Daily Archives: May 27, 2023

According to “The Checklist Manifesto,” errors of ignorance are mistakes made out of ignorance, while errors of ineptitude are mistakes made because of incorrect use of knowledge. The other options mentioned are either incorrect or not related to the distinction made in the book.

Some potential reasons for failure of a research report include unnecessary details, long sentences, no proper structure, inconsistent views, and complex language. The other options are either incorrect or not mentioned as reasons for failure.

Anchoring bias is a cognitive bias where individuals rely too heavily on the first piece of information offered when making decisions. Investors may hold on to outdated information, ignoring new information that is available. This bias can impact decision-making, such as holding on to losing stocks in expectation of a price rebound based on past prices, rather than considering current information.

The prevalent recommendations used by research analysts to rate stocks are Buy, Overweight, Hold, Underweight, and Sell. The other options mentioned are not related to stock ratings.

Country risk refers to the risk related to a country as a whole, where the country may not be able to honor its financial commitments. When a country defaults on its obligations, it can affect the performance of all other securities issued in that country as well as other countries with relations to it. Country risk applies to all types of securities issued in that country.

Interest rates and bond prices have an inverse relationship. When interest rates fall, or are expected to fall, bond prices go up. Conversely, when interest rates rise, or are expected to rise, bond prices decline. This relationship exists because investors demand a higher return for taking on the risk of holding a bond when interest rates are higher, and vice vers

ROI numbers should be used with caution for investments with unknown future returns and for equity and mutual funds.

Herd Mentality bias can prevent investors from benefiting from market corrections.

Projection bias refers to projecting recent past experiences or events into the distant future, ignoring the distant past. It involves giving more weight to recent events and not considering historical patterns or trends.

Quantitative parameters considered under quantitative analysis in an investment research checklist include equity history, revenue growth, leverage ratio, return track record, dividend track record, cash flows, et The other options are either incorrect or related to different types of parameters.

Relative valuation is used to compare the value of assets by looking at how the market prices similar/comparable assets. It provides an estimate of value based on the pricing of similar assets, which can be helpful in determining whether something is cheap or expensive.

Using a checklist approach in investment research reports helps avoid lazy mistakes or short-cuts, ensures disciplined decision-making, and helps in objective and facts-based decisions. The other options mentioned are either incorrect or not related to the advantages of using a checklist approach.

The EV to Capital Employed ratio is calculated by dividing the enterprise value by the capital employed, which is the sum of total equity and total debt.

The price-to-earnings (P/E) ratio is calculated by dividing the current price of the stock by the earnings per share (EPS). It indicates how much investors are willing to pay for each unit of earnings generated by the company.

The gambler’s fallacy is the mistaken belief that if something happens more frequently than normal during some period, then it will happen less frequently in the future, or vice versa, based on past events.

A higher Jensen’s Alpha indicates superior performance.

Fact-based sections in a research report are typically filled using information from annual reports, quarterly reports, and calculations. The other options mentioned are not related to fact-based sections.

Jensen’s Alpha refers to the excess return earned on investment compared to its benchmark.

Unsystematic risk, also known as diversifiable risk, refers to risks that are specific to individual securities or

When assessing the return on capital (ROCE) and return on equity (ROE), it is important to focus on the variations between these two ratios. ROCE reflects the true return on the capital invested in the business, while ROE can be manipulated by high leverage. Wide variations between ROCE and ROE may indicate potential issues or the need for further investigation into the financial performance and capital structure of the company.

The EV to Capital Employed ratio measures the relationship between enterprise value and the total capital employed, which includes both equity and debt.

Qualitative parameters that can be included in an investment research checklist include understanding the business, details of technology collaboration, revenue model, competitive advantage, risks, quality of management, et The other options are either incorrect or related to different types of parameters.

Ownership bias, also known as the endowment effect, reflects the tendency to place a higher value on a position than others woul

The demand and supply of securities in the market is not a valuation parameter for business analysis. The other options mentioned are commonly used valuation parameters.

Annualized return converts the return to a uniform period, enabling comparison between investments with different holding periods.

Business risk, also known as operating risk, is the risk inherent in the operations of a company. It is caused by factors that affect the company’s operations, such as the cost of raw materials, employee costs, introduction and position of competing products, marketing and distribution costs, et Holding a diversified portfolio is an efficient way to diversify this risk.

