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What is the primary role of a Research Analyst?
To collect information from various sources and process data to help clients make investment decisions.
What information sources are important for Research Analysts?
What do Sell-side Analysts do?
What is the primary role of a Research Analyst?
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Which type of analysis focuses on historical data like price movements and trading volumes?
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SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats.
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Dupont analysis decomposes Return on Equity (ROE) into its _____.
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What is the purpose of the NISM-Series-XV: Research Analyst Certification Examination?
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What is the passing score for the NISM-Series-XV: Research Analyst Certification Examination?
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Negative marking is applied in the NISM-Series-XV: Research Analyst Certification Examination.
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The NISM-Series-XV: Research Analyst Certification Examination consists of ____ multiple choice questions and ____ case-based questions.
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What is the primary role of a Research Analyst?
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Which factors affect Analysis and Decision making according to the text?
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Sell-side Analysts generally work for money managers like mutual funds, hedge funds, and portfolio managers. True or False?
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Which of these Qualities are desired in a good research analyst?
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What are CLDs advantages for investors?
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What are Mortgage Backed Securities (MBS) and Asset Backed Securities (ABS) backed by?
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REITs and InvITs are investment vehicles formed as corporations.
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_______ refers to basic materials or goods that are largely homogenous in nature.
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Match the following investment vehicles with their respective asset types:
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What are examples of securities mentioned in the text?
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Equity shares represent fractional ownership in a business venture.
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Debentures can be either _______ or secured in nature.
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What is the purpose of a Market Index?
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Match the following securities with their descriptions:
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What is an Offer for Sale (OFS)?
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Sweat Equity shares are mainly issued to raise capital for a company.
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What is the main purpose of Employee Stock Option Schemes (ESOPs)?
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In the secondary market, the dealings are between investors and __________ do not come into the picture.
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What is the main difference between open-ended and close-ended mutual fund schemes?
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Preference shares have voting rights like common equity shares.
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Convertible debentures can be converted into equity shares of the company at a future date. They may be of different kinds: Fully convertible debentures (FCD) where the entire face value of the debenture is converted into equity shares, Partly convertible debentures (PCD) where a portion of the debenture is converted into equity, and Optionally convertible debentures (OCDs) where the conversion is at the discretion of the debenture holders. The issuer specifies the details of the conversion at the time of making the issue itself, including the Date, Ratio, and Price. The advantage to the issuer is lower ____ rate than pure debt instruments.
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Match the following depository receipts with their descriptions:
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What is the difference between hard underwriting and soft underwriting in the context of an IPO?
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Which of the following investors are part of the Institutional Investors in the securities market?
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P-Notes provide access to Indian securities markets for overseas investors without requiring registration with SEBI.
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What is the primary focus of Mutual Funds when managing investments?
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_______ control relatively large amounts of capital and are some of the largest institutional investors.
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Match the following types of investment funds with their descriptions:
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Study Notes
Introduction to NISM Certification
- NISM (National Institute of Securities Markets) is a leading provider of high-end professional education, certifications, training, and research in financial markets.
- NISM engages in capacity building among stakeholders in the securities markets through professional education, financial literacy, enhancing governance standards, and fostering policy research.
About the Workbook
- This workbook is designed to assist candidates in preparing for the NISM-Series-XV: Research Analyst Certification Examination.
- The workbook covers all important topics required to perform research on companies, including:
- Basics of Indian securities markets
- Various terminologies used in equity and debt markets
- Top-down and bottom-up approach to fundamental research
- Basic principles for micro and macro-economic analysis
- Key industry drivers and sources of information for industry analysis
- Qualitative and quantitative dimensions with respect to company analysis
- Fundamentals of risk and return, valuation principles, and corporate actions
- The regulatory environment and writing a good research report
About the Certification Examination for Research Analyst
- The examination aims to create a common minimum knowledge benchmark for all associated persons registered as Research Analysts under SEBI (Research Analyst) Regulations, 2014.
- The examination consists of 92 multiple-choice questions and 2 case-based questions, with a total of 100 marks.
- The passing score is 60 marks (i.e., 60%).
- There shall be negative marking of 25% of the marks assigned to the question for each wrong answer.
Objectives of the Certification
- Upon successful completion of the examination, candidates should:
- Know the basics of Indian securities markets and different terminologies used in equity and debt markets.
- Know about the top-down and bottom-up approach to fundamental research.
- Know the basic principles for micro and macro-economic analysis.
- Know the key industry drivers and sources of information for industry analysis.
- Understand about the qualitative and quantitative dimensions with respect to company analysis.
