Financial Analyst Practice Exam
Financial Analyst Practice Exam
Financial Analysts are one of the most in-demand professions in the financial services industry. The primary role of a financial analyst is to sift through data in order to uncover opportunities or evaluate outcomes for company decisions or investment recommendations. Financial analysts can work at all levels of a corporation, from junior to senior, and it's a specialized field that frequently leads to other opportunities.
Since the financial services business is so competitive, it may be tough to break into. It is one of the most desirable jobs in the financial services business is that of a Financial Analyst. Financial Analysts, also known as Financial Research Analysts, can work in both junior and senior positions within a company, and it is a niche that frequently leads to further changes. The financial services business is competitive, and breaking into the analyst area can be difficult, but there are some steps you can take to prepare for this job. If you want to be a financial analyst, there are a few things you need to know to prepare yourself for the position.
Skills acquired
Becoming a certified financial analyst will help you in developing the below-mentioned skills:
- Financial Knowledge
- Analytical skills
- Leadership Skills
- Decision Making
- Attention to details
- Accounting Skills
- Interpersonal Skills
- Ratio Analysis
Recommend knowledge
In general, irrespective of the educational background, becoming a successful financial analyst requires
- Strong quantitative skills
- Expert problem-solving abilities
- Adeptness in the use of logic
- Good communication skills.
Who Should take the exam?
The Financial Analyst exam is suitable for candidates who want to develop their abilities and strengthen their CVs, especially newly graduated students. This qualification will assist you in obtaining the greatest career opportunities within the company.
Career opportunities
Learn the fundamentals of finance and you'll be on your way to a brighter future. Financial Analysts are in high demand. Finance firms are always looking for qualified Finance Analysts. Finance Analysts are needed by a variety of public and private companies' accounting and finance divisions.
Roles and Responsibilities
A Financial Analyst's responsibilities are as follows:
- To track indicators and report on them, as well as to do financial projections.
- To create financial decision-making models and keep track of financial success.
- Analyze prior data, conduct variance analysis, identify trends, and make recommendations for improvement
- To establish and implement policies and procedures, as well as to steer the cost analysis in the right direction.
- Recognize trends and make recommendations for improvement based on the trends' analysis
Topics Covered
The Financial analyst practice exam covers the following topics:
Generational forms of Business
● Forms of Business Organization
● Proprietary Concerns
● Joint Stock Companies
● Co-Operative Organizations
● Public Enterprises
● Comparison among Different Forms of Organisations
● Market Value and Stock Prices versus Book Value
Organization Chart & Finance Function
● Fictional Organization
● Product / Market Organization
● Line and Staff functions/Relationship/ Authority
● Functional and Line Authority
● The Concept of Finance
Finance Function-Organization, Objectives & Decisions
● Corporate Finance
● Corporate Finance & Other Functions
● Organization of the Finance Function
● Objectives Financial Management
● Profit Maximization
● Wealth Maximization
● Other Finance Functions
Financial Statements, Analysis and Information
● Balance Sheet
● Profit and Loss Account
● Financial Statements-Analysis & Interpretation
● Comparatives Financial Statements
● Common Size Statements
● Projected Balance Sheet
● Statement of Changes in Financial Position(SCPP)
● Funds Form Business Operations
● Statement of Changes in Total Resources
Cash Flow Statement
● Type of Cash Flow
● Actual Flow of Cash:
● Notional Cash Flow
● The notional outflow of cash
● Source of Cash Inflow
● Net Profit Method
● Outflow of Cash
● Changes in Current Accounts
● Change in Current Liabilities
Corporate Income Tax
● Personal Taxation and its Influence on Firm
● Deductibility of Expense
● Set-Off and Carry forward of Losses
Time Value of Money
● Simple interest
● Future Value at Simple Interest
● Present Value
● Compound Interest
● For Series of Payments
● Future or Compound Value
● Present (or Discounted) Value
● Multi-period or Semi-annual and other compounding
● Net Present Value
● Internal Rate of Return
● Mathematical Derivation of Formula for Future/Compound Value of Annuity
The Financial Securities
● Equity Shares
● Features of Equity Shares
● Advantage of Equity shares
● Disadvantages of Equity Share
● Preference share
● Feature of Preference share
● Types of Preference Shares
● Advantage or Merits of Preference Share
● Disadvantages of Preference shares
● Debt Securities-Debentures or Bonds
● Features of Debentures or Bonds
● Types of Debentures
● Advantage of Debentures
● Disadvantages of Debentures
● Treasury Bills (T-Bills)
The Financial Markets
● Functions of Financial Markets
● Classification of Financial Markets
● Methods of Floatation
● Indian Capital Market Participants
● Scenario of Indian Capital Market
● Transaction cost in Capital Market
International Financial Markets
● International Financial System and Foreign Exchange Market
● Market Features of International Markets
● Euro Currency Market
● Functions of Eurocurrency Market
● Eurobond Market
● Brief Procedure in Eurobonds Issues
