Silverstone Company has a very good financial position.

However, due to weak economic

conditions, it has experienced a fall in profits. Considering this scenario, which of the below
statements is TRUE ?
As the profit has fallen due to external factors, it does not indicate and major WEAKNESS as
per SWOT analysis
The fall in profits should be considered as an OPPORTUNITY as per SWOT analysis as the
company can grow faster from here-on
The fall in profits should be considered as a THREAT as per SWOT analysis as it a warning for
the future financial stability for the company
The fall in profits should be considered as a WEAKNESS of the company as per SWOT analysis

CORRECT ANSWER

Q 1.

WRONG ANSWER
CORRECT ANSWER:

The fall in profits should be considered as a THREAT as per SWOT analysis as it a warning for
the future financial stability for the company

Explanation:

In SWOT Analysis, threats are essentially risk that comes from external environment.

Weak economic condition is an external factor and such economic recession can cause
significant decline in the fortunes of many businesses.

Return on Capital Employed (ROCE) of a company is 6%. The cost of its debt is 8%. Identify
the correct statement about its Return on Equity (ROE).
Return on Equity is likely to be above 8%
Return on Equity is likely to be below 6%
Q 2. Return on Equity will be 2%
Return on Equity is likely to be between 6% to 8%

CORRECT ANSWER
 WRONG ANSWER
CORRECT ANSWER:

Return on Equity is likely to be below 6%

Explanation:

ROCE considers interest as returns where as ROE considers interest as a cost.

Therefore, the ROE will be lower than the ROCE of 6%

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.
2.78
10
5
12

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Explanation:

Price to book value ratio can be calculated using : Market capitalization / Networth

50,000,00 / 10,00,000 = 5
 Identify the industry which will fall under the 'Defensive' industry category?
Tourism Industry
Foods Industry
Media and information
Defense Equipment

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:
Q 4.
Foods Industry

Explanation:

Defensive industries: These are industries that create products and services that have low
income elasticity i.e., a fall or rise in income does not affect the demand significantly.
Therefore, these industries experience minimal impact on account of economic cycles.
Rather, their business prospects are affected only by secular trends.

Food, agricultural inputs, and healthcare are some of the industries that have exhibited
these traits in the past.

Q 5. Mr. Mohit purchased 500 shares of face value Rs. 2 of a company at Rs. 60000. The
company declared 100% dividend. Calculate the dividend yield on the value invested in
these shares.
1.66%
1.23%
12.75%
2.19%

CORRECT ANSWER
 WRONG ANSWER
CORRECT ANSWER:

1.66%

Explanation:

Dividend is declared on face value. Dividend declared is 100% i.e. Rs 2

Total Dividend = Rs 2 x 500 shares = Rs 1000

Dividend Yield = Dividend Received / Amount Invested x 100

Dividend Yield = 1000 / 60,000 x 100

= 1.66%

As per the BCG Matrix, _______ is that segment of the market in which business is growing
very strongly and the company has a large market share.
Dog
Question Mark
Star
Cash Cow

CORRECT ANSWER

Q 6.

WRONG ANSWER
CORRECT ANSWER:

Star

Explanation:
 As per the BCG matrix, business segments can be classified as:

Stars: These are segments in a business where market is growing rapidly and company is
having a large market share.

Cash Cows: These are segments which require low cash infusion for investment to maintain
market shares because of low growth prospects but at the same time steadily generate cash
for the company from the established market share.

Question Marks: Business segments in a fast growing market, but having low market share.

Dogs: Business segments, which have slow growth rates and intense competition.

[Stars: These are segments in a business where market is growing rapidly and company is
having a large market share. This segment generates increasing cash for the business with
the passage of time. Cera Sanitaryware could be a good example of “star” with large market
share, continuous growth and significant cash generation]

________ is an objective of SEBI regulations.

Prevention of volatility in markets
Protecting interest of investors
Securing steady returns for the investors
All of the above

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:
Q 7. Protecting interest of investors

Explanation:

The Preamble of the SEBI Act describes the basic functions of SEBI : “…..to protect the
interests of investors in securities and to promote the development of, and to regulate the
securities market and for matters connected therewith or incidental thereto”

Thus, SEBI’s primary role is to protect the interest of the investors in securities and to
promote the development of and to regulate the securities market.
 What is the cause of high inflation?
Increase in foreign exchange reserves
Higher interest rates
Strengthening of local currency
None of the above

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Increase in foreign exchange reserves

Q 8.

