With Study Materials and Mock Tests
The IBBI Valuation exam is a difficult exam to crack. Students must adopt a concrete study strategy to attain the minimum passing mark, which is 60%. Over the past few months, the School of Valuation (SoV) has meticulously prepared courses and mock tests covering the prescribed syllabus. These resources are helpful for the serious student of valuation.
This site has also several blogs on the exam syllabus and study methods. From simple tips to topic-wise strategy, we have covered all these topics in length. Our courses provide in-depth content on the various syllabus topics and our sectional mock tests build confidence in the candidate and help to identify weak areas.
What are sectional mock tests?
Taking mock exams before one takes a dive at the main exam is quite helpful. At the minimum, it gives you familiarity with exam- style questions and evaluation. At SoV, we provide mock test packages that cover 3 topics. For instance, our Series 3 package consists of Macroeconomics, Overview of Valuation and Valuation Application (Equity) areas. Each package has 3 individual mock exams of 15 questions each - in total, a package contains 45 questions. Furthermore, our series are categorized as Beginner, Intermediate and Advanced – each indicating the difficulty level of the questions.
Our sectional mock tests are not only a testing tool for the student but when used in the right manner, also act as a great learning resource. The Beginner package, for instance, tests the fundamental knowledge of the candidate in the topics.
Here is a sample question from our Series 3 Beginners. The question belongs to Macroeconomics and tests your fundamental knowledge of the national output equation.
GDP = _______ + Government (G) + Investment (I) + Net Exports (X)
a. Personal Taxes
c. Public Spending
d. Capital Expenditure
You may have probably guessed it right; the answer is b. Consumption.
Contrast this with a Series 3 Advanced question from Macroeconomics below.
The least likely cause of a decrease in aggregate demand is: Choices:
a. higher taxes
b. a weak domestic currency
c. a fall in capacity utilization
d. increase in repo rate.
You probably had to think a bit, right? The correct answer is b. a weak domestic currency. This, typically, is the difference between beginner and advanced series. While beginner questions are obvious ones (either you know or don’t, depending on if you have studied them), advanced series requires a bit of mental application.
Adopting mock exams in your preparation plan
My advice to students is to read the core course materials covering the syllabus at least once. As a next step, you should take one of the Beginner series of your choice. Typically, you should score well in order to proceed to a higher difficulty level. If you score poorly, then revisit the fundamentals and smoothen those rough patches.
Once you have understood the basics well enough and learned from the mistakes by attempting the Beginner series mock exams, it is time for you to level up to our Intermediate series. Our Intermediate series is harder than the Beginner series and may require a solid foundational knowledge coupled with a deeper understanding in select areas. The Advanced series is similar to Intermediate in terms of difficulty, except, that you might find a few exceptionally difficult problems and some outliers.
A high degree of success
If you prepare according to the above-outlined study strategy, there is no reason why you wouldn’t score above 60% in the main exams. At SoV, the level of preparation is geared towards a standard higher than required. However, one word of caution. Don’t take our mock exams if you have never read or prepared from study materials (from any source).
In my regular interaction with candidates, I see several who are keen to take mock exams without any prior preparation. I want to reiterate – please don’t take SoV’s sectional mock tests if your plan is just to practice some questions, recognize some patterns and believe you have some short-cut secret to pass the examination. Adopt our mock exams only as a part of your overall exam preparation. Use our mock exam as means to fine-tune your understanding of the subject. Aim for deeper understanding. Don’t expect mock questions to make a lucky, verbatim appearance in the exam. Solving a thousand mock questions won’t help, unless you have also made effort to identify weak areas, read and re-read the study materials and gained a thorough knowledge of the topic.
Why taking mock tests are important?
I have probably given you more reasons why you shouldn’t be taking mock tests. Now I will explain why taking mock exams are critical in the case of the IBBI Valuation Exam. As you might have heard, the pass percentage in the exam is low – anecdotal evidence suggests it's in the range of 10-15%. We don’t know the split between first-time takers and repeat takers. But, again, anecdotally, we hear of several candidates who have passed in their fifth or sixth and occasionally in their ninth attempt. These instances are definitely scary and disheartening for new candidates. But the more important question is this: why are Chartered Accountants, Company Secretaries and Cost Accountants who have crossed more difficult barriers finding it difficult to pass an objective test?
