Preview Questions Financial Analyst | Role Specific Skill

Question 1: Which scenario analysis method is most appropriate for interest rate-sensitive BFSI institutions?

Which action should you take?

Choose only one option

Fixed variable stress tests

Historical analysis

Best-case and worst-case scenarios

Monte Carlo simulation

Question 2: Which valuation method is most appropriate for determining the intrinsic value of a company based on its expected future cash flows, commonly used in investment analysis within BFSI?

Which action should you take?

Choose only one option

Discounted Cash Flow (DCF) Analysis

Precedent Transactions Analysis

Dividend Discount Model (DDM)

Comparable Company Analysis

Question 3: How would you incorporate macroeconomic factors in designing an investment strategy for a bank?

Which action should you take?

Choose only one option

By considering only the capital adequacy ratio

By assessing the historical performance of the bank's loan book

By focusing exclusively on asset-liability mismatch

By analyzing interest rate trends, GDP growth, and inflation

Question 4: How would you incorporate the risk of asset default into a loan portfolio's risk assessment?

Which action should you take?

Choose only one option

Use credit scoring models to determine exposure

Apply discounted cash flow analysis

Use portfolio diversification strategies

Measure exposure through interest rate risk models

Question 5: In stress-testing a portfolio of mortgage-backed securities held by a bank, which factor most significantly impacts the prepayment modeling and thus the cash flow projections?

Which action should you take?

Choose only one option

The volatility of equity markets

The shape and level of the yield curve and its projected changes

Expected inflation rates over the holding period

Historical credit spreads on corporate bonds

Question 6: How do you incorporate macroeconomic indicators, such as GDP growth or interest rate changes, into your investment analysis?

Which action should you take?

Choose only one option

I perform sensitivity analysis on how macroeconomic factors affect the investment's cash flow and return projections

I focus only on GDP growth and ignore other economic factors

I exclude macroeconomic indicators and rely solely on company-specific data

I assume that macroeconomic conditions will remain stable and do not incorporate them