Financial Markets (Advanced) Module Practice Exam

Financial Markets (Advanced) Module Practice Exam

The Financial Markets (Advanced) Module Exam assesses your understanding of complex financial products, instruments, and regulations within the Indian financial landscape. Earning this certification demonstrates your ability to navigate advanced investment strategies and the intricacies of the Indian financial system.

Who Should Take This Exam?

This module is ideal for:

• Those who want to expand their financial expertise
• Students
• Teachers
• Investors
• Finance Professionals
• Employees of Trading Members/ sub-brokers

Are There Prerequisites?

A solid foundation in core financial markets concepts and instruments is recommended. Familiarity with basic investment principles, terminology, and the Indian financial system would be beneficial.

Roles and Responsibilities 

With a certification in Financial Markets (Advanced), you might qualify for roles such as:

• Financial Advisor (Advanced Products): Guiding clients on complex investment strategies involving derivatives, structured products, and alternative investments.
• Portfolio Manager: Constructing and managing investment portfolios incorporating advanced asset allocation techniques and risk management strategies.
• Investment Analyst (Advanced Markets): Analyzing complex financial instruments and markets to identify investment opportunities for individuals or institutions.
• Wealth Manager: Providing comprehensive wealth management services to high-net-worth clients, considering advanced investment options.

Exam Details

• Duration: 120 minutes
• No. of questions: 60
• Maximum marks: 100, Passing marks: 60 (60%)

Course Outline

The exam covers the following topics:

1. Financial Markets, Products & Institutions
A. Financial Markets
B. Financial Products and Market Entities
C. Market Infrastructure Institutions
D. Conflicts of Interest

2. Quantitative Background to Debt
A. The Nature of Debt
B. The Price of a Debt Security

• Perpetual Debt
• Discount Instrument
• Coupon Instrument

C. Price-Yield Relationship of a Debt Security
D. Modified Duration of a Debt Security

3. Debt – Investment Drivers & Approaches
A. Interest Risk

• Forward Rates
• Yield Curve Estimation
• Shape of Yield Curve
• Debt Portfolio Structures

B. Credit Risk & Yield Spreads

• Assessment of Sovereign Debt Servicing Ability
• Assessment of Private Debt Servicing Ability
• Credit Rating
• Structured Obligations
• Yield Spread & Changes in Credit Risk

4. Financial Statements: Analysis & Projections for Equity
A. Financial Statement Analysis

• Revenue, Cost & Margin Structure
• Capital Efficiency
• Dividend Yield
• Price – Earnings Ratio

B. Financial Projections

5. Equity – Valuation & Investment Decisions (Part 1)
A. Required Rate of Return on Equity
B. Weighted Average Cost of Capital (WACC)
C. Fundamental Valuation Approaches

• Dividend Discounting
• Free Cash Flow
• Enterprise Value
• Earnings Multiple
• Price to Book Value Multiple

D. Margin of Safety

6. Equity – Valuation & Investment Decisions (Part 2)
A. Economy & Industry Analysis

• Economy Analysis
• Industry Analysis

B. Top-Down or Bottom-up?
C. Technical Analysis

7. Derivatives
A. Background
B. Interest Rate Futures
C. Credit Default Swaps (CDS)
D. Currency Futures
E. Currency Options
F. Equity Futures & Options

8. Alternate Assets & Structured Products
A. Alternate Assets

• Gold
• Real Estate

B. Structured Products

• Portfolio Insurance
• Risks
• SEBI Regulations

9. International Markets
A. Depository Receipts
B. International Stock Indices

• S&P 500 Index (SPX)
• Dow Jones Industrial Average (INDU)
• NASDAQ Composite Index (CCMP)
• EURO STOXX 50 Price Eur (SX5E)
• FTSE 100 (UKX)
• Deutsche Borse AG German Stock Index DAX (DAX)
• Nikkei 225 (NKY)
• Tokyo Stock Exchange Tokyo Price Index TOPIX (TPX)
• Hong Kong Hang Seng Index (HSI)

C. Feeder Funds
D. Trading in Global Markets through NSE

• Futures & Options
• Exchange Traded Funds (ETFs)

10. New Paradigms in Regulation of Financial Markets
A. Market Infrastructure Institutions
B. Alternate Investment Funds
C. Standardisation of Rating Symbols and Definitions
D. Investment Advisers
E. Commission on Public Issues of Debt
F. Merchant Bankers’ Track Record
G. Algorithmic Trading
H. Outsourcing by Intermediaries
I. Qualified Foreign Investors (QFIs)
J. KYC Registration Agency (KRA)