Preview Questions Financial Analyst | Role Specific Skill

Question 1: Which strategy is most suitable for enhancing portfolio returns during periods of high market uncertainty?

Which action should you take?

Choose only one option

Increasing exposure to high-yield bonds

Increasing the cash position

Implementing a tactical asset allocation strategy

Maintaining a low allocation to equities

Question 2: In budgeting, what is "budgetary slack," and why can it be problematic for financial analysts in BFSI?

Which action should you take?

Choose only one option

Overestimating revenues and underestimating expenses to make targets easier to achieve

Ignoring budget constraints entirely

Accurately predicting revenues and expenses

Underestimating revenues and overestimating expenses to create a cushion

Question 3: Which type of investment is most appropriate during a period of rising interest rates in BFSI?

Which action should you take?

Choose only one option

Real estate investment trusts

High-dividend stocks

Long-term bonds

Floating-rate notes

Question 4: How should an analyst treat off-balance-sheet items such as loan guarantees when evaluating a bank's financial position?

Which action should you take?

Choose only one option

They should be included in the calculation of capital reserves

They should be disclosed in the notes to the financial statements, as they represent contingent liabilities

They should be excluded from financial analysis due to their immaterial effect

They should be treated as part of the liabilities section of the balance sheet

Question 5: In portfolio construction, which financial theory is commonly applied to determine the optimal mix of risky and risk-free assets?

Which action should you take?

Choose only one option

Efficient Market Hypothesis (EMH)

Capital Asset Pricing Model (CAPM)

Modern Portfolio Theory (MPT)

Arbitrage Pricing Theory (APT)

Question 6: How do you assess the impact of regulatory changes, like Basel III, on a bank's forecasted capital requirements?

Which action should you take?

Choose only one option

By adjusting the risk-weighted assets and capital ratios according to the new regulations

By increasing capital reserves without considering specific regulatory impacts

By ignoring regulatory changes and relying on past capital ratios

By focusing only on revenue changes without adjusting for regulatory risk