NISM-Series XV: Research Analyst Certification 'Final Test 2'

Explanation:

OTC markets are the markets where trades are directly negotiated between two or more counterparties. There is no Stock Exchange or any other Exchange involved.

In this type of market, the securities, commodities etc. are traded and settled among the counterparties directly.

For eg – An Exporter selling US Dollars to a Bank.

Explanation:

A bonus issue, also known as equity dividend, is an alternative to cash dividend. Bonus shares are issued to the existing shareholders by the company without any consideration from them. The reserves lying in the books of the company (shareholders’ money) gets transferred to another head i.e. paid-up/subscribed capital (Except Capital reserve and revaluation reserve)

The shareholders do not pay anything for these shares and there is no change in the value of their holdings in the pre and post-bonus stages. The issuance of bonus shares is more to influence the psychology of investors without any economic impact.

Explanation:

Quantitative analysis (QA) with reference to financial research is collecting, evaluating and assessing data to understand patterns in the past, present and future. Understanding more about quantitative analysis can help you better use and interpret data.

In this, analysts try to understand the balance sheets and profit and loss statements of last few years, cash flows, assets and liabilities and so on. Quantitative approach can be used for both technical analysis and fundamental analysis and can be used by both traders and investors.

Explanation:

A complete study of company by an equity analyst will involve : Economic analysis 2. Industry analysis 3. Company analysis

Therefore, while researching a company, the equity analyst need to focus his studies on the boarder economy, the industry to which the company belongs and the company.

Explanation:

In Options, the buyers have the RIGHT but NO OBLIGATIONS.

The Writers (sellers) have the Obligations.

The Call writer has the obligation to sell / give delivery of the asset to the Call Buyer at a predetermined price.

The Put writer has the obligation to buy / take delivery of the asset from the Put Buyer at a predetermined price.

Call gives the buyer the right, but not the obligation, to buy a given quantity of the underlying asset, at a given price on or before a given future date.

Put gives the buyer the right, but not the obligation, to sell a given quantity of the underlying asset at a given price on or before a given date.

Explanation:

As per rules, a professional qualification or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, financial services or markets is required to become a Research Analyst.

Company Secretary is not a professional qualification in the fields mentioned above.

A graduate in any discipline with an experience of at least five years in activities relating to financial products or markets or securities or fund or asset or portfolio management is also considered as valid qualification.

Explanation:

It is given that EV/EBITDA = 6

EBITDA is given as Rs. 275 crores

Therefore EV / 275 crores = 6

EV (Enterprise Value) = 275 x 6 = 1650 crores

Enterprise Value = Value of Equity + Value of Debt

1650 crores = Value of Equity + 520 crores

Value of Equity = 1650 – 520 = Rs. 1130 crores

Explanation:

Environment, Social and Corporate governance (ESG)

Independent directors are those who do not have any material relationship with the company, its management, or its major shareholders. They are considered independent in their judgment and decision-making, free from any conflicts of interest that may compromise their ability to act in the best interests of the company and its stakeholders.

Independent directors are responsible for overseeing the company’s ESG performance. They play a critical role in guiding the company’s ESG strategy, monitoring progress, and reporting to stakeholders.

Board composition: The directors of a company can include independent directors, nonexecutive directors (who are not part of management but not independent, either), and executive directors. For the sake of strong corporate governance standards, majority of the board should comprise of independent directors. Currently, SEBI regulation stipulates that independent directors should constitute at least 50% of the board if the chairman is an executive director.

Explanation:

When an economy is in a recession, the Government resorts to Expansionary fiscal policy by pumping in more money in the economy to boost demand.

A low fiscal deficit means the Government has plenty of money to pump in the economy without restoring to huge borrowings etc.

Explanation:

According to technical analysis, there are three essential elements in understanding the price behaviour:

1. The history of past prices provides indications of the underlying trend and its direction. 2. The volume of trading that accompanies price movements provides important inputs on the underlying strength of the trend. 3. The time span over which price and volume are observed factors in the impact of long term factors that influence prices over a period of time.

Explanation:

The Department of Financial Services (Ministry of Finance) covers Banks, Insurance and Financial Services provided by various government agencies and private corporations. It also covers pension reforms and Industrial Finance and Micro, Small and Medium Enterprise. It started the Pradhan Mantri Jan Dhan Yojana.