The EV to Capital Employed ratio and Return on Capital Employed (ROCE) are used together to assess the return on invested capital and facilitate investment decision making. The EV to Capital Employed ratio helps determine the market value of assets relative to the capital employed, while ROCE evaluates the profitability of the business. By considering both ratios, investors can gauge the adequacy of the return on capital investe

Liquidity risk refers to the absence of liquidity in an investment. It implies that the investor may not be able to sell their investment when desired, or they may have to sell it below its intrinsic value, or incur high costs to carry out transactions. Investments in assets such as corporate bonds, property, and art are subject to liquidity risk, as finding a buyer and determining the price can be a lengthy process in the absence of an active market.

Confirmation bias, also called my side bias, is the tendency to search for, interpret, or prioritize information in a way that confirms one’s beliefs or hypotheses.

The Price/Adjusted book value ratio considers the fair value of assets minus the fair value of liabilities, taking into account off-balance sheet items as well. It provides a valuation metric that factors

When valuing a business with high earning power, an important consideration is the Return on Equity (ROE). In such cases, the book value (BV) of shares becomes less important compared to the profitability and return generated by the business. ROE reflects the return on the capital invested by shareholders and is a more relevant measure in assessing the value of the business in this scenario.

Political risk refers to the risk associated with unfavorable government actions such as nationalization, changes in tax structures, or licensing regulations. Businesses and securities are exposed to political risk because governments have the power to change laws that affect them. Political risk can have a significant impact on the performance of businesses and securities.

CAGR (Compounded Annual Growth Rate) is the accepted standard measure of return in financial markets.

Inflation risk represents the risk that the money received on an investment may be worth less when adjusted for inflation. It arises from the decline in the value of security’s cash flows due to the falling purchasing power of money. It is highest in fixed return instruments such as bonds, fixed deposits, and debentures, where investors are paid a fixed periodic interest and returned the principal amount at maturity. Inflation risk is relatively less for equity shares.

Annual reports are considered an authentic source for analysts to check facts on a company. Research reports, media reports, and business portals can provide additional information but may not be as authoritative as the annual reports.

For a private owner, EV (Enterprise Value) represents the true value of the firm. Unlike market capitalization, which only considers the equity value, EV takes into account both the equity and debt of the company. It provides a comprehensive measure of the company’s value from the perspective of a private owner.

The Capital Asset Pricing Model (CAPM) is used to estimate the expected return on investment by considering the risk associated with an asset or security. It helps in determining the appropriate rate of return required by an investor to compensate for the level of risk. The model takes into account factors such as the risk-free rate, beta (systematic risk), and the expected market return to calculate the expected return on an investment.

If a stock has exceeded its target price, an analyst may recommend selling the stock. Buying or holding the stock would not be appropriate when the target price has been surpasse

Stock turnover ratio is calculated using the number of shares traded divided by the number of outstanding free float shares.

Looking at consolidated numbers in valuation allows for the evaluation of the financial performance of the entire group or conglomerate. It provides a holistic view that includes the results of all the business units and subsidiaries under the umbrella of the company. This helps in assessing the overall financial health, profitability, and value of the company as a whole.

A good research report should possess qualities such as clarity of idea, simplicity of delivery, presenting the argument clearly, and a narrative structure. The option “Create customized reports according to the reader type” is not mentioned in the provided information.

Dividend is indeed a small component of the total returns from equity.

When interest rates rise, the price of bonds typically falls. This is because existing bonds with lower interest rates become less attractive compared to newly issued bonds with higher interest rates, leading to a decrease in demand for existing bonds and a corresponding decrease in their price.

The winner’s curse refers to the tendency to ensure winning a competitive bid even after overpaying for the asset. While it may be a behavioral win, financially it may result in a loss.

Stock turnover ratio is calculated by dividing the number of shares traded during a given period by the number of outstanding free float shares.

The Net Asset Value (NAV) approach considers the market value of assets minus the value of liabilities in valuation. It differs from the book value approach by using market values of assets rather than their historical cost.

Herd mentality is a bias where investors follow the investment choices made by others, often due to a belief that others may have better information. This behavior can lead to bubbles and crashes in the market.