Financial Institutions
● Activities of UTI includes
● UTI Schemes
● Industrial Development Bank of India(IDBI)
● Major Schemes of IDBI
● Industrial Credit and Investment Corporation of India (ICICI)
● Industrial Finance Corporation of India (IFCI)
● Industrial Reconstruction Bank of India (IRBI)
● Industrial Investment Bank of India (IIBI)
● Insurance Companies
● General Insurance Corporation (GIC)
● Stock Holding Corporation of Indian Ltd.(SHCIL)
● Ratings
● Rating Factors
● Credit Rating and Information Services of India Ltd (CRISIL)
● Information and Credit Rating Agency (ICRA)
● Duff and Phelps
Interest Rates
● Role of Interest Rates
● Interest Rates and Share Prices
● Factors Influencing Interest Rates
● Rates in Gilt –edged Market
● Private and Government Bond Rates
● Rates of Borrowings and Leading by Commercial Bank
● Interest Rates on Small saving
● Export Credit
Basic Valuation Model
● Bond Valuation
● Valuation of Preference Shares
● Stock Valuation
● Single Period Valuation Model
● Multi-period Valuation Model
● Zero Growth Model
● Constant Growth Model
● Stock Valuation: The P/E Ratio Approach
● Market Efficiency
Risk
● Systematic or Non Diversifiable Risk
● Unsystematic or Diversifiable Risk
● Measures of Risk
● Rate of Return
● Probability Distribution
● Continuous Probability Distributions
● Standard Deviation of Return
● Risk Return Relationship
● Diversification and Risk
● Measurement of Portfolio Risk
● Beta
● Security Market Line
Investment Decision Rules
● Category of Investment Decision Rules
● Accounting Income-based Decision Rule
● Return on Capital
● Return on Equity
● Cash Flow-based Decision Rule
● Decision rule
Cash FLow
● Cash Flow
● Definition
● Need for Cash Flow Statement
● Discount Rates
● Estimation of Cash Flow
● Depreciation & Taxes
● Components of Cash Flow
● Initial investment
● Annual Net Cash Flows
● Terminal Cash Flows
Incremental Analysis
● Allocated Overheads
● Opportunity Costs
● Incidental Effects
● Sunk Costs
Break-Even Analysis
● Variable Costs
● Fixed cost
● Semi-variable Cost
● Contribution Margin
● Strategies for Break-even Point
● Utility of the Break-even Analysis
● Shortcomings of the Break-even Analysis
Project Proposals
● Project Proposal Stage
● Tasks during Project Proposal Stage
● Change Management
Investment Decisions
● What are Capital Investment Decisions?
● Why is Capital Investment Decisions Important ?
● Growth
● Risk
● Types of Capital Investment Decisions
● Expansion and Diversification
● Replacement and Modernization
● Capital Investment Evaluation Criteria
Capital Budgeting Techniques
● Capital Budgeting
● Net present Value (NPV) Method
● Internal Rate of Return Method
● Profitability Index or Benefit-cost Ratio
● Payback Method
● Discounted Payback Period
● Accounting Rate of Return Method
Financial Structure – Capital
● Financing Decision
● Financial Structure
● Types of Capital
● Factor Affecting Financial Structure
● Agency Costs
Financial Distress – Remedial Options
● Financial Distress
● Reorganization
● Restructuring
● Merger
● Acquisition
● Takeover
● Defence Mechanisms
Corporate Restructuring Options
● Divestitures
● IPO Roll-Ups
● Going-Private Transactions
● Alternatives to the Corporate Form
● The Market for Corporate Control
● Synergistic Mergers
● Strategic Mergers and Acquisitions
● The Twenty-First Century
● Successful Merger
● Upon Completion
Cost of Debt
● Concept of the Cost Capital
● Cost of Debt
● Debt Issued at Per
● Debt Issued at Discount or Premium
● Cost of Term Loans
Cost of Capital
● Cost of Preference Capital
● Irredeemable Preference Share
● Redeemable preference shares
● Cost of Equity Capital
● Is Equity Capital Free of Cost
● Cost of Retained Earnings
● Zero-growth
● Cost of External Equity
● Realized Yield Approach
● Capital Assets Pricing Model Approach
● Bond Yield plus Premium Approach
● Weighted Average Cost of Capital
● Weight Marginal Cost of Capital
● Book-Value Vs, Market-Value Weights
Financial Leverage
● Leverage
● Measure of Leverage
● Application and Utility of the Financial Leverage
● Impact of Financial Leverage on Investor’s Rate of Return
● Financial Leverage and Risk
● EBIT-EPS Analysis
Dividend Policy
● Dividend Policy
● Dividend Decision
● Shareholders’ Expectations
● Financial Needs of the Company
● Constraints on Paying Dividends
● Stability of Dividends
● Constant Payout
● Danger of Stability of Dividends
Forms of Dividend
● Cash Dividends
● Bonus Shares
● Share Splits
● Reverse Split
Dividend Model & Its Decisions
● Dividend Decision
● Traditional Position
● Walter Model
● Gordon’s Dividend Capitalization Model
● Miller & Modigliani Position
● Rational Expectations Model
Financial Ratios
● Meaning of Ratio
● Types / Classification of Ratios
● Liquidity Ratios
● Activity Efficiency or Turnover Ratio
● Profitability in relation to Sales
Working Capital Management
● Components of Working Capital
● Constituents of Current Liabilities
● Significance of Working Capital
● The Cash Conversion Cycle
● Working Capital Policy
● Current Asset Policy
● Sources for Financing Working Capital
● Shares and Debentures
● Ploughing Back of Profits
● Loans from Financial Institutions
● Sources of Short term Working Capital
● Installment Credit
● Factoring or Accounts Receivable Credit
● Accrued Expenses
● Deferred Incomes
● Commercial Paper
Bank Credit
● Loans
● Cash credit
● Overdraft
● Purchasing and Discounting of Bills
● Principles of Bank Financing
● Tandon Committee Report
● Maximum Permissible Bank Finance (MPBF)
● Chore Committee Report
● Credit Authorization Scheme
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