MCQs- CHAPTER 1: INTRODUCTION TO RESEARCH ANALYST PROFESSION

Buy-side Analysts work for money managers like mutual funds and hedge funds. They generate investment recommendations for internal use within their organization by fund managers.

Research Analysts should communicate their findings to clients in a simple, clear, and concise manner. The research reports should be based on facts and figures, avoiding biased views. Any conflicts of interest should be disclosed, and abbreviations or jargon should be either avoided or clearly explained.

The main purpose of a Research Analyst’s role is to analyze companies, evaluate their past performance, and make recommendations based on comprehensive analysis. They consider qualitative and quantitative factors to guide investment decisions.

Sell-side Analysts work for firms that provide investment banking, broking, and advisory services. They publish research reports with specific recommendations on securities of companies or industries.

Research analysts should be proficient in using tools like Microsoft Excel and other data analytical tools to analyze data effectively. These tools help in organizing and manipulating data for further analysis.

A research analyst needs to have a strong knowledge of business models to ask pertinent questions. This helps in gaining a deeper understanding of the industry or company being analyzed and uncovering relevant information for the analysis.

Research Analysts are expected to perform their role with utmost sincerity, honesty, and ethics. They should follow all rules and regulations specified by SEBI (Securities and Exchange Board of Indi and use technology like recording devices only with the consent of management.

Qualitative analysis involves understanding why a particular business is better compared to its peers, identifying the strengths and weaknesses of the business model, and evaluating the capabilities of the management team.

Research analysts need to have a high degree of comfort in dealing with numbers. They must be able to analyze various financial factors, identify trends, and understand the inter-relationship between different factors.

Personal communication with management allows Research Analysts to gain a better understanding of the company’s vision and strategy to achieve its goals. It provides valuable insights that cannot be obtained solely through internet research.

Independent Analysts work for research originators or boutique firms separate from full-service investment firms. They sell their research to clients on a subscription basis and provide customized research reports.

Research Analysts should maintain independence and neutrality of view while communicating with the management of a company. They should base their analysis on factual information and avoid personal biases.

The primary responsibility of a Research Analyst is to understand and evaluate the growth of industries and companies. They analyze various factors related to the economy, industries, and individual companies to provide insights and recommendations.

Research analysts need to have strong written and verbal communication skills. They should be able to effectively communicate their findings, recommendations, and analysis to clients and colleagues.

Quantitative understanding for Research Analysts involves analyzing financial statements such as balance sheets, profit and loss statements, cash flows, and other financial metrics of companies. It focuses on the mathematical aspects of the company’s performance.

Research Analysts need to understand changes in macro-economic factors such as national income, inflation, interest rate, and unemployment rate. These factors have a significant impact on the overall economy and industries.

Understanding financial statements and reports requires attention to details. Research analysts need to closely examine the information presented in these documents to derive meaningful insights.

The primary role of a Research Analyst is to collect relevant data and information to assist in making investment decisions. They gather information from various sources and analyze it to provide recommendations.

Research Analysts can use their network to establish contacts who can provide meaningful insights into the company’s performance and plans. These contacts can include stakeholders such as competitors, suppliers, distributors, retailers, and customers.

Research Analysts focus on understanding the regulatory environment prevalent in the industry, business models, competition, operating factors, and sensitivity of demand to price changes. These factors help in analyzing the growth drivers and challenges within the industry.