Fundamental Analysis Module (Intermediate) Practice Exam

Fundamental Analysis Module (Intermediate) Practice Exam

Fundamental analysis is a core methodology for valuing stocks, relying heavily on effective security analysis to make sound investment decisions. This module provides an introductory understanding of fundamental analysis and explores a range of valuation techniques used in investment decision-making.

Key Objectives:

• Build a strong foundation in the principles of fundamental analysis

• Understand various valuation methods used to assess securities

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