Preview Questions Financial Analyst | Role Specific Skill

Question 1: Which of the following best describes the Efficient Market Hypothesis (EMH) in investment analysis?

Which action should you take?

Choose only one option

Markets are inefficient, and it is possible to consistently achieve higher returns than the market average

Markets quickly incorporate all relevant information, making it difficult to consistently outperform them

Markets are always perfectly efficient and reflect all available information

Markets are only efficient in the long run

Question 2: When determining the intrinsic value of a bank's equity using a Gordon Growth Model (GGM), which parameter's estimation is typically the most contentious due to changes in regulatory capital requirements?

Which action should you take?

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The risk-free rate used in the model

The long-term growth rate of dividends

The required return on equity

The payout ratio

Question 3: How should you interpret a sudden increase in the non-performing loans (NPLs) ratio in a bank's financial report?

Which action should you take?

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It reflects improved credit underwriting standards

It indicates a potential increase in loan defaults and future provisioning

It is a sign of increased asset quality in the portfolio

It suggests that the bank is expanding its loan portfolio successfully

Question 4: When reviewing a bank's quarterly financial report, which factor would be most likely to cause significant fluctuations in profitability between quarters?

Which action should you take?

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Changes in shareholder equity

Changes in loan loss provisions

Changes in deposit levels

Changes in interest rates

Question 5: What is the role of "zero-based budgeting" in enhancing financial efficiency within BFSI organizations?

Which action should you take?

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It streamlines the budgeting process by using historical data

It emphasizes maintaining current budget allocations

It focuses on reducing capital expenditures

It requires all expenses to be justified for each new period, improving cost control

Question 6: How does scenario analysis improve forecasting in BFSI budgeting?

Which action should you take?

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By focusing on historical trends

By providing a range of outcomes

By simplifying assumptions

By reducing forecasting errors