NISM Series XV Chapter 13: Qualities of a Good Research Report Practice Questions

Question 1

What is a primary purpose of a research report, as described in the text?

Accepted Answer

To present an investment idea.. The text states: 'Research report is a multipurpose document and does the following: Presents an investment idea - Provides market perspective - Detailed company analysis.'

Question 2

Based on the example provided in the text for rating conventions, a 'Hold' recommendation typically indicates an expectation that the stock's return over the next 12-month period will be within which range?

Accepted Answer

Between -10% and 10%. The text states: 'for example, a ‘buy’ may indicate an expectation that the stock will deliver more than 10% returns over the next 12-month period, ‘hold’ may indicate that the stock’s return is expected to range between -10% and 10% over the next 12-month period and a ‘sell’ recommendation may indicate an expected return of less than -10% over the period.'

Question 3

Which of the following sections of a research report is considered 'view-based' and typically requires communication with management and personal understanding?

Accepted Answer

Industry Overview. The text categorizes 'Company Business, Key Strengths, Key concerns, Industry Overview' as View-based sections, with the source of information including 'Communication with management, Personal Understanding of the business and industry'. Shareholding pattern, Key financial indicators, and Peer group analysis are listed as 'Fact-based sections'

Question 4

Which of the following is explicitly listed as a quality of a good research report?

Accepted Answer

Clarity of Idea. The text lists 'Clarity of Idea' as one of the ground rules to follow for making a good report

Question 5

What is suggested for presenting data in research reports to make it easier to understand than written numbers?

Accepted Answer

Data visualization software and visual charts.. The text states: 'It is also suggested to make use of data visualization software’s and prepare visual charts to present the data. Visual data is easier to understand than written numbers.'

Question 6

Which of the following is explicitly categorized as a 'view-based' section in a research report, according to the text?

Accepted Answer

Company Business. The text lists 'Company Business, Key Strengths, Key concerns, Industry Overview' as 'View-based section in research report'. The other options are listed as 'Fact-based sections'

Question 7

Which of the following sections of a research report is classified as 'view-based' according to the text, with its source of information being communication with management and personal understanding?

Accepted Answer

Key Strengths. The text lists 'Company Business, Key Strengths, Key concerns, Industry Overview' under 'View-based section in research report' with sources like communication with management and personal understanding

Question 8

According to the text, what are the three important steps involved in compiling research reports?

Accepted Answer

Planning, Drafting, Editing. The text explicitly states: 'Like any other writing projects, compiling research reports also have three important steps - Planning, Drafting and Editing.'

Question 9

Which of the following is a common recommendation convention used by research analysts when rating stocks, as mentioned in the text?

Accepted Answer

Hold. The text lists 'buy', 'overweight', 'hold', 'underweight' and 'sell' as prevalent recommendations

Question 10

A research report is described as a multipurpose document that performs all of the following functions EXCEPT:

Accepted Answer

Offers personal financial planning advice. The text explicitly lists 'Presents an investment idea', 'Provides market perspective', and 'Detailed company analysis' as functions of a research report. Personal financial planning advice is not mentioned

Question 11

In the context of stock rating conventions, what does an 'underweight' rating typically indicate?

Accepted Answer

A relatively poor performance compared to the market.. The text defines 'underweight' as indicating 'a relatively poor performance' of a stock or sector compared to the market

Question 12

According to the text, what are the three important steps involved in compiling research reports?

Accepted Answer

Planning, Drafting, Editing. The text explicitly states: 'Like any other writing projects, compiling research reports also have three important steps - Planning, Drafting and Editing.'

Question 13

According to the text, which of the following communications is *not* included in the definition of a 'research report'?

Accepted Answer

Discussions on broad-based indices.. The text explicitly states: 'Research report” does not include the following communications... ii. discussions on the broad-based indices;'. Options A, C, and D are listed as purposes of a research report

Question 14

According to the SEBI regulations mentioned in the text, which of the following communications is specifically excluded from being termed a 'research report'?