Call risk refers to the possibility that a debt security will be called prior to its maturity. It is most prevalent when interest rates are falling, as companies trying to save money will usually redeem bond issues with higher coupons and replace them with issues with lower interest rates. Call risk usually goes hand in hand with reinvestment risk.

Both amortization of capital expenses and depreciation are non-cash charges. They represent the allocation of expenses over time and do not involve the actual outflow of cash. Interest on foreign exchange borrowing, on the other hand, represents an actual cash expense.

CAGR is computed using the formula: (End Value / Beginning Value)^(1/n) – 1, where n is the holding period in years.

ROI for a single period is calculated as net profit divided by the investment, multiplied by 100.

Valuations in the new age economy and businesses often utilize unconventional parameters such as eyeballs, page reviews, footfall, average revenue per user (ARPU), and the number of users. These parameters are used to justify the high valuations seen in these industries. However, it is important to note that ultimately these parameters should translate into profits for owners in the long run. The valuations may be sustained based on market belief and investor interest, but without profitability, they can be susceptible to a downturn, as seen during the dot-com boom in 2000-2001.

Compounded return (CAGR) takes into consideration the time value of money and assumes reinvestment of periodic returns.

The calling feature in bonds is most prevalent when interest rates are expected to fall.

The Sharpe Ratio measures the risk premium earned per unit of standard deviation.

Systematic risk, also known as undiversifiable risk, refers to risks that impact multiple investment categories and cannot be eliminated through diversification. It is caused by factors that affect the economy or markets as a whole, such as changes in government policy, external factors, wars, or natural calamities. Inflation risk, exchange rate risk, interest rate risk, and reinvestment risk are examples of systematic risks.

The investor expects both to preserve the capital invested and earn a return from the investment.

The earnings yield is calculated by dividing the earnings per share (EPS) by the price of the stock and expressing the result as a percentage. In this case, the earnings yield would be (13 / 195) * 100 = 6.67 percent.

Sharpe Ratio factors in the difference in risk by measuring the risk premium earned per unit of standard deviation.

Valuation is considered a subjective exercise because the inputs required for valuation, such as earnings, assets, and growth projections, are subjective in nature and can vary based on individual judgment and assumptions. Additionally, valuation is not a timeless concept and can change dramatically if the circumstances of a business change. It is influenced by various factors, making it subjective rather than a precise and objective measure. Complicated quantitative models may provide a false impression of preciseness, but ultimately valuation remains a subjective process.

Market risk refers to the risk of the loss of value in an investment due to adverse price movements in the market. The price of an asset responds to information that impacts its intrinsic value. For example, changes in interest rates or currency exchange rates can affect the market price of bonds or stocks. Market risk primarily affects investments in marketable securities such as equity, bonds, gold, real estate, et

Reinvestment risk arises from the probability that income flows received from an investment may not be able to earn the same interest as the original interest rate. It occurs when intermediate cash flows may be reinvested at a lower return compared to the original investment. Reinvestment rates can be high or low depending on the levels of interest rates at the time when the coupon income is receive

Credit risk, also known as default risk, refers to the possibility that a bond issuer will not be able to make expected interest rate payments and/or principal repayment. Debt instruments are subject to credit risk as they have pre-committed payouts. The credit rating provided by credit rating agencies is used to measure the credit risk in an instrument. A lower credit rating represents a higher credit risk, resulting in higher interest rate expectations by investors.

The Net Asset Value (NAV) approach is commonly used in industries such as Real Estate, Shipping, Aviation, and others that are highly asset-oriente

The main measure of liquidity in the traded value turnover ratio is the traded value of the shares.

Confirmation bias leads to searching, interpreting, or prioritizing information that confirms one’s beliefs or hypotheses.

Valuation parameters in an investment research checklist are used to assess the business’s intrinsic value, determine market mispricing, and justify the margin of safety. The other options are either incorrect or not related to the purpose of considering valuation parameters.

The Treynor Ratio calculates the risk premium per Bet

The major sections of a research report include company business, peer group analysis, shareholding pattern, key strengths, key concerns, industry overview, company fundamentals, key financial indicators, and financials. The other options are either incorrect or not related to the major sections.