Explanation:

Advice from investment analysts is many times prone to conflicts of interest that may prevent them from offering independent and unbiased opinions.

One of the principles on addressing conflicts of interest is – Disclosures of actual and potential conflicts of interest should be complete, timely, clear, concise, specific and prominent.

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

Explanation:

Price Earning (P/E) Ratio = Market Price of share / Earning Per Share EPS

2.5 = 200 / EPS

EPS = 200 / 2.5 = 80

EPS = Net Profit / No. of Shares

80 = Net Profit / 2000

So Net Profit = 2000 x 80 = 160000

The Profit before tax (Gross Profit) is Rs. 200000

The Net Profit (ie. Profit after tax) = Rs. 160000

So the tax paid is Rs 40000 on a profit of Rs. 200000

So the tax rate is 20% ( 40000 / 200000 x 100)

Explanation:

Commodity Linked Debentures (CLDs) are floating rate debt instruments whose interest is based on the returns of the underlying commodity asset. While the returns can be linked to any commodity, most of
these papers globally are linked to precious metals – Gold and Silver.

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.

Explanation:

Different industries face different ch

Price to Earnings Ratio (PEG) = PE / Growth Rate
PEG Ratio of the first company = 9 / 8 = 1.12

PEG Ratio of the second company = 27 / 32 = 0.84

The PEG ratio of the second company (P/E of 27) is lower so its cheaper

(Lower the PEG Ratio, cheaper the valuations)

allenges 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.

Explanation:

Current Ratio = Current Assets / Current Liabilities

2.5 = Current Assets / 60000

Current Assets = 60000 x 2.5 = 1,50,000

Quick Ratio = ( Current Assets – Inventories) / Current Liabilities

= (150000 – 27000) / 60000

= 123000 / 60000

= 2.05

Explanation:

Pricing power is generally a function of industry dynamics, elasticity of demand and branding and customer loyalty/addiction. Presence of strong brands and/or virtual monopoly play an important factor in the pricing power.

Tobacco based businesses are an example of such businesses wherein, constant rise in taxes by the Govt. are passed on by the companies to their end consumers and even then there is no impact on volumes as consumers are generally brand loyal / addict.

Explanation:

Per Capita Income is the average income earned by each individual in the economy and is calculated as : National Income / Total population

Explanation:

Historical financials give us great sense of qualitative aspects of business. If financials are great, hopefully, quality of business is great.

Looking into historical financials and understanding the ratios would give a great sense on how is the business organized and what are the drivers of the business.

Explanation:

Threat of substitutes would be high if –

1. Substitutes offer equal or better experience to customers – quality, price, ease etc.
2. Switching cost for customers from one product/service to another is low or nil

Explanation:

To calculate the value of equity, FCFE is discounted using the cost of equity.

Explanation:

Bonus issue, Share Split and Share consolidation are only book entries without any economic benefit whatsoever to the shareholders. For eg. In Bonus issue, the shareholder get more free shares but the market price drops accordingly to adjust for the increase in shares.

These are to influence the psychology of investors without any economic benefit to the shareholders.

Explanation:

There are various valuation parameters of a business like What is Valuation/intrinsic value of the business ; Is business cheap relative to itself and peers ; Reasons of market mispricing and likelihood of correction etc.

Explanation:

Step1.

Return On Equity = Earning Per Share (EPS) / Book Value

25% = EPS / 100

So EPS is 25% of 100 = 25

Step 2.

EPS = Net Profit / No. of Shares

25 = 80000 / No. of Shares

No Shares = 80000 / 25 = 3200

Step 3.

Market Capitalisation = Market Price X No. of shares

= 200 x 3200 = 640000

Explanation:

Lets assume the Sales = 100

As sales are double (200%) of EBIT, EBIT will be half of sales

So the EBIT is 50 ( Half of 100 )

Net Profit will be 30 ( As its 30 % of Sales )

Now we have to calculate the EBIT as a percentage of Net Profit

= 50 / 30 x 100 = 166.66%

Explanation:

Leverage ratio is a financial metric used in quantitative analysis. It involves the use of numerical data and financial ratios to assess the financial leverage or risk of a business.