Here are two reasons;
No formal preparation
Most of the candidates who appear for the IBBI Valuation exam don’t prepare for it separately. They hope to pass the exam based on their credentials and/or practical knowledge. Several of these candidates must have attained their academic qualification(s) several years ago, and in some cases a few decades ago. Yet, they don’t consider it worthy to sit down and prepare for this examination like a regular student would do. Without dedicated preparation, passing the IBBI valuation exam is near impossible.
The hardworking type but missing by a whisker
This is the second category of students. They prepare and work hard for the exam. Yet, somehow, each time, they miss the passing score by a mere 1-3% difference; that is, they land scores in the range of 57-59%. Such a score is certainly disheartening. The issue here is that the candidate is weak (inadequately prepared) in at least 2 major areas in the syllabus, one of them being Case Studies in Valuation. You can afford to (probably) prepare ‘light’ in one major topic among ten topics. But scoring poorly in two major topics brings your score very close to below 60. Case Study preparation is serious work. As I have written earlier as well, Case Study mastery can be achieved only with a thorough foundational knowledge of valuation topics. As per the IBBI Syllabus, these are Overview of Valuation, Valuation Approaches and Valuation Applications.
A word on our course materials and mock tests
At SoV, we have separate courses for Overview of Valuation, Valuation Approaches and Valuation Application. These three topics carry 42%. These topics are foundational to Case Study. The weightage of the Case Study section in the exam is 20%. The Case Study course has 25 solved questions to aid your exam preparation. Please check it out!
Valuation Application is a vast area dealing in three asset classes broadly. These are Equities, Fixed Income and Derivatives. Combining the three topics and presenting them as one course would be a humungous task both for me as a trainer and for the student as a learner. Therefore, I have split the topic into three separate courses, namely, Valuation Application – Part 1 (Equity), Valuation Application – Part 2 (Fixed Income) and finally, Valuation Application – Part 3 (Derivatives). These individual courses are lengthy and therefore requires attentive study by the students. For instance, the Equity course lessons run over 92 pages (in a standard Word document)! That covers the IBBI Syllabus completely and thoroughly. Not to mention 3 mock exams at the end of the course of 15 questions each, totalling 45 questions.
As stated earlier, the Valuation mock test packages are also categorized as Beginner, Intermediate and Advanced. These levels are necessary to gradually improve your knowledge and skills in the core area of valuation. As stated above, the Beginner series can be attempted after one or two readings of the basic materials. These are simple questions of fact and test your basic understanding of the subject.
For instance, here is a question from our Series 5 Beginner from the topic Overview of Valuation.
Under IFRS, _____ is defined as “the price that would be received for an asset or paid to transfer a liability in a current transaction
between marketplace participants in the reference market for the asset or liability.”
a. Fair Market Value
b. Fair Value
c. Arm’s Length Valuation
d. Distressed Value
You probably guessed it right. The correct answer is b. Fair Value. (Don’t always expect choice ‘b’ to be the correct answer each time 😊). The precise meaning of the terms Fair Value, Fair Market Value and their distinction are crucial in building your foundations in Valuation.
Now, let’s take a question from our Series 5 Advanced. Here is a question from the topic Valuation Application (Equity).
The risk factor summation approach/method is a valuation technique for which of the following type of entity?
This question isn’t particularly hard. But it comes from an area which students usually don’t pay attention to. The correct answer is a. Startup. (In the prescribed syllabus, Startup Valuation is covered under a heading called Situation Specific Valuation)
What is a good score in the mock tests?
In mock tests and quizzes, we have set the same passing score as the minimum score required to pass the main exam; which is 60%. However, since generally, our questions are harder than exam questions, we have removed negative marking. All questions carry 1 mark. However, a score above 70% in our Intermediate and Advanced Series means you stand a very good chance of acing the main exams.
How much preparation is required?