Explanation:

Substantial Increase in foreign exchange reserves will influence the monetary policy by
increase money supply and increase in money supply leads to inflation. This excess liquidity
creates some inflationary pressure

(Increase in international reserves also had a profound effect on the structure of world
inflation. The increase in demand expansion triggered by the monetary expansion results in
a sharp increase in the demand for traded commodities because the increase in
international reserves had eliminated or substantially reduced the foreign exchange
constraint in many countries. Consequently, the foreign trade sector became the leading
sector in inflation)

Q 9. How are Corporate actions regulated?

Corporate actions are regulated by SEBI regulations
Corporate actions are regulated by the listing agreement between the companies and Stock
exchanges
Corporate actions are regulated by the provisions of Companies Act
All of the above

CORRECT ANSWER

WRONG ANSWER
 CORRECT ANSWER:

All of the above

Explanation:

A company initiates several actions, apart from those related to its business, that have a
direct implication for its stakeholders. These include sharing of surplus with the
shareholders in the form of dividend, changes in the capital structure through the further
issue of shares, buy backs, mergers and acquisitions and delisting, raising debt and others.
In a company that has made a public issue of shares, the interest of the minority investors
has to be protected.

Corporate actions are regulated by provisions of the following: • Provisions of the

Companies Act, 2013, • Relevant regulations of SEBI, and • Terms of the listing agreement
entered into with the stock exchange.

Q 10. The unique parameter for evaluation of the business in hotel sector is ________ and for the
retail sector is _________ .
Net Room Income , Net profit margin
Average room tariffs , Foot falls and same store sales
Average Revenue Per User , Net profit margin
Average room tariffs , Net profit margin

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Average room tariffs , Foot falls and same store sales

Explanation:

Each sector has its own unique parameters for evaluation. For the retail sector, foot falls
and same store sales (SSS) are important parameters, whereas for banking it is Net Interest
 Income (NII)/ Net Interest Margin (NIM). For telecom, it is Average Revenue Per User
(ARPU) and for hotels, it is average room tariffs etc.

The tyre industry in a country comprised of three organised players and several
unorganised players. A sample survey revealed that around 20% of total sales came from
unorganised sector. The three major companies reported revenue of Rs 6,000 crore, Rs
8,000 crore and Rs 10,000 crore. Which of the following is closest to the fair estimate of
overall size of tyre market in that country?
Rs 30,000 crore
Rs 48,000 crore
Rs 36,000 crore
Rs 24,000 crore

CORRECT ANSWER

Q 11.
WRONG ANSWER
CORRECT ANSWER:

Rs 30,000 crore

Explanation:

If the unorganised sector market share is 20%, the balance 80% is of the organised sector.

The sale of the organised sector is Rs 6000 cr + Rs 8000 cr + Rs 10000 cr = Rs 24000 cr

Rs 24000 cr sale is 80% sale of the tyre industry. So 100% will be ?

24000 cr x 100 / 80 = Rs 30,000 cr

So the overall tyre market is of Rs 30,000 cr

_______ refers to the possibility that a company will be unable to honour its debt
obligations.
Market Risk
Q 12.
Liquidity Risk
Business Risk
Credit Risk
 CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Credit Risk

Explanation:

Credit Risk or default risk refers to the possibility that a particular bond issuer will not be
able to make expected interest rate payments and/or principal repayment.

Q 13. In ________ bias, investors look for evidence of some other investors buying specific
securities.
Gambler's fallacy
Confirmation bias
Herd Mentality
Anchoring

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Herd Mentality

Explanation:

Herd mentality: This is a common behaviour disorder in investing community. This bias is an
outcome of uncertainty and a belief that others may have better information, which leads
 investors to follow the investment choices that others make.

Small investors keep watching other participants for confirmation and then end up entering
when the markets are over heated and poised for correction.

The paid up capital of a company is Rs. 20 lakhs and the face value is Rs. 10. The Earning Per
Share is Rs. 5 and the Book value per share is Rs 25. Calculate the Return on Equity?
20%
15%
150%
Data insufficient

CORRECT ANSWER

Q 14.