Reinvestment risk increases when interest rates fall because the reinvestment of periodic cash flows at lower rates will result in lower returns.

Traded value turnover ratio measures the liquidity of a stock by dividing the traded value of the shares by the market capitalisation of the company.

Loss-aversion bias refers to an investor’s tendency to strongly prefer avoiding losses to acquiring gains, and the fear of loss leads to inaction.

The Sum-Of-The-Parts (SOTP) valuation method involves valuing each business separately and then adding the individual valuations to arrive at the total value of a company. This method is used when a company operates multiple businesses under one umbrella, such as conglomerates. Each business vertical is treated as an independent entity and valued separately, and the valuations are then summed up to determine the total value of the company.

Leverage ratio is a quantitative parameter of business analysis. Qualitative parameters focus on non-numeric aspects, while quantitative parameters involve numerical analysis.

The Treynor Ratio measures the risk premium earned per unit of Bet

The time frame typically used for calculating the stock turnover ratio is one year.

Business risk is indeed also known as operating risk, as it is caused by factors that affect the company’s operations.

The main objective of stock exchanges is to provide liquidity, which refers to the ease of buying and selling shares in the market.

The Price/Embedded value ratio measures the relationship between the market price and the present value of expected net future cash flow (adjusted for probability) from the policies currently in force for life insurance businesses. This ratio is specifically used in the case of the life insurance industry to assess the value based on embedded value.

Herd Mentality bias can prevent investors from benefiting from market corrections.

The calling feature in bonds is most prevalent when interest rates are expected to fall.

Business risk is indeed also known as operating risk, as it is caused by factors that affect the company’s operations.

Stock turnover ratio is calculated using the number of shares traded divided by the number of outstanding free float shares.

Stock turnover ratio is calculated by dividing the number of shares traded during a given period by the number of outstanding free float shares.

Anchoring bias is a cognitive bias where individuals rely too heavily on the first piece of information offered when making decisions. Investors may hold on to outdated information, ignoring new information that is available. This bias can impact decision-making, such as holding on to losing stocks in expectation of a price rebound based on past prices, rather than considering current information.

Confirmation bias leads to searching, interpreting, or prioritizing information that confirms one’s beliefs or hypotheses.

Projection bias refers to projecting recent past experiences or events into the distant future, ignoring the distant past. It involves giving more weight to recent events and not considering historical patterns or trends.

Dividend is indeed a small component of the total returns from equity.

The time frame typically used for calculating the stock turnover ratio is one year.

The main measure of liquidity in the traded value turnover ratio is the traded value of the shares.

Traded value turnover ratio measures the liquidity of a stock by dividing the traded value of the shares by the market capitalisation of the company.

The main objective of stock exchanges is to provide liquidity, which refers to the ease of buying and selling shares in the market.

Herd mentality is a bias where investors follow the investment choices made by others, often due to a belief that others may have better information. This behavior can lead to bubbles and crashes in the market.

Reinvestment risk arises from the probability that income flows received from an investment may not be able to earn the same interest as the original interest rate. It occurs when intermediate cash flows may be reinvested at a lower return compared to the original investment. Reinvestment rates can be high or low depending on the levels of interest rates at the time when the coupon income is receive

Projection bias refers to projecting recent past experiences or events into the distant future, ignoring the distant past. It involves giving more weight to recent events and not considering historical patterns or trends.

Interest rates and bond prices have an inverse relationship. When interest rates fall, or are expected to fall, bond prices go up. Conversely, when interest rates rise, or are expected to rise, bond prices decline. This relationship exists because investors demand a higher return for taking on the risk of holding a bond when interest rates are higher, and vice vers

Ownership bias, also known as the endowment effect, reflects the tendency to place a higher value on a position than others woul

Country risk refers to the risk related to a country as a whole, where the country may not be able to honor its financial commitments. When a country defaults on its obligations, it can affect the performance of all other securities issued in that country as well as other countries with relations to it. Country risk applies to all types of securities issued in that country.

The winner’s curse refers to the tendency to ensure winning a competitive bid even after overpaying for the asset. While it may be a behavioral win, financially it may result in a loss.

Herd Mentality bias can prevent investors from benefiting from market corrections.

