NISM Series XV · Unit 13 of 15 · about 5% of the paper
Qualities of a good research report: NISM Series XV notes and practice questions
What separates a useful report from a promotional one: structure, clarity, evidence and honesty.
What to know in Unit 13
- Structure and content of a report.
- Rating and target price.
- Risks and disclosures.
Key terms, examples and exam traps
Report structure
A good report has a clear recommendation, summary, business overview, financial analysis, valuation, risks and disclosures.
Example. A report opens with the rating and the key reasons.
Exam trap. This statement is false: A report need not state a recommendation.
Recommendation and rating
A rating such as buy, hold or sell must be defined, with the basis stated, and applied consistently.
Example. A report defines buy as an expected return above 15% over twelve months.
Exam trap. This statement is false: Ratings can be undefined labels.
Target price
A target price is the analyst's estimate of a security's price over a stated horizon, backed by a valuation method and assumptions.
Example. An analyst sets ₹500 with a twelve-month horizon using a P/E method.
Exam trap. This statement is false: A target price needs no supporting valuation.
Risk disclosure in reports
A report should state the key risks to its thesis, so readers understand what could go wrong.
Example. A report lists regulatory changes and input costs as risks.
Exam trap. This statement is false: Reports should hide risks to appear persuasive.
Clarity and objectivity
Clear language, supported claims and balanced treatment of positives and negatives make a report credible.
Example. A report cites sources for each figure.
Exam trap. This statement is false: A good report uses exaggerated claims.
Reasonable basis
Every recommendation must have a reasonable basis supported by research and data, not mere speculation or rumour.
Example. An analyst bases her call on filings and a valuation model.
Exam trap. This statement is false: A recommendation can rest on market rumours.
Timeliness and updates
Reports should be updated when material events occur and should state the date and data cut-off.
Example. An analyst revises the target after the quarterly results.
Exam trap. This statement is false: A report never needs revision after publishing.
Data sources and accuracy
Sources should be reliable and cited, and numbers cross-checked for accuracy.
Example. An analyst verifies figures with filings.
Exam trap. This statement is false: Data need not be checked before publishing.
6 practice questions
Read each question and choose your answer before opening the free mock, which shows the correct answer and the reason.
Q1. Which statement best describes “Timeliness and updates”?
- Receivable days measure the average time taken to collect payment from customers.
- Reports should be updated when material events occur and should state the date and data cut-off.
- A simple moving average is the average closing price over a set number of periods, smoothing price data to show the trend.
- SEBI regulates the securities market, RBI the money market and banks, and exchanges oversee their members.
Q2. Which statement best describes “Target price”?
- A target price is the analyst's estimate of a security's price over a stated horizon, backed by a valuation method and assumptions.
- The Relative Strength Index is a momentum oscillator from 0 to 100; above 70 is considered overbought and below 30 oversold.
- The DDM values a share as the present value of expected dividends; in the Gordon model, value = D1 ÷ (r − g).
- Sensitivity analysis shows how the valuation changes when key assumptions such as growth or discount rate are altered.
Q3. Which statement best describes “Risk disclosure in reports”?
- A research analyst must disclose any financial interest, ownership or relationship with the subject company in the report.
- Violations of the regulations can lead to penalties, suspension or cancellation of registration by SEBI.
- For cyclical firms, valuation based on peak or trough earnings misleads, so analysts use average or normalised earnings.
- A report should state the key risks to its thesis, so readers understand what could go wrong.
Q4. Which term is described here? A good report has a clear recommendation, summary, business overview, financial analysis, valuation, risks and disclosures.
- PMI
- Resistance
- Industry concentration
- Report structure
Q5. Which term is described here? A report should state the key risks to its thesis, so readers understand what could go wrong.
- MACD
- Free cash flow
- Double bottom
- Risk disclosure in reports
Q6. Which statement about “Clarity and objectivity” is correct?
- Clear language, supported claims and balanced treatment of positives and negatives make a report credible.
- A good report uses exaggerated claims.
- Relative valuation requires projecting cash flows.
- Asset turnover measures profit per share.
Frequently asked questions
How much of NISM Series XV comes from Unit 13?
Unit 13 (Qualities of a good research report) usually carries about 5% of the questions. The whole exam has 100 questions and the pass mark is 60%.
What should I study in NISM Series XV Unit 13?
Structure and content of a report. Rating and target price. Risks and disclosures.
Are these NISM Series XV practice questions free?
Yes. Take the full free mocks to see the correct answer and the reason for every question.
Next
UpperCrust Academy is independent study material from UpperCrust Wealth. It is not affiliated with NISM, SEBI or AMFI. For education only. Not investment advice. Always confirm the latest syllabus and rules on the official NISM website.