers

What kind of programs does the School for Certification of Intermediaries (SCI) administer?

Certification Examinations and Continuing Professional Education Programs Signup and view all the answers

Which of the following is NOT one of the areas covered by the CPE Programs at NISM?

Corporate Law Signup and view all the answers

What assurance do publishers of the NISM material provide concerning error liability?

They express disclaimers of any legal liability for errors or omissions. Signup and view all the answers

How does obtaining certification from NISM benefit aspiring professionals?

It creates structured career paths in the securities markets. Signup and view all the answers

Which of the following statements is true regarding the questions in the NISM Certification examination?

Questions may cover topics not discussed in the workbook. Signup and view all the answers

What is the primary currency in which interest is paid for Foreign Currency Convertible Bonds (FCCBs)?

Foreign Currency Signup and view all the answers

What is the main feature of Equity Linked Debentures (ELDs)?

Floating rate tied to equity returns Signup and view all the answers

Which type of securities typically determine the interest for Commodity Linked Debentures (CLDs)?

Commodities, mainly precious metals Signup and view all the answers

What major risk is associated with Equity Linked Debentures (ELDs)?

Credit risk from issuer default Signup and view all the answers

Which institutions issue Mortgage Backed Securities (MBS)?

Financial Institutions Signup and view all the answers

What is a common investment strategy associated with Equity Linked Debentures (ELDs)?

Capital protection with equity market exposure Signup and view all the answers

The guidelines for issuing Foreign Currency Convertible Bonds are set by which authority?

Reserve Bank of India (RBI) Signup and view all the answers

What characteristic do both Mortgage Backed Securities (MBS) and Asset Backed Securities (ABS) share?

They are issued against financial assets' cash flows. Signup and view all the answers

What is a key characteristic that makes precious metals a viable investment option?

Long life span Signup and view all the answers

How do investors manage their storage obligations when investing in commodity ETFs?

By transferring the obligation to the ETF Signup and view all the answers

What is the fundamental purpose of a managed futures contract?

To gain from price movements without owning the underlying asset Signup and view all the answers

What does a warehouse receipt signify?

Ownership of commodities without the need for physical possession Signup and view all the answers

Which of the following is NOT a characteristic of precious metals as an investment?

They are subject to significant depreciation Signup and view all the answers

What typically influences the value of units in a commodity ETF?

The net asset value of the fund Signup and view all the answers

Which commodity ETF product is most commonly used by investors?

Gold ETFs Signup and view all the answers

In which scenario is an investor most likely to benefit from a managed futures contract?

The price of the underlying asset increases Signup and view all the answers

Study Notes

NISM Research Analyst Workbook Information

No Guarantees: Publishers offer no guarantees or warranties for information accuracy. NISM and SEBI disclaim liability for errors or omissions.
Workbook Scope: The workbook assists candidates preparing for the NISM Research Analyst exam. It covers a range of topics.
Chapter Coverage and Weights: Detailed chapter breakdown is provided with assigned weightages for each chapter in the NISM exam syllabus.
Exam Content: The NISM certification examination will largely use the covered material but the examination may contain questions not directly in the workbook.

Research Analyst Role

Information Gathering: Research analysts collect information from various resources (e.g., government statistics, company reports).
Analysis: Data is processed to form investment decisions.
Client Communication: Clients receive clear, concise, and factual recommendations.
Company Interaction: Analysts interact with companies, maintaining independence and neutrality. Thorough pre-meeting research is necessary.
Conflict of Interest Disclosure: Conflicts (like owning company stock) must be disclosed.
Important Qualities: Research analysts need quantitative and qualitative skills (numerical analysis, keen observation, and understanding of business operations)

Securities Market Instruments & Details

Foreign Currency Convertible Bonds (FCCBs): Bonds are convertible into equity at a later date, and interest/principal payments are usually in foreign currency; dividends paid in INR upon conversion.
Equity Linked Debentures (ELDs): Floating-rate debt instruments linked to equity market performance. They are designed with capital protection and potential equity participation. There is credit risk.
Commodity Linked Debentures (CLDs): Debt linked to commodity returns, predominantly linked to precious metals.
Mortgage-Backed Securities (MBS): Debt issued using cash flow from financial assets such as mortgages.
Asset-Backed Securities (ABS): Debt based on receivables and cash flows from various financial assets like auto loans.

Commodity Investment Options

Precious Metals: Gold and Silver valued as investors for stable value preservation.
Commodity ETFs: Exchange-traded funds for diversified commodity exposure.
Managed Futures Contracts: Portfolios of future contracts managed by professionals for commodities investments
Warehouse Receipts: Negotiable documents proving ownership of stored goods.

Securities Market Structure

Securities Market: This is where securities are issued, bought, and sold.

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Description

This quiz is designed to assist candidates preparing for the NISM Research Analyst exam, covering various topics outlined in the official workbook. It includes chapter breakdowns with assigned weightages to facilitate focused study. Prepare effectively with questions aligned to the exam's content and structure.