📊 NISM Series XVChapter 4 of 15⚖ 5 marks weightageCase-Based ✓
Ch.4: Fundamentals of Research
Practice questions for NISM-Series-XV: Research Analyst Certification Examination
(mandated by SEBI under the Research Analysts Regulations, 2014).
Chapter 4 carries 5 out of 100 marks
in the final examination. The exam has 80 MCQs + 5 case-based sets, 120-minute duration,
60% passing score, and −0.25 negative marking per wrong answer.
30
MCQ
1
Case Sets
34
Total Qs
5
Exam Marks
60%
Pass Score
−0.25
Neg. Marking
What You Will Learn in This Chapter
Distinguish between fundamental and technical analysis
Understand top-down and bottom-up research approaches
Know the difference between active and passive investing
A fundamental research analyst performs 'mosaic analysis' by gathering insights from various individually insignificant public and non-public sources. This practice is:
AStrictly prohibited as it always constitutes illegal insider trading.
BAcceptable, provided the insights drawn are not from specific non-public price-sensitive information.
COnly acceptable if all information sources are publicly available.
DConsidered a form of speculation rather than legitimate research.
Q2MCQEasyTechnical Analysis Elements
According to technical analysis, what important input does the volume of trading that accompanies price movements provide?
AThe long-term factors influencing prices.
BThe underlying strength of the trend.
CThe intrinsic value of the asset.
DThe efficiency of the market.
Q3MCQEasyFundamental Analysis Focus
According to the text, what is the primary focus of fundamental analysis?
AForecasting price direction through historical market data.
BIdentifying specific securities to buy or sell based on short-term price patterns.
CLong-term investing based on a company's profits and cashflows.
DProfiting from a spread between selling price and buying price without a change in underlying value.
Q4MCQHardFundamental Analysis Baskets
Which of the following is NOT explicitly listed as one of the three main 'baskets' for studying various aspects in fundamental analysis?
AEconomic analysis
BManagement analysis
CIndustry analysis
DCompany analysis
Q5MCQMediumActive Investing Objective
An active investing strategy primarily aims to achieve which of the following objectives?
ATo earn the rate of return that the selected broader asset class provides.
BTo identify and invest in a broad set of securities that fairly represent an asset class.
CTo earn a rate of return that is above the return generated by the broader asset class.
DTo limit analysis to the broader asset class without deciding upon individual securities.
Q6MCQMediumTechnical Analysis Assumption
What is the core assumption of technical analysis regarding information affecting a share's performance?
AOnly fundamental economic factors are reflected in stock prices.
BAll information, including company fundamentals, economic factors, and market sentiments, is reflected in the stock prices.
CFuture price movements are determined by management capabilities and governance style.
DStock prices move randomly and are unpredictable.
Q7MCQEasyInvesting vs. Trading
What is the primary motivation for a trader in the securities market?
AEarning returns over a long investment horizon based on asset value increase.
BEarning a spread between selling price and buying price without a necessary change in the underlying value.
CIdentifying securities priced below their intrinsic value for long-term holding.
DFollowing an indexing strategy to match the broader asset class return.
Q8MCQMediumRole of Research
According to the text, what is the key difference between 'research' and 'analysis' in the context of a fundamental research analyst's role?
AResearch involves drawing conclusions, while analysis involves gathering information.
BResearch focuses on historical data, while analysis focuses on future projections.
CResearch involves obtaining necessary information to meet a set goal, while analysis involves analyzing available information to arrive at a conclusion.
DResearch is quantitative, while analysis is qualitative.
Q9MCQEasyInvesting vs. Trading
What is the primary distinction between investing and trading in the securities market?
AInvesting focuses on short-term price patterns, while trading focuses on long-term asset value.
BInvesting involves an upfront commitment of money for returns over an investment horizon, while trading seeks profit from price spreads without a necessary change in underlying value.
CInvesting relies solely on historical price patterns, while trading relies on fundamental analysis.
DInvesting aims to earn the market return, while trading aims to beat the market return.
Q10MCQHardTechnical Analysis Indicators
In technical analysis, what does the breaking of a support or resistance level, accompanied by strong volumes, typically indicate?
AA weakness in the existing trend.
BThat the trend has accelerated and the supply and demand situation has changed.
CA confirmation that prices are likely to retract once close to the level.
DThe unreliability of past price movements for future forecasting.
Q11MCQMediumInsider Information
In the context of research, which characteristic primarily defines insider information?
AInformation obtained through mosaic analysis.
BAny non-public information about a company.
CMaterial non-public information that, when published, would immediately affect an investor’s decision to buy or sell the security.
DInformation about increasing workload in a company department.
Q12MCQEasyActive Investing
What is the main objective of an active investor?
ATo earn a rate of return that matches the broader asset class.
BTo earn a rate of return that is above the return generated by the broader asset class.