Explanation:

When a fund manager sells a security to maintain its weight in the portfolio, it implies that the portfolio had a lower-than-desired exposure (underweight) to that particular security, and the sale is intended to rebalance the portfolio.

Explanation:

Net Profit is 20% of Rs 750000 (Sales) = Rs 150000

Return on Equity = Net Profit / Equity Capital

30% = 150000 / Equity Capital

Equity Capital = 150000 / .30 = 5,00,000

Explanation:

Unsystematic risk is the risk specific to individual securities / industry. Hence it can be diversified away by including other assets in the portfolio. Credit risk, business risk, and liquidity risks are unsystematic risks.

Explanation:

Price to Book Value = Stock Price / Book Value

So Stock Price = Price to Book Value X Book Value

Stock Price = 4 X 12 = Rs 48

PE = Stock Price / EPS

So EPS = Stock Price / PE

EPS = 48 / 8 = 6

Return on Equity = (EPS / Book Value) X 100

= (6 / 12) x 100 = 50%

Explanation:

Fiscal policy contains policy measures of the Government which deal with governments’ revenues and expenses

The actions of the Central Bank (RBI) are known collectively as Monetary policy.

Explanation:

National income of an economy is defined through a variety of measures such as gross domestic product (GDP) and gross national product (GNP).

Computation of these numbers is a humongous task in terms of data-collection and its processing.

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

Explanation:

NPAs are typically low when interest rates are low as defaults become less due to affordability of Equated Monthly Installments (EMIs).

Explanation:

Market Capitalisation or Market Cap is the total money market value of the shares outstanding of a publicly traded company.

Its equal to the share price multiplied by the number of shares outstanding.

Explanation:

Delisting of shares refers to the permanent removal of the shares of a company from being listed on a stock exchange.

Delisting may be compulsory or voluntary. In a compulsory delisting, the shares are delisted on account of non-compliance to regulations and the clauses of the listing agreement by the company. In a voluntary delisting, the company chooses to get the shares delisted and go private.

Explanation:

A low Price to Book Value Ratio (P/B) suggests that the market values the company’s assets at a relatively lower price compared to their book value. This can indicate that the assets are perceived as inexpensive or undervalued.

Explanation:

PE ratio = Market Price / EPS

In a Bear Market, the market price of shares are quiet low, so accordingly the PE ratios are also low.

Explanation:

Top Down approach starts with economic analysis, moves to industry analysis and then finally to selection of companies in an Industry.

Explanation:

The focus of macroeconomics is on factors that influence aggregate supply and demand in an economy such as unemployment rates, gross domestic product (GDP), overall price levels, inflation, savings rate, investment rate etc.

Explanation:
Balance of payment statement of a country is broadly divided into two accounts namely the current account and the capital account.

The current account has all the details of transactions on revenue account viz. imports and exports of goods and services.

The capital account captures all the capital flows like FDI, FII, loans, and grants etc.

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.

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.

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.

Explanation:

Net Profit is the final profit ie. after Interest and tax.

In this question, to get Net Profit, we shall have to deduct the tax from Operating Profit.

So 3900 less 30 % Tax ( 3900 – 1170 ) = 2730 is the Net Profit

Net Profit margin is the Net profit as a % of Sales

Sales = Rs 28000

NP = Rs 2730

2730 / 28000 x 100 = 9.75%

Explanation:

In a consolidation, companies combine together to form a new company and the merged companies cease to exist.

In a merger, the acquirer buys up the shares of the target company and it is absorbed into the acquiring company and the target company ceases to exist.

In an acquisition or takeover, the acquiring company acquires all or a substantial portion of the stock of the target company. Both entities typically continue to exist after the acquisition.

Explanation:

If a company can increase prices without experiencing a decline in demand, it may be attributed to factors such as pricing power, strong brand loyalty, or consumer addiction to the company’s products.

Explanation:

Valuation parameters consist of intrinsic value, P/E, P/BV, margin of safety aspects.

Qualitative parameters take care of aspects like business/revenue model, SWOT analysis, competition in the industry, technology aspects etc.

Quantitative parameters would consist of financial aspects such as ratio analysis, analysis of cash flows etc.

