Preview Questions Financial Analyst | Role Specific Skill

Question 1: When assessing a real estate investment trust (REIT), which of the following financial metrics is most important for long-term success?

Which action should you take?

Choose only one option

Capitalization rate (Cap Rate)

Internal rate of return (IRR)

Net operating income (NOI)

Funds from operations (FFO)

Question 2: Which budgeting technique is most effective for organizations that experience significant fluctuations in revenue or costs, such as those in the BFSI sector?

Which action should you take?

Choose only one option

Fixed Budgeting

Incremental Budgeting

Zero-Based Budgeting

Flexible Budgeting

Question 3: How can an analyst effectively model liquidity risk in a BFSI institution?

Which action should you take?

Choose only one option

By increasing the assumption on dividend payouts

By forecasting cash inflows and outflows in different economic scenarios

By adjusting the debt service coverage ratio for potential liquidity stress

By excluding all short-term liabilities from the forecast

Question 4: What forecasting model would be best to predict future loan demand in a financial institution during periods of economic downturn?

Which action should you take?

Choose only one option

Exponential smoothing, using a weighted average of past loan data

Simple linear regression based on past loan growth

Econometric modeling, integrating both macroeconomic indicators and historical data

Moving averages, ignoring the broader economic context

Question 5: In financial reporting for a bank, what is the purpose of reconciling cash flow from operations?

Which action should you take?

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To ensure that the cash flow reflects the bank's true operational performance

To show the effects of interest rates on loan repayments

To estimate future income from loans

To predict the bank's capital requirements

Question 6: When forecasting operating expenses for a financial institution, which cost component is likely to exhibit the most significant variability over a short time frame?

Which action should you take?

Choose only one option

Fixed overheads

Variable production costs

Interest expenses

Employee compensation