Company Analysis – Business and Governance
9 questions. Each answer is explained.
Question 1 of 9Practice · Series XV — Research Analyst
0 right · 0 wrong · 9 to go
A–D or 1–4 to answer · Enter or → for the next question · ← to go back
Learn these topics
More units in NISM Series XV
- Introduction to Research Analyst Profession2
- Introduction to Securities Market3
- Terminology in Equity and Debt Markets3
- Fundamentals of Research7
- Economic Analysis7
- Industry Analysis12
- Company Analysis – Financial Analysis16
- Corporate Actions7
- Valuation Principles13
- Fundamental analysis of commodities9
- Fundamentals of Risk and Return10
- Qualities of a Good Research Report7
- Legal and Regulatory Environment15
- Technical Analysis22
- Case Study - Valuation8
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series XV Research Analyst
Exam rules read on NISM's site on 3 October 2026. Exam pattern revised on 20 January 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 3 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 9 questions on Company Analysis – Business and Governance, with answers
Q1Which situation should prompt the strongest governance scrutiny by an equity analyst?
Option A. A clearly disclosed, arm's-length purchase of raw materials from an unrelated outside supplier
Why it is wrong: A normal arm's-length unrelated transaction is not inherently a governance red flag.
Option B. Repeated large related-party deals with promoter-linked firms, poorly explained and disclosed — Correct answer
Option C. A company moving its registered office to a larger rented building within the same city
Why it is wrong: A registered-office move by itself is not a serious governance red flag.
Option D. A board scheduling one extra meeting during the year to review its long-term strategy
Why it is wrong: More board meetings are not inherently adverse.
Answer: B. Large recurring related-party dealings with promoter-linked entities, especially where rationale, pricing or disclosure is weak, can create conflicts of interest and deserve close scrutiny. Remember: Governance analysis focuses on conflicts, transparency, treatment of minority shareholders and stewardship of capital.
Hint, shown before you answer in practice mode: Common mistake: Calling any related-party transaction improper without examining its terms and disclosure.
XV-020mediumconceptual
Q2A listed company's promoter pledge rises from 8% to 62% of promoter holdings over two years while the share price becomes more volatile. What is the most appropriate analytical interpretation?
Option A. It is a risk flag that calls for checking loan terms and forced-sale risk — Correct answer
Option B. It guarantees that the company will soon default on its bank loans
Why it is wrong: A pledge does not guarantee default.
Option C. It proves the promoter has sold all economic interest in the company to lenders
Why it is wrong: Pledged shares remain owned subject to the pledge arrangement.
Option D. It has no relevance to equity analysis, as pledges are private deals
Why it is wrong: Pledging can affect control and market risk and is relevant to analysis.
Answer: A. A high or rising pledge of promoter shares can increase risk because falling share prices may trigger additional collateral requirements or forced sales. It is a red flag requiring investigation, not proof of default or misconduct. Remember: Governance red flags should trigger targeted investigation rather than automatic conclusions.
Hint, shown before you answer in practice mode: Common mistake: Treating a pledge as either harmless or conclusive proof of failure.
XV-037mediumconceptual
Q3A company earns 38% of revenue from promoter-linked entities, up from 12% three years ago. What should an analyst do first?
Option A. Ignore it, because revenue from promoter-linked firms is always legitimate
Why it is wrong: The materiality and trend make the exposure relevant.
Option B. Examine pricing, arm's-length terms, collections, approvals and disclosures — Correct answer
Option C. Automatically remove all related-party revenue from reported sales
Why it is wrong: Legitimate arm's-length related-party business should not be automatically deleted.
Option D. Assume the related-party revenue is fictitious and fraudulent
Why it is wrong: The fact pattern alone does not prove fictitious revenue.
Answer: B. High and rising related-party exposure can create conflict, concentration and earnings-quality risks. The correct response is to investigate the commercial terms, approvals, disclosures and cash collection rather than assume either legitimacy or fraud. Remember: Related-party analysis requires evidence about economics, governance and cash conversion.
Hint, shown before you answer in practice mode: Common mistake: Jumping from 'related party' directly to either 'safe' or 'fraudulent'.
XV-038mediumconceptual
Q4Which evidence is generally most useful when assessing management quality over time?
Option A. A single upbeat television interview given by the chief executive
Why it is wrong: One interview is weak evidence.
Option B. The chief executive's social-media follower count and online popularity
Why it is wrong: Social-media popularity is not a reliable governance measure.
Option C. A multi-year record of capital allocation, disclosure and meeting guidance — Correct answer
Option D. The company's share price move on the day its results were announced
Why it is wrong: One day's market movement says little about management quality.
Answer: C. Management quality is best judged through a longitudinal evidence set: capital allocation, transparency, governance behaviour, accounting quality, strategic execution and consistency between commitments and outcomes. Remember: Prefer repeated behaviour and verifiable outcomes over management narratives.
Hint, shown before you answer in practice mode: Common mistake: Overweighting charisma, presentations or short-term share-price performance.
