Module 00 · Exercises

Orientation exercises are short and mostly conceptual; their purpose is to make you articulate the frame before the techniques arrive. Write answers down — the solutions include model answers and a rubric.

Warm-up

E00.01 Define, in one sentence each: price, intrinsic value, margin of safety, variant perception.

E00.02 Name the three questions a fundamental investor asks about any company (from 00.1) and give one example of a tool used to answer each.

E00.03 List four schools of fundamental investing and one investor associated with each.

E00.04 State three reasons mispricing can persist even when many smart investors are looking.

E00.05 What is the difference between "the stock went up" and "the decision was good"? (Preview of 11.6.)

Core

E00.06 A market-maker earns a small edge on thousands of trades a day with immediate feedback; a fundamental investor makes perhaps ten decisions a year with feedback over years. List three consequences of this difference for (a) position sizing, (b) how you know whether you are skilled, and (c) the role of written process.

E00.07 The Nifty 50 has returned roughly 12–13% a year in rupees over long periods (verify with a source). Explain why "I aim for 25% a year from stock picking" is a claim that needs base rates, and where you would find them.

E00.08 Survivorship bias: a book profiles ten stocks that rose 50-fold. What data would you need to decide whether the profiled approach has an edge, and why does the book not provide it?

E00.09 From 00.3's workflow map, place each of the following in the right step and name the module: reading a related-party note; computing ROIC; estimating what growth the price implies; deciding how much to buy; asking a dealer about channel inventory.

E00.10 Read the Kaveri preview in 00.3. Write down every number in the one-page thesis and, next to each, the module that will teach you to compute or source it.

E00.11 Explain why the course uses fictional running-example companies rather than real ones, and one limitation of that choice.

E00.12 Set up the toolkit: install the Python requirements, run python -m pytest tools/tests -q, run tools/examples/kaveri_dcf_and_reverse_dcf.py, and record the base-case value per share and the implied growth at ₹390 it prints.

Stretch

E00.13 Write a 300-word note on what a vol trader's mental toolkit (implied vs realised, convexity, carry, regime) transfers to fundamental investing, and what does not transfer. Be specific.

E00.14 Design your 20-week study calendar from 00.2, adjusted to your actual hours per week; mark the four mock dates and the capstone start.

E00.15 Pre-mortem the course: "It is 20 weeks later and I have not finished." Write the three most likely causes and one countermeasure each.

Real-world task

E00.16 Pick any Nifty 500 company you have never analysed. Without doing any analysis, write your current "three sentences" about its business (what it sells, to whom, why they buy). Save this note; you will rewrite it after Module 05 and compare.

E00.17 Open that company's latest annual report and, without reading it, list the sections you find in the table of contents. Mark which ones Module 03 will teach you to read.