Good preparation involves reading all course materials (SoV or any RVO material) and taking either full-length mock exams or sectional mock exams. Irrespective of academic background, I would recommend a minimum of 3 months (excluding the mandatory 50-hour course) at an average of 4-5 hours per week.
Several topics in valuation are not covered in-depth in either CA, CS or CMA materials. For instance, bond valuation is poorly covered in these professional courses. Similarly, Overview of Valuation which deals with different definitions of valuation, though have been addressed (in CA, CS, CMA), but is not consolidated and presented with a unique view as it is in the IBBI syllabus.
Candidates who passed professional courses prior to the year 2003, may not even have studied investment or valuation from a financial market's perspective. For those candidates, concepts such as CAPM, Beta, Duration or even Yield are alien topics. How do those candidates expect to pass the valuation exam that has at least 50% of the syllabus dedicated to these areas? This is the reason I like to reiterate that merely taking some randomly shared mock exams will not help. You need to get some books and study these areas. Then test yourself adequately. Therefore, the preparation time can extend from 3 months to 6 months depending on how recently you have attained professional qualification.
A word on the study materials offered by SoV. Here is an extract of our course Valuation Application Part 2 – Fixed Income
Topic: bond duration
Duration estimates the change in the price of a bond for a given change in interest rates.
When the price-change is estimated from the change in the given bond’s yield to maturity, such a measure is called yield duration.
When the price-change of the bond is estimated based on the changes in the benchmark yield curve (the given bond is compared to its benchmark such as the sector average or g-sec curve), such a measure is called curve duration.
In SoV’s study material, the Fixed Income topic is covered over 43 pages of contents (theory and solved questions). Separately, there are 3 quizzes, with each containing 15 questions. That’s 45 questions in Fixed Income itself! You must supplement these with the sectional mock tests that we have discussed in great detail above.
If you are serious about passing the IBBI valuation exam and succeeding in your professional career as a valuer, you must have a proper plan from now. It can’t be haphazard and leaving it to luck, your current qualifications or your current professional experience. As far as the exam is concerned, you are a student and you must admit to yourself what you clearly know and don’t know. The quicker such a reconciliation happens, the better for you.
You must assimilate study resources, have a study plan, take mock tests and be thoroughly prepared ahead of the exam.
Join a study group if possible. Share and discuss insights. Don’t just swap mock exam resources as is often the case; take questions, discuss and deliberate upon it. If you are from a CA background, you probably do a lot of debating around questions of law, taxation, accounting etc. You must develop a similar questioning and enquiring attitude when it comes to the Valuation subject. If you think Valuation is just some esoteric theorems and calculations, sorry, you haven’t understood the A, B, C of valuation. It’s time to unlearn and learn few things about the subject.
Re-takers, don’t despair!
A word of encouragement for those who have appeared for the exam and failed. It really doesn’t matter what your past exam success has been. What matters is your plan for the future. I have trained a candidate who had 6 failed attempts and passed in his very first attempt after enrolling with SoV. The biggest mistake candidates make is not taking the Valuation exam in all the seriousness that it deserves. Aided by low examination fees, it has become habitual for candidates to book multiple seats (on different dates) in the very first attempt! Imagine, would you do this if the exam fees were 20x of what it is today? What would you do differently then?
With the right preparation strategies, your chances of passing the examination are very high. The low passing percentages are a reflection of the lack of seriousness in applying proper study strategies and the lack of good study materials. Though IBBI doesn’t offer study materials for preparation, several RVOs do (the IBBI provides one study material for free, but in my opinion, it is insufficient). In our earlier blog Topic-wise strategy to ace the IBBI valuation exam, I have provided a topic-wise list of study materials.
Most of the suggested study materials are available on the internet for free. Plus, there are plenty more websites to learn from - a simple google search does the trick usually. So, the lack of study materials can’t be a real complaint.
What remains are study strategies. Start with reading the official IBBI syllabus. Your planning starts only when you know what’s being tested. Download materials (free or if you could afford, paid materials), appear for mock tests, go back to the study materials to identify and improve upon weaknesses and re- take mocks. Iterate this process. With these methods and strategies, you have a very good chance of success in the examination.
Best wishes from SoV!