Explanation:

Foreign capital flows to a country can be in :

1 Foreign Direct Investment (FDI) – investing entities participate in decision making and drive the businesses

2. Foreign Portfolio Investment (FPI) – investment in markets – equity or bonds by the Foreign Portfolio Investors without any management participation.

Explanation:

A good report always comprises of visuals and exhibits like charts and graphs to make it simple for readers to understand the contents.

Explanation:

Price to Earnings Ratio (PE Ratio) = Market price per share / Earnings per share (EPS)

We know the Market Price and have to calculate the EPS

EPS = Net Income / No. of Outstanding Shares

= 540000 / 6000

= 90

PE Ratio = Market price per share / EPS

PE = 280 / 90 = 3.11

Explanation:

All three elements – the quality of data organization, the way the analyst interprets the data, and the clarity of communication – are crucial in preparing a research report. The analyst needs to ensure accurate and well-organized data, effective interpretation, and clear communication to make the research report valuable and understandable.

Explanation:

Per Capita Income = National Income / Total Population.

Which is the amount of money that is being earned per person in a country.

Higher the Per Capita Income, higher the Standard of Living.

Explanation:

An industry having the below mentioned features will have strong pricing power and high profit margins and attract investors :

1. Low competition
2. High barriers to entry
3. Weak suppliers’ bargaining power
4. Weak buyers’ bargaining power
5. Few substitutes

Explanation:

Investment Advisers, Asset Management Companies, Proxy Advisory Service providers and fund managers of Alternative Investment Funds shall not be required to be registered under the Securities and Exchange Board of India (Research Analyst) Regulations, 2014.

Explanation:

Buyers can exert a lot of pressure and dictate prices, if there are a large number of sellers with similar products/services.

On the contrary, they may not be such a big influencer in case there are few sellers for a product/service.

Explanation:

The certificate of registration granted under regulation 9 shall be valid till it is suspended or cancelled by the Board.

Explanation:

All indirect taxes such as Excise Duty, Value Added Tax (VAT), Service Tax etc. have to be deducted from the Gross Sales to get the Net Sales figure as these taxes are collected by the business for the government and don’t belong to the business.

So in the above question Net Sales = Sales Less Indirect Taxes

= 10 lakhs – 2 Lakhs

= 8 Lakhs

Explanation:

Price to Earnings Ratio ( PE Ratio ) measures the price that the market is willing to pay for the earnings of a company.

The PE multiple moves high when prices run ahead of the earnings numbers and the market is willing to pay more and more per rupee of earnings.

When markets correct and uncertainty about future earnings increases, the PE multiple also drops. A value investor, who would like to pick up stocks when they are cheap, may be interested to purchase when PE is low.

Explanation:

In SCP analysis, While analyzing PERFORMANCE of an industry, analysts will look at several numerical ratios.

Explanation:

The two formulae for calculating Dividend Payout Ratio are :

– Yearly Dividend Per Share / EPS

– Total Dividends / Net Income

Explanation:

A good businessman is generally aware of the risks associated with the business and understands their implications. Being cognizant of risks allows for better decision-making, strategic planning, and risk management, contributing to the overall success and sustainability of the business.

Explanation:

n situations where Price Sensitive Information is leaked, the Compliance Officer of the company is typically the designated person who needs to be informed. The Compliance Officer is responsible for ensuring that the company complies with all relevant laws, regulations, and internal policies, including those related to the disclosure of Price Sensitive Information.

Explanation:

OTC markets are the markets where trades are directly negotiated between two or more counterparties. There is no Stock Exchange or any other Exchange involved.

In this type of market, the securities are traded and settled over the counter among the counterparties directly.

Explanation:

WACC = [Ke * Equity / (Equity+ Debt)] + [Kd * (1-Tax)* Debt / (Equity+ Debt)]

= [Ke * We] + [Kd * (1-Tx)*Wd]

Where Kd = Cost of Debt, Wd = Weight of Debt, Ke = Cost of Equity, We = Weight of Equity

Explanation:

The oragnisation structure and accounting policies can be same in many organisations but what is most important is the quality and integrity of the management.

Explanation:

Net Interest Margin (NIM) is a key parameter used to evaluate the profitability of a bank. It is calculated by dividing the difference between interest income and interest expenses by the average earning assets. NIM indicates how well a bank is able to manage the spread between the interest earned on loans and the interest paid on deposits and other borrowings.