CTo invest in a broad set of securities that fairly represent the asset class.
DTo minimize the number of transactions in the investment portfolio.
Q13MCQEasyDefinition of Investment
In the context of the securities market, what does investment typically involve?
AEarning profit by exploiting historical price patterns.
BAn upfront commitment of money to earn returns during an investment horizon.
CBetting on short-term movement of asset prices based on calculated guesses.
DBuying all securities that are part of an index without individual security analysis.
Q14MCQEasyTechnical Analysis Elements
Which of the following is NOT an essential element in understanding price behaviour according to technical analysis?
AThe history of past prices.
BThe volume of trading accompanying price movements.
CThe time span over which price and volume carry impact.
DThe company's future earnings projections.
Q15MCQHardQuantitative Research Limitations
A major limitation of applying a pure econometric approach in fundamental analysis, as stated in the text, is:
AThe difficulty in converting price and volume data into charts.
BThe assumption that all information is already reflected in stock prices.
CThe availability of comparable information due to frequent changes in accounting standards and business models.
DIts focus on short-term price movements rather than long-term value.
Q16MCQEasyInvesting Definition
Which of the following is a key distinguishing factor between investment activity and trading/speculative activities?
AInvestment activity focuses on short-term price movements.
BTrading involves a thorough analysis of safety/risk, income, and growth potential.
CInvestment activity focuses on the potential of an asset’s value to increase over a period.
DTrading typically involves a longer time horizon than investing.
Q17MCQMediumInsider Information vs. Mosaic Analysis
What distinguishes 'insider information' from other non-public information an analyst might come across, according to the text?
AInsider information is always obtained directly from a company's CEO.
BInsider information is material non-public information that, when published, would immediately affect an investor’s decision to buy or sell the security.
CInsider information is any information about increasing workload in a company department.
DInsider information is information collated from different sources through mosaic analysis.
Q18MCQEasyInvesting vs. Trading
What is the primary difference between investing and trading, as described in the text?
AInvestors focus on short-term price movements, while traders focus on long-term value.
BInvestors commit money upfront, while traders do not.
CInvestors focus on an asset's potential value increase over time, while traders profit from price spreads without a necessary change in underlying value.
DTraders use thorough analysis, while investors rely on calculated guesses.
Q19MCQMediumFundamental Analysis vs. EMH
The premise of fundamental analysis, where market price can significantly diverge from its fair value, stands in contradiction to which widely known financial hypothesis?
AModern Portfolio Theory (MPT)
BCapital Asset Pricing Model (CAPM)
CEfficient Market Hypothesis (EMH)
DRandom Walk Theory (RWT)
Q20MCQEasyPassive Investing Strategy
Which strategy is typically followed by passive investing?
AIdentifying specific securities priced below their intrinsic value.
BConstant evaluation of every security in the investment portfolio.
CAn indexing strategy where an investor buys all securities that are part of an index.
DEarning a rate of return above the broader asset class.
Q21MCQMediumInsider Information
Which of the following scenarios would most likely constitute insider information according to the text?
AAn employee talking about increasing workload in the purchase department.
BCollating individually insignificant public and non-public information to gain critical insight.
CA CEO discussing an unpublished acquisition proposal.
DAccessing reports from market research firms about industry conditions.
Q22MCQHardFundamental Analysis Opportunity
According to the principles of fundamental analysis, when does an attractive investment opportunity arise?
AWhen the market price of an equity share is significantly above its intrinsic value, indicating strong market sentiment.
BWhen the market price is below the intrinsic value, suggesting an undervaluation based on expected business performance.
CWhen the stock price is moving closer to an established resistance level, signaling a potential breakout.
DWhen a company's annual report shows high profitability, regardless of its market price.
Q23MCQMediumActive vs. Passive Investing
An investor whose objective is to earn a rate of return that is above the return generated by the broader asset class is most likely engaged in which type of investing?
APassive Investing
BIndexing Strategy
CActive Investing
DQuantitative Investing
Q24MCQMediumFundamental Analysis Objective
The primary objective of fundamental analysis, as described, is to:
AForecast the direction of prices through the study of patterns in historical market data.
BIdentify short-term price anomalies that can be corrected within 3-6 months.
CGauge the fair price (intrinsic value) of an equity based on the expected performance of the business.
DBenefit from trading in line with short-term price trends.
Q25MCQMediumMosaic Analysis
In the context of research, what is 'mosaic analysis'?
AObtaining price-sensitive non-public information from company insiders.
BAnalyzing historical price patterns and charting techniques to predict future movements.
CCollating information from different sources which, individually insignificant, provide critical insight when put together.
DRelying solely on a company's annual report for investment decisions.
Q26MCQEasyBehavioral Finance
According to the behavioral approach to equity investing, what often influences investment decisions, leading to sub-optimal choices?
