Fundamental Analysis Module (Intermediate) Practice Exam

Fundamental Analysis Module (Intermediate) Practice Exam

Fundamental analysis, a methodology for valuing stocks, is achieved through security analysis. Effective security analysis is essential for making sound investment choices. This module seeks to offer an introductory understanding of fundamental analysis and the diverse valuation methods employed. Its objectives include gaining a foundational grasp of fundamental analysis and exploring various valuation methodologies.

Who should take the exam?

The exam is for:

• Students of Management and Commerce
• Finance Professionals
• Stock Analysts
• Employees with Treasury & Investment division of banks and financial institutions
• Anybody having interest in this subject

Exam Details

• Exam Name: Fundamental Analysis Module (Intermediate)
• Exam Languages: English
• Exam Questions: 60 Questions
• Time: 120 minutes
• Passing Score: 60%

Course Outline 

The Exam covers the given topics  - 

Topic 1: Overview of Fundamental Analysis

• What is fundamental analysis?
• Why is fundamental analysis relevant for investing? - Efficient Market Hypothesis (EMH), Arguments against EMH, Does fundamental analysis work?
• Steps in Fundamental Analysis

Topic 2: Learn about the Basics

• Concept of “Time value of Money”
• Interest Rates and Discount Factors – Opportunity cost, Risk-Free Rate, Equity Risk Premium, The Beta, Risk Adjusted Return (Sharpe Ratio)

Topic 3: Understanding Financial Statements

• Where can one find financial statements – The Director’s Report, The Auditor’s Report, Financial Statements: Balance Sheet, Income Statements, Schedules and Notes to the Accounts, Cash Flow Statement
• Financial Statement Analysis and Forensic Accounting
• Comparative and Common-size financial statements
• Financial Ratios
• Du-Pont Analysis
• Cash Conversion cycle
• The Satyam case and need for forensic accounting

Topic 4: Learn about Valuation Methodologies

• Top-Down valuation (EIC Analysis) – Economy, Industry, Company
• Discounted Cash Flow (DCF) Models
• Dividend Discount Model (DDM)
• Free Cash Flow to Firm (FCFF) and Free Cash Flow to Equity (FCFE) based DCF
• Sum of the parts (SOTP)
• Price-to-Earnings (PE) ratio.
• Price to Book Value PB Ratio.
• EV/ EBITDA
• Price to Sales (P/S) Ratio
• Special cases of valuation – IPOs, Financial Services firms, Net interest mar with in (NIM), Firms negative cash flows, Acquisition valuation, Distressed companies