Accepted Answer

Comments on general trends in the securities market. The text explicitly states that 'comments on general trends in the securities market' are among the communications excluded from being a 'research report'

Question 15

How do research analysts primarily differentiate themselves and 'stand out and be the best' if they all have access to similar information?

Accepted Answer

By presenting their views, conclusions, and recommendations effectively.. The text states: 'Research analysts, make a difference by the way in which they present their views, conclusions and recommendations. The communication aspect of an analyst’s job is as important as analysis, of which writing research report is one.'

Question 16

In the sample checklist for investment research, which of the following is considered a 'Quantitative Parameter'?

Accepted Answer

Whether business has stable and growing profitability (NPM > 10%). The text lists 'Whether business has stable and growing profitability (NPM > 10% and growth in EPS continuously over last 5 years)' under 'Quantitative Parameters'

Question 17

According to Dr. Atul Gawande in 'The Checklist Manifesto', which type of error can be largely avoided by following a checklist approach?

Accepted Answer

Errors of ineptitude (mistakes made because of incorrect use of knowledge). The text states: 'He argues that errors of second type [errors of ineptitude] can be avoided to a large extent by following a checklist approach'

Question 18

What are the three important steps involved in compiling research reports, similar to other writing projects?

Accepted Answer

Planning, Drafting, Editing. The text states: 'Like any other writing projects, compiling research reports also have three important steps - Planning, Drafting and Editing.'

Question 19

Which of the following is listed as a reason for the failure of a research report?

Accepted Answer

Inconsistent views. The text lists 'Inconsistent views' as one of the reasons for the failure of a research report under 'Things to watch-out'

Question 20

Which of the following is listed as a reason for the failure of a research report?

Accepted Answer

Unnecessary details.. Under 'Things to watch-out', the text lists 'Unnecessary details' as a reason for the failure of a research report. The other options are qualities of a good report

Question 21

In 'The Checklist Manifesto,' Dr. Atul Gawande distinguishes between two types of errors. Which type of error, according to the text, can be largely avoided by following a checklist approach?

Accepted Answer

Errors of ineptitude.. The text explains: 'Dr. Atul Gawande makes a distinction between errors of ignorance (mistakes made out of ignorance), and errors of ineptitude (mistakes made because of incorrect use of knowledge). He argues that errors of second type [errors of ineptitude] can be avoided to a large extent by following a checklist approach.'

Question 22

An 'Underweight' rating for a stock or sector, as defined in the text, indicates which of the following expectations?

Accepted Answer

The stock/sector will have a relatively poor performance compared to the market.. The text states: 'An ‘overweight’ rating indicates the expectation that the stock or sector will perform better than the market, while ‘underweight’ indicates a relatively poor performance and ‘equal weight’ indicates performance in line with the market.'

Question 23

One of the obvious advantages of a checklist approach for analysts, as stated in the text, is that it:

Accepted Answer

Helps avoid lazy mistakes or short-cuts.. The text lists 'Checklist helps avoid lazy mistakes or short-cuts' as an obvious advantage of the checklist approach

Question 24

Which of the following is NOT listed as a purpose of a research report?

Accepted Answer

Guarantees investment returns. The text states that a research report 'Presents an investment idea - Provides market perspective - Detailed company analysis.' It does not mention guaranteeing investment returns

Question 25

Given that all research analysts have access to similar information, how do they primarily make a difference and stand out as per the text?

Accepted Answer

By the way in which they present their views, conclusions and recommendations.. The text states: 'Research analysts, make a difference by the way in which they present their views, conclusions and recommendations.'

Ch.13: Qualities of a Good Research Report

What You Will Learn in This Chapter

Multiple Choice Questions (25)

Case-Based Questions (1 sets)

Most candidates guess their way through XV.
BullWiser makes you prove it.

Ch.13: Qualities of a Good Research Report

What You Will Learn in This Chapter

Multiple Choice Questions (25)

Case-Based Questions (1 sets)

Most candidates guess their way through XV.BullWiser makes you prove it.

Most candidates guess their way through XV.
BullWiser makes you prove it.