Research Analyst Certification Free Demo Test 6

Explanation:

Other comprehensive income (OCI): Other comprehensive income refers to income or expense that are required or permitted to by-pass profit and loss account. It mostly comprises of change in value of assets and liabilities on account of non-operating factors.

They include the following: – Changes in revaluation surplus – Re-measurement gain/(loss) on defined benefit plans – Gain/(losses) arises on account of translation of financial statement of foreign operations – Changes in fair value of financial assets or liabilities that are accounted through OCI – Gain/(loss) on account of derivative contracts that effectively hedge risk.

Explanation:

Each sector has its own unique parameters for evaluation. For the retail sector, footfalls 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.

Explanation:

If a property is transferred to a spouse, minor child etc., without adequate compensation, it is not valid. The transferor is the deemed owner and income from property is taxable in his hands.

As per section 64(1)(vi) of Income Tax Act, if an individual transfers his/her asset to his/ her son’s wife otherwise than for adequate consideration, then income from such asset will be clubbed with the income of the individual (i.e., transferor being father-in-law/mother-in-law).

Explanation:

The term “securities” has been defined in the Section 2(h) of Securities Contracts (Regulation) Act, 1956(SCRA).

‘Securities’ include: Shares, scrips, stocks, bonds, debentures, Government securities, derivatives etc.

Explanation:

Analysis and decision making process is a combination of understanding qualitative factors that affect operational performance, such as efficiency of operations, competitiveness, business plans and work ethics of the management among others and quantitative factors such as revenues, costs, profitability and risks to these financials.

Therefore, Research Analyst’s spend lot of time interacting with companies and others, accumulating data, analysing it and arriving at a decision on whether to buy, hold or sell a particular security/stock

Explanation:

Re-investment risk arises from the probability that income flows received from an investment may not be able to earn the same interest as the original interest rate. The risk is that intermediate cash flows may be reinvested at a lower return as compared to the original investment.

The rate at which the re-investment of these periodic cash flows is made will affect the total returns from the investment. The reinvestment rates can be high or low, depending on the levels of interest rate at the time when the coupon income is received.

Explanation:

EPS = Net Profit / No. of Shares

First let’s calculate the number of shares.

Number of Shares = Equity Capital / Face Value

= 3,44,81,540 / 10

= 34,48,154

EPS = Net Profit / No. of Shares

= 20,00,00,000 / 34,48,154

= 58.00

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)

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.

Explanation:

While analysing a company, the analyst has to check its Corporate governance standards.

Related party transactions form a part of corporate governance standards. It is important to prevent unscrupulous related party transaction that can enrich promoter group or other majority shareholders at the cost of minority shareholders. Ideally all material related party transactions should be presented to the audit committee for pre-approval.