A higher NIM generally signifies better profitability for a bank, as it suggests that the bank is earning more from its interest-earning assets relative to the interest it pays on liabilities. Therefore, NIM is indeed a unique and crucial parameter for assessing the financial performance of banks.

Explanation:

Net Profit Margin is calculated as Net Profit divided by Sales, and it is given as 25%. Therefore, Net Profit as a percentage of Sales is 25%.

Let EBIT be X. Sales is 300% of EBIT, so Sales = 3X.

Now, Net Profit Margin = Net Profit / Sales 25% = X / 3X

Solving for X, we get X = 0.75X.

Now, EBIT as a percentage of Net Profit = (X / Net Profit) * 100 = (0.75X / X) * 100 = 75%

So, the EBIT % of Net Profit is 100% – 75% = 25%. Therefore, the EBIT % of Net Profit is 133.33% (as 100% + 25% = 133.33%).

Explanation:

Business Valuation requires a forecast of the cash flows expected in the future. This can be done by applying the historical growth rate exhibited by company or a rate estimated by the analysts based on their information and analysis. A more robust way is to look at the internal determinants of growth, namely, the proportion of earnings ploughed back into the business and the return on equity that it is expected to earn.

Explanation:

In a simple bond, the timing and amount of interest receipts and principal amount payment is certain and known to the investor.

Explanation:

Tom trades are the trades where settlement (payment and delivery) occurs on the day next to the trading day ie T + 1.

Cash trades are the trades where settlement occurs on the same trading day ie.T+0.

Explanation:

Forward contracts are Over-the-counter (OTC) contracts. They are contractual agreement between two parties to buy or sell an underlying asset and there is no Stock Exchange or any other Exchange involved.

Explanation:

Stock dividend or Bonus shares are additional shares are given to the shareholders, without any consideration, in proportion of their holdings by capitalization of revenue reserves.

Explanation:

For eg – Suppose the 7.59% GS2017 is trading at Rs. 103, the current yield would be:

Current Yield = (7.59/103) = 0.07368 = 7.36%

Explanation:

ROCE = Earnings Before Interest & Tax / Capital Employed

Capital Employed = Total Assets – Current Liabilities or Total Equity + Total Debt

Explanation:

Sometimes, any small change in the industry configuration can trigger significant change in the industry prospects. For example, in the General Budget of 2014, an announcement increased the definition of ‘Long Term’ from 1 years to 3 years for calculating capital gains on units of debt Mutual funds units and suddenly the way the industry was selling this product changed.

Explanation:

PESTLE Analysis stands for Political, Economic, Socio-cultural, Technological, Legal and Environmental Analysis.

To do business in any country, a business must know each of the above factors very well and how changes in any/either of these would impact business. Healthy public finances and a consistent fiscal policy furthering investment in infrastructure are some important political parameters for investors .

Explanation:

If expected rate of return by investors is higher than the coupon rate, then bond would have value less than facevalue.

It is based on present and future value computations.

Explanation:

In case of Bonus Shares, per share data (earning per share, book value per share, market price per share etc.) will witnesses immediate deterioration as total number of shares go up without any economic change in the profit and loss statement or balance sheet.

Same is the case with Stock Split.

Explanation:

Unemployment rate refers to the eligible and willing to work unemployed population of the country.

During an expansion phase / boom time, the unemployment rate falls as more jobs are created as production goes up.

Explanation:

Expansionary fiscal policy – Fiscal measures when government’s spending exceeds its income.This policy stance is usually undertaken during recessions/slow moving economy.

Contractionary fiscal policy – Fiscal measures when government’s spending is lower than its income. Government uses excess income to repay its debts/obligations or acquire assets.

Explanation:

Qualities that are desired in a good research analyst are:

– Good with numbers
– Good Excel/spreadsheet and other data analytical tools
– Clarity in financial concepts
– Ability to read and comprehend financial statements and reports
– Ability to ask pertinent questions
– Attention to details
– Communication Skills – Written and Verbal

Explanation:

Threat of substitutes would be high if:

1. Substitutes offer equal or better experience to customers – quality, price, ease etc.
2. Switching cost for customers from one product/service to another is low or nil

Explanation:

Herd mentality bias is a common behaviour disorder in investing community.