XV-039mediumconceptual
Q5The audit committee of a listed company is primarily expected to strengthen oversight of:
Option A. The monetary-policy stance of the RBI and its decisions on the repo rate
Why it is wrong: RBI monetary policy is external to the company.
Option B. Daily product pricing decisions made by the sales team in each regional market
Why it is wrong: Routine sales pricing is an operating-management responsibility.
Option C. The technical chart patterns formed by the company's share price over recent months
Why it is wrong: Technical chart analysis is unrelated to the committee's governance role.
Option D. Financial reporting, internal controls, audit process and auditor independence — Correct answer
Answer: D. An audit committee plays a central governance role in oversight of financial reporting, internal-control systems and the audit relationship, helping protect the integrity of reported information. Remember: Board committees have distinct governance responsibilities. Audit committees focus on reporting and control integrity.
Hint, shown before you answer in practice mode: Common mistake: Confusing board oversight with day-to-day operating management.
XV-040mediumconceptual
Q6Which evidence most strongly supports the view that a company has sustainable pricing power?
Option A. It cuts prices every quarter to stop its customers from leaving
Why it is wrong: Repeated defensive price cuts suggest weak pricing power.
Option B. Its revenue rises only because it keeps issuing more shares
Why it is wrong: Equity issuance does not create operating pricing power.
Option C. Its share price rises even though operating margins collapse
Why it is wrong: Share-price movement does not itself demonstrate pricing power.
Option D. It raises prices repeatedly yet keeps customers and margins — Correct answer
Answer: D. Pricing power is the ability to raise or maintain prices without suffering an economically damaging loss of volume, market position or margins. Persistence relative to competitors matters more than a one-off price increase. Remember: Pricing power is observed through customer response and economics, not simply through announced price increases.
Hint, shown before you answer in practice mode: Common mistake: Calling any company that raises list prices a business with pricing power.
XV-078mediumconceptual
Q7A company’s long-term credit rating is downgraded twice over 18 months and its borrowing spreads rise. How should an equity analyst use this information?
Option A. Treat it as evidence to investigate changing leverage, cash-flow resilience and refinancing risk — Correct answer
Option B. Ignore it, because credit ratings are relevant only to bond investors and lenders, not to shareholders
Why it is wrong: Credit quality can materially affect equity holders through financing cost and solvency risk.
Option C. Assume that the equity value must immediately become zero after the second downgrade
Why it is wrong: A downgrade does not imply equity is automatically worthless.
Option D. Conclude that the company’s reported revenue must be false and its accounts unreliable
Why it is wrong: A rating change does not by itself prove false revenue.
Answer: A. Credit-rating history can reveal changes in perceived credit quality, leverage, liquidity and refinancing risk. Equity analysts should investigate the drivers because financing stress can affect equity cash flows and valuation. Remember: Credit deterioration can be an early signal of pressure relevant to equity analysis.
Hint, shown before you answer in practice mode: Common mistake: Treating credit analysis and equity analysis as completely separate disciplines.
XV-079mediumconceptual
Q8A powerful new competitor enters a company's core market with significantly lower costs and comparable product quality. In a SWOT analysis of the incumbent, this development is primarily a:
Option A. Strength
Why it is wrong: A strength is an internal positive attribute.
Option B. Weakness
Why it is wrong: A weakness is an internal limitation.
Option C. Opportunity
Why it is wrong: The event may create strategic choices, but its direct classification is a threat.
Option D. Threat — Correct answer
Answer: D. A new external competitor that can pressure market share, pricing or margins is an external threat to the incumbent. Remember: SWOT separates internal strengths/weaknesses from external opportunities/threats.
Hint, shown before you answer in practice mode: Common mistake: Classifying external competitive developments as internal weaknesses.
XV-110easyconceptual
Q9A beverage company operates water-intensive plants in regions facing chronic water scarcity. Which ESG dimension is most directly implicated?
Option A. Environmental — Correct answer
Option B. Social only
Why it is wrong: Social impacts may arise, but the most direct classification is environmental.
Option C. Governance only
Why it is wrong: Governance concerns oversight and decision-making structures rather than the physical resource issue itself.
Option D. None, because water is not relevant to ESG
Why it is wrong: Water availability can be financially material.
Answer: A. Water use, scarcity and resource management are primarily environmental issues, though they can also have social and operational consequences. Remember: ESG analysis links non-financial factors to business risks and opportunities.
Hint, shown before you answer in practice mode: Common mistake: Treating ESG as separate from operating and valuation risk.
XV-111mediumconceptual
Company Analysis – Business and Governance: common questions
How many practice questions are there on Company Analysis – Business and Governance?
9 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 16 practice topics for NISM Series XV, which has 150 questions in total.
Are these real NISM Series XV questions on Company Analysis – Business and Governance?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
Does negative marking apply to NISM Series XV?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Company Analysis – Financial Analysis
16 questions on Company Analysis – Financial Analysis. Its quiz opens on that unit.
Open Company Analysis – Financial Analysis