WRONG ANSWER
CORRECT ANSWER:

20%

Explanation:

Return on Equity = (Earning Per Share / Book Value) x 100

= 5 / 25 x 100 = 20%

Q 15. The EV/EBIT ratio in an industry is 10.0X. A company from the in industry reported an EBIT
of Rs 500 crores. The company has a net debt of Rs 800 crores. What is the value of the
company's equity?
Rs. 1300 crores
Rs. 5800 crores
Rs. 4200 crores
Rs. 2700 crores

CORRECT ANSWER
 WRONG ANSWER
CORRECT ANSWER:

Rs. 4200 crores

Explanation:

Enterprise Value (EV) = Value of Equity + Value of Debt

The EV/EBIT = 10

So the EV is EBIT X 10 = 500 crores X 10 = Rs 5000 crores

EV = Value of Equity + Value of Debt

So Value of Equity = EV - Value of Debt

= 5000 cr - 800 cr = Rs 4200 crores

Q 16. A share is currently trading at Rs 40.50 with a PE ratio of 13.50. The company has a policy of
70% dividend payout ratio. Calculate the dividend per share.
Rs 3.50
Rs 2.10
Rs 5
Rs 1.60

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Rs 2.10

Explanation:

The Dividend Payout Ratio (DPR) is the amount of dividends paid to shareholders in relation
to the total amount of net income the company generates. In other words, the dividend
payout ratio measures the percentage of net income that is distributed to shareholders in
the form of dividends.

First lets find the Earning Per Share (EPS)

 PE Ratio = Market Price / EPS

13.50 = 40.50 / EPS

EPS = 40.50 / 13.50 = 3

Dividend Payout Ratio = Dividend Per Share / EPS

70% = Dividend Per Share / 3

70% of 3 = 2.10

So the Dividend Per Share = Rs 2.10

The Debt to Equity ratio of an organization is 2 : 1. The debt on the balance sheet is Rs
8,00,000 and the Return on Equity is 25%. Calculate the Net Profit of the company.
Rs 4,00,000
Rs 3,50,000
Rs 2,00,000
Rs 1,00,000

CORRECT ANSWER

WRONG ANSWER
Q 17. CORRECT ANSWER:
Rs 1,00,000

Explanation:

The Debt to Equity ration is 2 : 1. Which means Equity amount is half of Debt amount.

So the equity is half of Rs 8,00,000 = Rs 4,00,000

Net Profit = Return on Equity = 25%.

25% of Rs 4,00,000 = Rs 1,00,000

The competing technology for digital cameras is _______ .

Laptops
OTT platforms
Smart phones
Q 18.
Online shopping

CORRECT ANSWER
 WRONG ANSWER
CORRECT ANSWER:

Smart phones

Explanation:

Camera manufacturing is an example that shows the challenges in defining an industry.

Couple of decades ago, cameras were a standalone product. However, with the emergence
of smart mobile phones with built-in cameras, a lot of entry level digital cameras started
losing their sales to these phones.

In ________ , the issuers have the right to call the bonds back.
Convertible bonds
Callable bonds
Puttable bonds
Zero coupon bonds

CORRECT ANSWER

Q 19.
WRONG ANSWER
CORRECT ANSWER:

Callable bonds

Explanation:

A callable bond, also known as a redeemable bond, is a bond that the issuer may redeem
before it reaches the stated maturity date. A callable bond allows the issuing company to
pay off their debt early.
 What will be the likely Beta of a stock which is more volatile than the market?
Zero
Below zero
Between zero and one
Greater than one

CORRECT ANSWER

Q 20. WRONG ANSWER

CORRECT ANSWER:

Greater than one

Explanation:

Beta of 1 indicates that the security's price will move with the market. Beta of less than 1
means that the security will be less volatile than the market. And, beta of greater than 1
indicates that the security's price will be more volatile than the market.

For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market
both on up and down moves.

What is the advantage of the 'CHECKLIST' approach to investing?

There are less chances of overlooking data
It ensures a disciplined approach
It leaves a decision-making trail that can be modified and corrected with time.
All of the above

CORRECT ANSWER
Q 21.

WRONG ANSWER
CORRECT ANSWER:

All of the above

 Explanation:

A checklist is a type of job aid used to reduce failure by compensating for potential limits of
human memory. It helps to ensure consistency and completeness in carrying out a task. A
basic example is the "to do list".

