Preview Questions Financial Analyst | Role Specific Skill

Question 1: Which of the following techniques can be used to forecast non-interest income for a financial institution?

Which action should you take?

Choose only one option

Ignoring past performance and focusing on fixed income models

Simple trend analysis based on market cycles

Moving averages based on past non-interest income growth

Regression analysis based on historical fee structures

Question 2: When incorporating risk factors into a forecast, which technique is most useful for quantifying the uncertainty of future cash flows?

Which action should you take?

Choose only one option

Sensitivity analysis

Monte Carlo simulation

Regression analysis

Scenario analysis

Question 3: How would you assess whether a leveraged buyout (LBO) investment strategy is appropriate for a financial institution's portfolio?

Which action should you take?

Choose only one option

By analyzing the strategic fit of the target company with the bank's business model

By focusing on the liquidity of the underlying assets

By calculating the potential returns based on the exit multiple and debt structure

By evaluating the market risk premium for the target company

Question 4: What is the primary advantage of using a rolling forecast in financial budgeting within BFSI?

Which action should you take?

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It provides a static view of financial performance

It eliminates the need for periodic budget reviews

It simplifies the budgeting process by fixing the forecast period

It allows continuous updating and adjustment of forecasts based on the latest data

Question 5: In building a discounted cash flow (DCF) model for a BFSI institution, which of the following should be given the highest weight when projecting future cash flows?

Which action should you take?

Choose only one option

Historical growth rates

Analyst estimates

Economic forecasts

The institution's capital expenditures

Question 6: When creating a forecast for a bank's loan portfolio, how do you handle economic downturns or recessions?

Which action should you take?

Choose only one option

I ignore recessions and assume constant growth in loan portfolios

I apply stress testing and scenario analysis to assess how downturns would impact loan performance

I adjust only for short-term economic factors and ignore long-term trends

I forecast based on historical trends and assume no changes in economic conditions