This bias is an outcome of a belief that others may have better information, which leads investors to follow the investment choices that others make.

Explanation:

The scenario described, predicting random events based on past occurrences or creating trends where none exist, is known as the “Gambler’s fallacy.” This bias occurs when individuals believe that random events are influenced by previous outcomes, even when each event is independent and has no bearing on the next. It is commonly observed in situations like gambling, where individuals may falsely believe that past outcomes influence future ones.

Explanation:

The history of a company is best illustrated by its financial performance.

If financials are good, they would give a sense of quality of business being good and if they are bad, it will mean that their is an issue with the business quality.

Explanation:

Stock split does not lead to any increase in the wealth of shareholders. Its merely an action of reducing the face value of shares there by multiplying the number of shares leading to increase in liquidity.

The increase / decrease in the wealth of the shareholder will be determined by the stock prices.

Explanation:

Lets assume the Net Profit to be Rs 100.

The Operating Profit is 2 times the Net Profit ie 100 x 2 = 200

The Operating Profit margin is 50% , this means its 50% of Sales or Sales is double of Operating Profit.

So Sales = 200 x 2 = Rs 400

Net Profit is Rs 100 and Sales is Rs 400

So the Net Profit margin is 100 / 400 x 100 = 25%

Explanation:

Face Value is Rs 5. 200% dividend means a dividend of Rs 10 per share.

He has 800 shares, so dividend received is Rs 10 x 800 = Rs 8000

On an investment of Rs 48,000 he has received dividend of Rs 8000

So the Dividend Yield = Dividend Received / Amount Invested x 100

= 8000 / 48000 x 100 = 16.67 %

Explanation:

Industry rivalry is likely to be high under the following conditions:

A) Switching cost for customers from one product/service to another is low or nil: When customers can easily switch between products or services without incurring significant costs, competition tends to be intense.

B) Every industry participant tries to attract customers with similar strategies – lower prices or longer credits: Homogeneous strategies among competitors can lead to price wars and increased rivalry.

C) Many companies exist in the business segment: Higher competition arises when there are numerous companies vying for market share within the same business segment.

Therefore, when all these conditions are present, industry rivalry tends to be high.

Explanation:

The Registrar of Companies (ROC) is the authority appointed under the Companies Act. The ROC is responsible for registering companies and ensuring their compliance with the provisions of the law. The ROC plays a crucial role in maintaining accurate and up-to-date records of companies, overseeing their registration, and monitoring their adherence to legal requirements.

Explanation:

SEBI merged with the Forward Markets Commission (FMC) and took over its role and now regulates the commodities markets in India. It is the regulatory body that oversees regulating and promoting forward and futures trading in commodities.

Explanation:

SEBI merged with the Forward Markets Commission (FMC) and took over its role and now regulates the commodities markets in India. It is the regulatory body that oversees regulating and promoting forward and futures trading in commodities.

Explanation:

Equity = Assets – Liabilities

= 35000 – 18000

= 17000

Equity to Asset Ratio = Equity / Assets

= 17000 / 35000

= 0.48

Explanation:

When an investor makes an investment, they typically look for multiple objectives, and these objectives often include:

A) Getting adequate returns: Investors seek a return on their investment that compensates them for the risk taken and provides a reasonable level of profitability.

B) Safety of principal: Investors are concerned about the preservation of their capital, aiming to avoid significant losses or the risk of losing the principal amount invested.

C) Beating inflation: Investors aim to generate returns that exceed the rate of inflation, ensuring that their purchasing power is not eroded over time.

Therefore, all of the given options – getting adequate returns, safety of principal, and beating inflation – are considerations that investors commonly take into account when making investment decisions.

Explanation:

Country’s dependence on other countries in terms of important natural resources such as oil, monitory policies of the Central Banker, Balance of payment positions and forex reserves etc. are very important for an investor to get a comfort level about a country’s economic situation.

Explanation:

In a Cash Cow the industry grows at a predictable and steady rate each year.

There is a strong brand name, well penetrated distribution channel, ready market, and strong balance sheet, Colgate is one such example.