Advantages of checklist approach are:

- Checklist helps avoid lazy mistakes or short-cuts.

- Checklist ensures than an analyst always does what he or she intends to do in a disciplined

manner.

- Checklists help in objective and facts based decisions.

- Checklists leave a decision-making trail that can be modified and corrected with time.

Q 22. The role of an Research Analyst is to _______ .

Study companies and industries, analyze raw data, and make forecasts
Give recommendations about whether to buy, hold or sell securities.
Both 1 and 2
None of the above

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Both 1 and 2

Explanation:

Research Analysts play an important role in interpreting the complex data related to
economy, industry, companies etc. They study Companies and industries, analyze raw data,
 and make forecasts / recommendations about whether to buy, hold or sell securities.

Investments in _______ is considered quiet risky.

Provident Fund
Venture Capital Fund
Pension Fund
Mutual Fund

CORRECT ANSWER

Q 23.
WRONG ANSWER
CORRECT ANSWER:

Venture Capital Fund

Explanation:

Venture Capital Funds - A venture capital fund refers to a pooled investment vehicle like
mutual fund but with mandate to invest money in enterprises that are in the early stage
of development but with the potential of long-term growth. However the risk of failure is
quiet high in these new enterprises.

Which of the following is NOT TRUE about INVESTING ?

Risk and return are an integral part of investing
Investments in bonds is safer than investing in equities
All investments carry risk of erosion of capital
All types of investment will result in capital appreciation over a long period of time

CORRECT ANSWER
Q 24.

WRONG ANSWER
CORRECT ANSWER:
 All types of investment will result in capital appreciation over a long period of time

Explanation:

Capital appreciation usually happens over a long period of time but it is not a certainity.
There could be losses also in the long term.

Identify the correct statement with respect to the 'Face Value' of a share -
Face value depends on the market price of the share
Dividends are not declared as a percentage to the face value of the share
A Company can have various face value or its shares
Face value of company’s shares would increase in case of share split

CORRECT ANSWER

WRONG ANSWER
Q 25. CORRECT ANSWER:

Dividends are not declared as a percentage to the face value of the share

Explanation:

SEBI has mandated that listed companies shall declare dividends in rupees terms on per
share basis as against the earlier practice of declaring dividends as a percentage of the face
value.

This is to avoid confusion among investors while comparing dividend on various shares of
different face values.

Q 26. An agent or a dealer who buys and sells shares in a registered stock exchange is known as
__________ .
Underwriter
Share transfer agent
Stockbroker
 Lead merchant banker

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Stockbroker

Explanation:

Trading members or Stock Brokers are registered members of a Stock Exchange. They
facilitate buy and sell transactions of investors on stock exchanges. All secondary market
transactions on stock exchanges have to be essentially conducted through registered
brokers of the stock exchange.

Which of the below mentioned actions is NOT included in the powers of Securities and
Exchange Board of India (SEBI)?
To appoint the directors of Financial Intelligence Unit (FIU).
Suspend an officer of a SEBI registered Stock Broker.
Impound and retain the proceeds or securities in respect of any transaction which is in
violation of regulations.
Suspend trading of a listed security on a recognised stock exchange.

CORRECT ANSWER

Q 27.

WRONG ANSWER
CORRECT ANSWER:

To appoint the directors of Financial Intelligence Unit (FIU).

 Explanation:

FIU is an independent body reporting directly to the Economic Intelligence Council (EIC)
headed by the Finance Minister.

Which of the below options is TRUE for an industry which has low competition, few
substitutes and low bargaining power of the buyers?
It has strong pricing power and high profit margin
It has strong pricing power and low profit margin
It has weak pricing power and high profit margin
It has weak pricing power and low profit margin

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

It has strong pricing power and high profit margin

Q 28.

Explanation:

If an industry has the following features, it would have strong pricing power and high profit
margins -

1. Low competition

2. High barriers to entry

3. Weak suppliers’ bargaining power

4. Weak buyers’ bargaining power

5. Few substitutes

A good example of this is the Education industry in India.