AThorough analysis of available information reflecting expected performance and risks.
BStrict adherence to the Efficient Market Hypothesis.
CBehavioral biases of the decision maker.
DPurely quantitative models and econometric approaches.
Q27MCQMediumTechnical Analysis Suitability
Why is technical analysis considered less suitable for long-term investing?
ATechnical analysis primarily focuses on a company's profits and cash flows, which are irrelevant in the short term.
BBusiness fundamentals may change significantly in the long term, making past price trends unreliable for future movements.
CLong-term investors prefer to use a pure econometric approach, which contradicts technical analysis.
DTechnical analysis assumes that market sentiments are not reflected in stock prices over longer periods.
Q28MCQEasyTechnical Analysis Assumption
What is the fundamental assumption of Technical Analysis regarding market information?
ACompany fundamentals, economic factors, and market sentiments are irrelevant to stock prices.
BAll information that can affect the performance of a share is reflected in the stock prices.
COnly future expectations, not historical data, determine stock price movements.
DStock prices are primarily driven by insider information.
Q29MCQHardQuantitative Research Limitations
What is identified as a primary limitation when applying a pure econometric approach in fundamental analysis?
AThe inability to conduct time series analysis.
BThe difficulty in performing sensitivity analysis.
CThe availability of comparable information due to frequent changes in accounting standards and business models.
DThe lack of sophisticated econometric tools for financial analysis.
Q30MCQMediumQuantitative Research Limitations
Which of the following statements accurately describes a major limitation of applying a pure econometric approach in fundamental analysis?
AIt is too qualitative and lacks the rigour of traditional financial statement analysis.
BIt primarily relies on predicting short-term price movements, which contradicts long-term investing.
CFrequent changes in accounting standards and business models make past data less useful for comparison with present market conditions.
DIt does not allow for the use of time series analysis or regression, limiting its predictive power.
Case-Based Questions (1 sets)
Case 1Case-BasedInvestment Research Approaches and Ethics
Priya, a newly onboarded research analyst at 'Alpha Insights,' an investment research firm, is tasked with evaluating 'TechSolutions Ltd.,' a mid-cap IT services company, for a long-term investment recommendation. Her senior analyst, Mr. Sharma, emphasizes the firm's commitment to rigorous, ethical research focused on uncovering intrinsic value. Priya begins by meticulously reviewing TechSolutions' annual reports, industry analyses, and broader macroeconomic forecasts. She plans to conduct primary research, including interviews with industry experts and key clients of TechSolutions. During her initial research phase, she inadvertently overhears a conversation at a public event where an ex-employee of TechSolutions mentions a significant client contract that is reportedly on the verge of being terminated, a fact not yet disclosed to the public. Separately, while reviewing historical stock data, Priya observes a recurring pattern: the stock price consistently rallies with high volumes whenever it drops to a specific price level.
Hard Sub-question 1
If Priya were to exclusively rely on projecting TechSolutions' future earnings by applying sophisticated econometric models to historical financial statements, what research approach would she be primarily employing, and what is a known limitation of this pure approach?
ABehavioral Finance; it often overlooks the impact of cognitive biases on market prices.
BFundamental Analysis; it tends to ignore short-term market sentiment and price movements.
CQuantitative Research; frequent changes in accounting standards and business models can make past data less comparable or useful.
DTechnical Analysis; it does not consider the underlying economic health of the company or industry.
Medium Sub-question 2
Priya observes a recurring pattern in TechSolutions' stock chart where the price consistently rallies with high volumes after dropping to a certain level. Which analytical approach primarily focuses on identifying such patterns and trends?
AFundamental Analysis
BQuantitative Research
CTechnical Analysis
DBehavioral Finance
Easy Sub-question 3
Given Mr. Sharma's emphasis on intrinsic value and long-term potential, what type of investing strategy does 'Alpha Insights' most likely pursue?
ASpeculative trading, aiming for short-term price anomalies.
BDay trading, profiting from intraday price fluctuations.
CActive investing, identifying securities priced below their intrinsic value for superior returns.
DPassive investing, mirroring a broad market index.
Hard Sub-question 4
Priya overhears information about a potential significant client loss for TechSolutions Ltd. that is not publicly announced. How should she ethically proceed with this information in her research process?
AShe should include this information immediately in her report, citing it as an expert opinion.
BShe should disregard the information entirely, as it came from an unofficial source.
CShe should use this information as a critical piece in her mosaic analysis, combining it with other public data.
DShe should recognize this as potential insider information and refrain from using it directly in her analysis until it becomes public.
About this content: These practice questions are based on the
NISM-Series-XV: Research Analyst Certification Examination Workbook (February 2026)
published by the National Institute of Securities Markets (NISM), Mumbai.
NISM is a SEBI-established institution. Questions cover Fundamentals of Research with verified answers and explanations.
BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI.
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