Systematic risk, also known as undiversifiable risk, refers to risks that impact multiple investment categories and cannot be eliminated through diversification. It is caused by factors that affect the economy or markets as a whole, such as changes in government policy, external factors, wars, or natural calamities. Inflation risk, exchange rate risk, interest rate risk, and reinvestment risk are examples of systematic risks.

Stock turnover ratio is calculated using the number of shares traded divided by the number of outstanding free float shares.

Loss-aversion bias refers to an investor’s tendency to strongly prefer avoiding losses to acquiring gains, and the fear of loss leads to inaction.

Annualized return converts the return to a uniform period, enabling comparison between investments with different holding periods.

The investor expects both to preserve the capital invested and earn a return from the investment.

Business risk is indeed also known as operating risk, as it is caused by factors that affect the company’s operations.

Inflation risk represents the risk that the money received on an investment may be worth less when adjusted for inflation. It arises from the decline in the value of security’s cash flows due to the falling purchasing power of money. It is highest in fixed return instruments such as bonds, fixed deposits, and debentures, where investors are paid a fixed periodic interest and returned the principal amount at maturity. Inflation risk is relatively less for equity shares.

CAGR is computed using the formula: (End Value / Beginning Value)^(1/n) – 1, where n is the holding period in years.

Liquidity risk refers to the absence of liquidity in an investment. It implies that the investor may not be able to sell their investment when desired, or they may have to sell it below its intrinsic value, or incur high costs to carry out transactions. Investments in assets such as corporate bonds, property, and art are subject to liquidity risk, as finding a buyer and determining the price can be a lengthy process in the absence of an active market.

Credit risk, also known as default risk, refers to the possibility that a bond issuer will not be able to make expected interest rate payments and/or principal repayment. Debt instruments are subject to credit risk as they have pre-committed payouts. The credit rating provided by credit rating agencies is used to measure the credit risk in an instrument. A lower credit rating represents a higher credit risk, resulting in higher interest rate expectations by investors.

Traded value turnover ratio measures the liquidity of a stock by dividing the traded value of the shares by the market capitalisation of the company.

Herd mentality is a bias where investors follow the investment choices made by others, often due to a belief that others may have better information. This behavior can lead to bubbles and crashes in the market.

The Sharpe Ratio measures the risk premium earned per unit of standard deviation.

Dividend is indeed a small component of the total returns from equity.

Anchoring bias is a cognitive bias where individuals rely too heavily on the first piece of information offered when making decisions. Investors may hold on to outdated information, ignoring new information that is available. This bias can impact decision-making, such as holding on to losing stocks in expectation of a price rebound based on past prices, rather than considering current information.

CAGR (Compounded Annual Growth Rate) is the accepted standard measure of return in financial markets.

The main measure of liquidity in the traded value turnover ratio is the traded value of the shares.

Jensen’s Alpha refers to the excess return earned on investment compared to its benchmark.

Unsystematic risk, also known as diversifiable risk, refers to risks that are specific to individual securities or

ROI numbers should be used with caution for investments with unknown future returns and for equity and mutual funds.

ROI for a single period is calculated as net profit divided by the investment, multiplied by 100.

Business risk, also known as operating risk, is the risk inherent in the operations of a company. It is caused by factors that affect the company’s operations, such as the cost of raw materials, employee costs, introduction and position of competing products, marketing and distribution costs, et Holding a diversified portfolio is an efficient way to diversify this risk.

Sharpe Ratio factors in the difference in risk by measuring the risk premium earned per unit of standard deviation.

Stock turnover ratio is calculated by dividing the number of shares traded during a given period by the number of outstanding free float shares.

Confirmation bias, also called my side bias, is the tendency to search for, interpret, or prioritize information in a way that confirms one’s beliefs or hypotheses.

Call risk refers to the possibility that a debt security will be called prior to its maturity. It is most prevalent when interest rates are falling, as companies trying to save money will usually redeem bond issues with higher coupons and replace them with issues with lower interest rates. Call risk usually goes hand in hand with reinvestment risk.

The Treynor Ratio measures the risk premium earned per unit of Bet

Reinvestment risk increases when interest rates fall because the reinvestment of periodic cash flows at lower rates will result in lower returns.