 The EBIT % (Earnings before Interest and Tax) of a business is 50% with EBIT levels of Rs
200000. The Net Profit margin of this company is 20%. No. of shares outstanding are 20000.
Calculate the Earning per share (EPS).
Rs.2
Rs.4
Rs.6.50
Rs.8

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:
Q 29.
Rs.4

Explanation:

The EBIT is Rs 200000 and this is 50% of the business ie. 50% of sales.

So Sales = Rs 400000 (200000 / 50 x 100)

Net Profit margin is 20% ie 20% of Sales Rs 400000

20% of Rs 400000 = 80000

EPS = Net Profit / No. of Shares

= 80000 / 20000 = 4

Q 30. ________ is NOT a valuation parameter for business analysis.

P/E ratio
P/BV ratio
The demand and supply of the companies shares in the stock market
Intrinsic value

CORRECT ANSWER
 WRONG ANSWER
CORRECT ANSWER:

The demand and supply of the companies shares in the stock market

Explanation:

When a business is valued, the demand and supply of its shares in the stock market is not
considered.

The manager of the Indian Government's borrowing program is ______ .

SEBI
IRDA
RBI
Ministry of Finance

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:
Q 31.
RBI

Explanation:

Reserve Bank of India (RBI) is the central bank of the country which has the responsibility of
administering the monetary policy.

It regulates the money markets and is the manager of Government's borrowing programs.

One can see low consumer confidence during ________ .

Recession
Q 32. Slow Down
Recovery
Boom
 CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Recession

Explanation:

Recession Phase : As utilization rates are low, manufacturers cut down on their further
expansion plans. Further, to control cost, they may begin layoffs. This results in increase in
unemployment, decrease in income levels and in turn decrease in consumption.

Decreasing consumption causes losses and more unemployment and the cycle sustains the
decreased consumption. Consumer confidence declines. Consumers start saving rather than
borrowing and/or spending.

Q 33. The formula for calculating Growth adjusted Price to Earnings ratio (PEG Ratio) is ______ .
[Current price of stock x Earnings Per Share] / Growth rate
[Current price of stock/ Earnings Per Share] x Growth rate
[Current price of stock/ Earnings Per Share] / Growth rate
Market price X Number of outstanding shares

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

[Current price of stock/ Earnings Per Share] / Growth rate

 Explanation:

Growth Adjusted Price to Earning Ratio (PEG) =

[Current price of stock/ Earnings Per Share] / Growth rate

To understand the difference between a normal PE Ratio and PEG Ratio, lets take an
example.

There are two businesses with P/E ratios 12 and 28. They have different growth potentials
of 10 % and 40 % for next few years. If we look at PE Ratio, we will derive that the stock
with PE of 12 is cheaper than the stock with PE 28.

However if we calculate the PEG ratio ie - 12/10 = 1.2 and 28/40 = 0.7 , we will find that the
second stock is cheaper due to the high growth rate of the company.

Q 34. When an investor suffers a loss in his bond portfolio due to insolvency of the company, this
is known as ______ .
Interest Rate Risk
Market Risk
Credit Risk
Liquidity Risk

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Credit Risk

Explanation:

Credit Risk or default risk refers to the possibility that a particular bond issuer will not be
able to make expected interest rate payments and/or principal repayment.

Debt instruments are subject to default risk as they have pre-committed pay outs. The
ability of the issuer of the debt instrument to service the debt may change over time and
 this creates default risk for the investors.

Unfair trade practice excludes :

Active concealment
Publicly known information
Wilful mis-statement
Misleading info

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:
Q 35.
Publicly known information

Explanation:

Some of the instances of unfair trade practices cited in the SEBI (Prohibition of Fraudulent
and Unfair Trade Practices relating to Securities Markets) Regulation, 2003 are as follows:

a) A wilful misrepresentation of the truth or concealment of material fact in order that

another person may act, to his detriment b) A suggestion as to a fact which is not true, by
one who does not believe it to be true c) An active concealment of a fact by a person having
knowledge or belief of the fact d) A promise made without any intention of performing it e)
A representation, whether true or false, made in a reckless and careless manner.

Publicly know information is not a unfair trade practice.

As per SEBI rules, the chairman of the Remuneration Committee should be ______ .
The Chairman of the Board
A Non Executive Director
An Executive Director
Q 36. An Independent Director
CORRECT ANSWER
 WRONG ANSWER
CORRECT ANSWER:

An Independent Director

Explanation:

The remuneration committee decides the remuneration of directors and senior

management. Ideally, the committee should comprise entirely of independent directors.
SEBI regulation currently stipulates that all members should be non-executive directors and
the chairman of the committee should be independent director.

