Preview Questions Financial Analyst | Role Specific Skill

Question 1: What method would an analyst use to forecast the impact of regulatory changes on a bank's capital adequacy ratio?

Which action should you take?

Choose only one option

Assume no change in the capital adequacy ratio under new regulations

Model the potential increase in risk-weighted assets under new regulations

Use market forecasts for interest rates and model them into the ratio

Apply historical trends and adjust for future market conditions

Question 2: For a highly volatile financial market, what type of budget would you recommend to provide flexibility in managing financial operations?

Which action should you take?

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Flexible budget

Rolling forecast

Fixed budget

Incremental budget

Question 3: In the valuation of hybrid securities (e.g., contingent convertibles) issued by a bank, which aspect significantly complicates the modeling of expected cash flows and payoff profiles?

Which action should you take?

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The fixed coupon rate

The issuer's credit rating migration under stress

The embedded trigger events tied to regulatory capital thresholds

The linear conversion ratio

Question 4: What is the main purpose of performing a sensitivity analysis on an investment portfolio in BFSI financial analysis?

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To determine the portfolio's historical performance

To assess how changes in key assumptions affect the portfolio's value

To identify the most profitable assets in the portfolio

To optimize the asset allocation strategy

Question 5: What is the primary limitation of top-down forecasting in BFSI institutions?

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Relies heavily on macroeconomic indicators

Lack of detail

Requires more resources

Excludes qualitative factors

Question 6: In integrating climate transition risk into a bank's credit risk assessment, which modeling approach most effectively captures the impact of carbon pricing, regulatory shifts, and technology changes on borrower default probabilities?

Which action should you take?

Choose only one option

Scenario-based credit risk modeling linking macroeconomic pathways, carbon costs, sector adjustments, and borrower-level PD shifts

Linear regression of PD on historical energy prices

Static PD models based solely on historical default correlations

Simple application of industry-average transition risk multipliers