The time frame typically used for calculating the stock turnover ratio is one year.

Confirmation bias leads to searching, interpreting, or prioritizing information that confirms one’s beliefs or hypotheses.

Market risk refers to the risk of the loss of value in an investment due to adverse price movements in the market. The price of an asset responds to information that impacts its intrinsic value. For example, changes in interest rates or currency exchange rates can affect the market price of bonds or stocks. Market risk primarily affects investments in marketable securities such as equity, bonds, gold, real estate, et

The main objective of stock exchanges is to provide liquidity, which refers to the ease of buying and selling shares in the market.

A higher Jensen’s Alpha indicates superior performance.

The Treynor Ratio calculates the risk premium per Bet

Political risk refers to the risk associated with unfavorable government actions such as nationalization, changes in tax structures, or licensing regulations. Businesses and securities are exposed to political risk because governments have the power to change laws that affect them. Political risk can have a significant impact on the performance of businesses and securities.

The calling feature in bonds is most prevalent when interest rates are expected to fall.

The gambler’s fallacy is the mistaken belief that if something happens more frequently than normal during some period, then it will happen less frequently in the future, or vice versa, based on past events.

Compounded return (CAGR) takes into consideration the time value of money and assumes reinvestment of periodic returns.

True. Strong financial performance is often an indication of a good business quality, as it reflects profitability, efficiency, and financial stability.

True. Companies are required to inform the exchanges about their shareholding pattern and any changes in it periodically to ensure transparency and provide relevant information to the stakeholders.

Weaknesses in SWOT analysis refer to internal issues that make the company vulnerable to external events or prevent it from exploiting opportunities. Weaknesses can include vulnerability to external events, lack of financial strength, high fixed costs, and high customer concentration.

Assessing the history of credit rating helps equity investors determine the level of financial risk, understand how the management responds to external feedback, and set return expectations based on the company’s creditworthiness.

SCP analysis is a method of analyzing industries based on their structure, conduct, and performance.

Dr. Garry Hamel’s perspective on competition in the market place is that it is between the business models of competing companies, highlighting the importance of understanding a company’s business model in fundamental research.

Each sector has its own unique parameters for evaluation, and it is important for analysts to possess in-depth knowledge of the sectors while researching companies.

Political factors are important to consider as countries can have different political structures. For example, communist countries would have social objectives above anything else while capitalist ones would not necessarily have all responsibilities of a welfare state. Political stability, minimal corruption, bureaucracy, communal tensions and violence, and maximum freedom of press, ease of doing business and quick turnaround time are some of the factors which investors would look at in a country.

While financial performance is an important aspect of company analysis, it is not directly evaluated under the ESG framework. The ESG framework primarily focuses on environmental impact, social development activities, and corporate governance standards.

The ESG framework in company analysis primarily focuses on evaluating companies based on their impact on the environment, social development factors, and corporate governance standards.

Company analysis helps investors evaluate external and internal factors that drive a company’s performance, including macro-economic and industry-specific factors, as well as company-specific factors such as its business model, competitive advantage, capability to exploit opportunities and withstand threats, management competence, vision for the future, and governance structure.

Agency risk refers to the risk that the management may prioritize their personal interests over the interests of the company and its shareholders.

The Ministry of Corporate Affairs website often provides information on a company’s corporate governance practices, including details about the board of directors, independent directors, and compliance with regulations. Annual/quarterly reports may also contain information on corporate governance practices, but the Ministry of Corporate Affairs website is specifically focused on such matters.

PESTLE analysis is a tool used to analyze the external macro-environmental factors that affect an organization. Economic factors, such as forex reserves, monetary policies of the RBI, and a country’s dependence on other countries for natural resources, are important economic factors that impact an organization. Therefore, option is the correct answer.

The government of Kerala introduced a fat tax in 2017 to discourage the junk food industry by levying 14.5% additional tax on junk foods.

Excise duty is an example of an indirect tax, whereas income tax, corporate tax, and wealth tax are examples of direct taxes.

Threats in SWOT analysis refer to risks that come from the external environment. These can include economic recession, regulatory headwinds, technological disruptions, and other factors that pose risks to the company’s operations and profitability.