Identify which of these is important in the context of client meetings by research analysts?
Pre-meet research done by the research analyst
Clarity of questions asked to the management
Unbiased attitude of the research analyst
All of the above

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Unbiased attitude of the research analyst

Q 37.

Explanation:

Once analysts are done with research and research report is prepared, they need to
communicate their findings to the clients. There are certain guidelines that an analyst could
follow in their communication with clients.

• They must be realistic in suggesting companies to their clients. Suggestions should be

based on facts and figures and not contain an optimistic/pessimistic/biased view on the
subject company.

Q 38. Analysis of industry by a research analyst will involve which of the following factors?
Regulatory environment prevalent in the industry
Competition in the industry
 Consumers’ behaviour
All of the above

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

All of the above

Explanation:

Different industries face different challenges and opportunities. Their growth drivers could
be significantly different. Accordingly, Research Analysts need to understand thoroughly
the regulatory environment prevalent in the industry, business models, competition,
operating factors, sensitivity of demand to price changes, consumers’ behaviour etc.

Find out the Cost of Equity if the risk free rate is 5%, the Market risk premium is 8% and the
Beta is 0.60.
11.08%
10.50%
9.8%
8.65%

CORRECT ANSWER
Q 39.

WRONG ANSWER
CORRECT ANSWER:

9.8%
 Explanation:

Cost of Equity = Risk Free Rate + Beta (Risk free rate - Expected Rate)

'Risk free rate - Expected Rate' is also known as Market Risk Premium

= 5 + 0.60 (8)

= 5 + 4.8 = 9.8%

Earnings for an investor from the business depend on which of these factors?
Interest rate in the economy
Inflation in the economy
Market conditions
Performance of the company

CORRECT ANSWER

Q 40.
WRONG ANSWER
CORRECT ANSWER:

Performance of the company

Explanation:

The returns to an investor from a business depends on various factors, but the most
important factor is the performance of the company.

________ is considered as an Economic Factor in PESTLE analysis.

Foreign Exchange Reserves
Q 41. Monitory policies of the RBI
Dependence of a country on other countries for important natural resources
All of the above
 CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

All of the above

Explanation:

Political, Economic, Socio-cultural, Technological, Legal and Environmental (PESTLE) Analysis

Monitory policies of the Central Banker, country’s dependence on other countries in terms
of important natural resources such as oil, Balance of payment positions and forex reserves
etc. all form a part of the economic factors under PESTLE analysis.

Q 42. The 'Income Method' of measuring national income measures the national income as an
aggregated flow of goods and services in the economy from the different sectors:
agriculture, industry and services. State whether True or False?
True
False

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

False

Explanation:

National income of an economy is defined through a variety of measures such as gross

domestic product (GDP) and gross national product (GNP). Broadly stating, national income
of an economy can be measured through three methods: (i) Product Method (ii) Income
 Method, and (iii) Expenditure Method.

In the Product Method national income is measured as an aggregated flow of goods and
services in the economy from the different sectors: agriculture, industry and services.
Economists calculate money value of all final goods and services produced in the economy
during a specified period. Final goods refer to only those goods which are consumed by
economy participants and not the ones used in further production processes (intermediate
goods).

_________ is responsible for managing the fiscal policy of India.

Central Bank (RBI)
Central Government
Capital Market Regulator (SEBI)
EXIM Bank of India

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Central Government
Q 43.

Explanation:

Fiscal policy is defined as the policy under which the government uses the instrument of
taxation, public spending and public borrowing to achieve various objectives of economic
policy. Simply put, it is the policy of government spending and taxation to achieve
sustainable growth.

Note – The fiscal policy is managed by the Central Government and the monetary policy is
managed by the Central bank (RBI).

