Preview Questions Financial Analyst | Role Specific Skill

Question 1: In projecting future private equity returns within a financial conglomerate's portfolio, which method best captures the illiquidity, long investment horizons, and macroeconomic regime shifts affecting these investments?

Which action should you take?

Choose only one option

Multi-period stochastic modeling with regime-switching, macroeconomic scenario integration, and illiquidity premium adjustments

Linear regression on historical PE returns vs. public market indices

Simple correlation-based scaling of public equity returns

Unadjusted ARIMA on private equity NAVs

Question 2: Which forecasting method would you use to predict customer demand for financial products in a highly volatile market?

Which action should you take?

Choose only one option

ARIMA model

Exponential smoothing

Dynamic time warping

Moving averages

Question 3: What is the role of strategic asset allocation in investment planning?

Which action should you take?

Choose only one option

To identify underperforming assets

To track portfolio performance

To set long-term portfolio structure

To adjust to short-term market conditions

Question 4: How do you incorporate seasonality into financial forecasts for a bank or insurance company?

Which action should you take?

Choose only one option

I ignore seasonality and assume constant monthly/quarterly performance

I adjust forecasts only for the holiday season, ignoring other seasonal trends

I apply a flat annual growth rate without adjusting for seasonal variations

I use historical seasonal data to adjust revenue and expense projections for different periods of the year

Question 5: When preparing financial reports for a financial institution, which statement would you use to assess liquidity risk?

Which action should you take?

Choose only one option

Statement of cash flows

Income statement

Statement of changes in equity

Balance sheet

Question 6: How would you account for liquidity risk in a bank's financial statements?

Which action should you take?

Choose only one option

Use liquidity coverage ratio (LCR)

Apply sensitivity analysis to interest rate risk

Adjust the balance sheet for asset-liability matching

Use earnings-at-risk (EaR) model