Pricing power is often driven by industry factors that affect all companies in the industry. These factors include the competition intensity in the industry, the price elasticity of the product, and the level of commoditization of the product. However, there are also company-specific factors that position a company differently from its peers. These factors include its natural leadership position in the industry, brand affinity among customers, and its cost base.

If an analyst cannot address what a company does with preciseness and clarity, they should try to obtain the necessary data to substantiate their findings.

Small changes in regulatory framework can have a big impact on businesses, and therefore, analysts should pay enough attention to the regulatory aspects of businesses

The objective of good corporate governance standards is to ensure that the company is managed in a way that takes care of all stakeholders, including shareholders, lenders, employees, suppliers, and customers.

Some phenomenon can result in industries at the down end of value chain gain at the cost of those at the upper end or vice vers High competition intensity in the Indian telecommunication space resulted in significant fall in price of mobile services, which in turn led to significant decline in shareholder value for telecom companies. However, this resulted in increased consumption of digital products and thus more traction for digital content providers.

To evaluate management competency, analysts should consider factors such as educational qualification, years of experience, company’s performance during their tenure, vision on long-term goals, strategic direction, and delegation in decision-making.

Cess is an additional levy charged on the taxes plus surcharge, and it is meant to be used for specific purposes for which it is levie

In an industry where rivalry is high, the competition among the players increases, leading to lower pricing power and lower incomes for the industry participants. Therefore, option is the correct answer.

Suppliers’ bargaining power would be high if the number of suppliers are limited and buyers are many.

Structure Conduct Performance (SCP) analysis is a framework that examines the structure, conduct, and performance of an industry. The “structure” in SCP analysis refers to the relationship among the various players in the industry, such as the number and size of firms, entry and exit barriers, and degree of product differentiation. Therefore, option is the correct answer.

Opportunities in SWOT analysis can arise from events leading to faster growth, technological advancements, opportunities for geographic expansion, and adverse market conditions that allow for consolidation. These are external factors that can create avenues for business growth and development.

The first step in the marketing research process is problem identification, which involves identifying and defining the marketing problem that the research is intended to solve.

The structure analysis of SCP analysis involves studying the competitive intensity in the industry, the concentration of business, the relationship among various players, and the market size, growth rate, dominance of few players in the industry, and other related factors.

The differentiating factors for a company compared to its competitors can be categorized into three areas: differentiation in product features, competitive pricing driven by operational efficiency, and better execution.

PESTLE Analysis is an analysis done more from the perspective of a business which is looking to set up a unit offshore and analyzing several countries to choose from. This model primarily analyzes the external environmental factors that will act as influencers for a business.

Governments use direct taxes as a tool for promoting or discouraging certain activities. For instance, in India, companies are allowed to claim an expense that is 1.5 times of actual expenditure incurred on certain scientific research activity to promote research and development.

The conduct analysis of SCP analysis involves studying the factors that define the conduct of businesses such as pricing and product innovation.

Stars are segments in a business where the market is growing rapidly and the company is having a large market share.

The overall size of the tyre market in the country can be estimated as: Rs 24,000 crore / (1 – 0.20) = Rs 30,000 crore. Therefore, option is the closest estimate to the fair size of the tyre market in that country for the year 2019.

SCP analysis involves considering the key constraining factors such as demand side constraints, supply side constraints, and regulatory constraints while analyzing the industry.

Certain disruption may create new competitive advantage for one company or may remove a competitive advantage enjoyed by an existing player. This may result is value migrating from one company to another. Before

STEEPLED stands for Sociological, Technological, Environmental, Economic, Political, Legal, Ethical and Demographi Some models extend PESTLE to include these factors, thus modifying the acronym to STEEPLE

In a market where there are a large number of sellers with similar products or services, consumers have more bargaining power and can exert pressure on the sellers to lower prices. Therefore, option is the correct answer.

Cash Cows are segments in a business which require low cash infusion for investment to maintain market shares because of low growth prospects but at the same time, generate a significant amount of cash for the business.

SWOT Analysis is a strategic planning tool used to analyze the external factors that could impact a company’s growth and success.

An analyst needs to compare the products of a company with those of its competitors to see if they have offered better features. It is important for the analyst to look at the data that can substantiate the advantage and not get carried away by superficial marketing claims.