A company paid a dividend of 25% on face value of Rs. 5. The market price of its share is Rs.
70. The dividend payout ratio is 80%. Calculate the Earnings Yield.
2.23%
Q 44.
8%
4.63%
5%
 CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

2.23%

Explanation:

The company paid a dividend of 25% on Rs. 5 face value. So the dividend is Rs. 1.25 (25% of
Rs. 5)

Dividend Payout ratio = Dividend Per Share / EPS (Earning Per Share)

80% = 1.25 / EPS

EPS = 1.25/ 0.8

EPS = 1.56

Earning Yield % = EPS / Stock Price x 100

= 1.56 / 70 x 100

= 2.23 %

Q 45. _______ regulates the registered valuers in India.

Securities and Exchange Board of India (SEBI)
Registrar of Companies (ROC)
Institute of Chartered Accountants of India (ICAI)
Insolvency and Bankruptcy Board of India (IBBI)

CORRECT ANSWER
 WRONG ANSWER
CORRECT ANSWER:

Insolvency and Bankruptcy Board of India (IBBI)

Explanation:

Insolvency and Bankruptcy Board of India (IBBI), established under the Insolvency and
Bankruptcy Code 2016, is the regulator for overseeing insolvency process as well as the
insolvency professionals. It is responsible for making and enforcing rules related to
corporate insolvency resolution, corporate liquidation and individual insolvency resolution
and individual bankruptcy code.

It is also appointed as the authority for regulation and development of valuers in India.

Q 46. Calculate the Sales of a business with the following data : Outstanding Shares 50,000 ;
Earning Per Share - Rs. 4 ; EBIT percent of the business - 40% and EBIT is 200% of Net Profit.
Rs. 8,00,000
Rs. 12,80,000
Rs. 10,00,000
Rs. 7,80,000

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Rs. 10,00,000

Explanation:

Earning Per Share (EPS) = Net Profit / No. of shares

So Net Profit = EPS X No, of Shares

 Net Profit = 4 X 50000 = Rs 2,00,000

EBIT is 200% of Net Profit = 2,00,000 x 2 = 4,00,000

EBIT is 40% of the business which means EBIT is 40% of sales

EBIT = 4,00,000.

If 40% is 400000, 100% will be 400000 x 100 / 40 = 10,00,000

Therefore sales = Rs 10,00,000

Sell side Analyst generally work for money managers like mutual funds, hedge funds,
portfolio managers who purchase and sell securities for their own investment accounts or
on behalf of their clients. State whether True or False.
True
False

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Q 47. False

Explanation:

Sell-side Analysts - They typically publish research reports in public domain on the securities
of companies or industries with specific recommendation to buy, hold, or sell the subject
security. These recommendations include the analyst’s expectations of the future earnings
of the company and future price performance of the security (“price target”). These
analysts work for firms that provide investment banking, broking, advisory services for
clients.

(Buy-side Analysts - They generally work for Asset managers like mutual funds, hedge funds,
pension funds, Alternative investment funds, Foreign Portfolio investors or portfolio
managers that purchase and sell securities for their own investment accounts or on behalf
of their investors/clients)

Q 48. As per SEBI (Research Analyst) Regulations, 2014, a research analyst who is an individual or
are a partnership firm will have net tangible assets of __________ .
 Not less than Rs. 1 lakh
Not less than Rs. 5 lakhs
Not less than Rs. 10 lakhs
Not less than Rs. 15 lakhs

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

Not less than Rs. 1 lakh

Explanation:

As per the Securities and Exchange Board of India (Research Analyst) Regulations :

Regulation 8: Capital adequacy - A research analyst who is individual or partnership firm

shall have net tangible assets of value not less than one lakh rupees.

Q 49. Capital Markets in India are regulated by _______ .

Ministry of Finance
SEBI
RBI
Controller of Capital

CORRECT ANSWER

WRONG ANSWER
CORRECT ANSWER:

SEBI

Explanation:
 Securities and Exchange Board of India (SEBI) is the regulatory authority for the securities
market in India.

SEBI stands at the forefront of regulating India's security and capital markets, with its
oversight extending to activities related to stock exchanges, brokers, portfolio managers,
and mutual funds.

Identify the bonds which can be converted into equity.

Callable Bonds
Puttable Bonds
Convertible Bonds
Zero Coupon Bonds

CORRECT ANSWER

WRONG ANSWER
Q 50. CORRECT ANSWER:

Convertible Bonds

Explanation:

A convertible bond or debenture is generally issued as a debt instrument with the option to
investors to convert the amount invested into equity of the issuer company later. This
security has features of both debt and equity.