- Know the fundamentals of risk and return, valuation principles, and corporate actions.
- Understand the qualities of a good research report.
Disclaimer
- The contents of this publication do not necessarily constitute or imply its endorsement, recommendation, or favoring by the National Institute of Securities Markets (NISM) or the Securities and Exchange Board of India (SEBI).
- The publication is meant for general reading and educational purposes only.
- It is not meant to serve as a guide for investment.### Introduction to Research Analyst Profession
- The role of a research analyst is to help clients make informed investment decisions by analyzing data and information to evaluate the performance of companies and industries.
- Research analysts collect data from various sources, including government statistics, industry-specific journals, and company-specific information, and analyze it to make recommendations.
- The primary responsibilities of a research analyst include:
- Understanding the economy, including macroeconomic factors, fiscal and monetary policies, and global factors.
- Understanding industries, including regulatory environments, business models, competition, and operating factors.
- Understanding companies, including qualitative and quantitative analysis of their financials, business models, and management.
Types of Research Analysts
- Sell-side analysts: Work for firms that provide investment banking, broking, and advisory services, and publish research reports in the public domain with recommendations to buy, hold, or sell securities.
- Buy-side analysts: Work for asset managers, such as mutual funds, hedge funds, and pension funds, and generate investment recommendations for internal use.
- Independent research analysts: Work for research originators or boutique firms, and sell their research to others on a subscription basis.
Primary Responsibilities of a Research Analyst
- Understanding economy:
- Macro-economic factors, such as national income, inflation, interest rate, and unemployment rate.
- Fiscal and monetary policies and their impact on the economy.
- Global factors that impact GDP growth.
- Understanding industry:
- Regulatory environment.
- Business models.
- Competition.
- Operating factors.
- Understanding companies:
- Qualitative understanding: business model, management, and strengths and weaknesses.
- Quantitative understanding: financials, including balance sheets, profit and loss statements, and cash flows.
Basic Principles of Interaction with Companies/Clients
- Pre-meeting research: Thoroughly research the company's products, industry, and competitors before meeting with management.
- Independence and neutrality of view: Maintain an unbiased opinion and do not reveal non-public information.
- Network: Use contacts to acquire meaningful insights into the company's performance and plans.
- Clarity of questions: Have clear and specific questions to ask management during meetings.### Role of Research Analysts
- Research analysts help clients make informed decisions by providing them with research reports and recommendations
- They must be realistic and unbiased in their suggestions, and consider facts and figures rather than emotions
- Research reports should be simple, clear, and concise, and free from any conflicts of interest
- Analysts should disclose any assumptions or biases in their reports
Important Qualities of a Research Analyst
- Quantitative and qualitative skills
- Comfort with numbers and ability to analyze financial data
- Methodical and enquiring mind
- Ability to understand business models and competitive dynamics
- Good communication skills, both written and verbal
Research Reports
- Sample research reports can be found on the BSE and NSE websites
- Reports should be detailed and informative, providing investors with the information they need to make decisions
Securities Market
- A securities market is a platform where investors and borrowers can buy and sell securities
- It allows for the transfer of resources from those with surplus funds to those who need them
- The market provides a mechanism for investors to convert their savings into investments
- Securities markets include:
- Investors/providors of funds (buyers of securities)
- Borrowers/seekers of funds (sellers of securities)
- Intermediaries (providing infrastructure to facilitate the transfer of funds and securities)
- Regulatory bodies (responsible for the orderly development of the market)
Types of Securities
- Equity shares: represent ownership in a company and provide a claim on its profits
- Debentures/bonds: debt instruments used to raise long-term capital
- Derivatives: contracts that derive their value from an underlying asset or security
- Government securities: debt instruments issued by the government to raise funds
- Units or other instruments: issued by collective investment schemes to investors
Product Definitions
- Equity shares: issued by companies, represent ownership in a company
- Debentures/bonds: issued by companies, government, and special purpose vehicles, used to raise long-term debt
- Warrants: options that allow investors to buy equity shares of a company at a pre-determined price
- Convertible warrants: warrants that can be converted into equity shares
- Indices: track the market movement and provide a benchmark for investment performance
Mutual Funds and Exchange Traded Funds
- Mutual funds: investment vehicles that pool money from investors to invest in a portfolio of securities
- Exchange-traded funds (ETFs): investment vehicles that track an index, commodity, or basket of assets
- ETFs are listed and traded on a stock exchange, and their price changes continuously to reflect changes in the underlying asset.
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Description
Prepare for the National Institute of Securities Markets (NISM) Certification Examination for Research Analyst with this workbook. Assist candidates in preparing for the exam.
