Preview Questions Financial Analyst | Role Specific Skill

Question 1: What economic indicator would you use to measure the inflation-adjusted return on a bank's loan portfolio?

Which action should you take?

Choose only one option

Consumer price index (CPI)

Real interest rate

Interest rate spread

Nominal interest rate

Question 2: How does the LIBOR transition affect economic forecasting in BFSI?

Which action should you take?

Choose only one option

Reduces market transparency

Disrupts derivative pricing

Alters benchmark interest rate models

Reduces financial system risk

Question 3: What method should be used to calculate the Weighted Average Cost of Capital (WACC) for a bank?

Which action should you take?

Choose only one option

Calculating WACC based only on equity costs without considering debt

Using a fixed rate for WACC over the life of the financial model

Using historical financing costs without adjusting for market conditions

Incorporating the cost of debt and equity, with weights based on market value of debt and equity

Question 4: What is the correct interpretation of a high leverage ratio in a bank's financial report?

Which action should you take?

Choose only one option

It suggests the bank has excess liquidity

It indicates higher risk and increased potential for financial distress

It shows a strong capital base with low potential for risk

It reflects the bank's high profitability

Question 5: How can you improve the accuracy of a bank's budgeting process during economic uncertainty?

Which action should you take?

Choose only one option

By relying solely on historical trends without considering new data

By reducing the forecast horizon to one year and limiting assumptions

By conducting regular reforecasting based on actual performance and new data

By making forecasts based on a single best-case scenario

Question 6: How should you calculate the terminal value in a DCF model for a financial institution?

Which action should you take?

Choose only one option

Assuming no growth and setting the terminal value to zero

Using a constant multiple of the last year's EBITDA

Using the exit multiple method based on industry averages

Using the perpetuity growth method, assuming stable long-term growth rates