Vm Restaurant Consultants Interview Questions and Answers

The duration of a bond is the time until it reaches maturity. It is used to determine the bond's sensitivity to interest rate changes.

• Duration is measured in years and can range from a few months to several decades

• Longer duration bonds are more sensitive to interest rate changes than shorter duration bonds

• Duration is an important factor to consider when investing in bonds

• For example, a 10-year bond with a duration of 8 years will decrease in value by approximately 8% if inter...read more

Equity Swap, Black Scholes, Option Pricing, CAPM are all financial concepts related to risk management and investment analysis.

• Equity Swap is a financial contract between two parties to exchange cash flows based on the performance of an underlying asset.

• Black Scholes is a mathematical model used to calculate the theoretical value of European-style options.

• Option Pricing is the process of determining the fair value of an option contract.

• Types of risks include market risk, cred...read more

Bond prices and interest rates have an inverse relationship.

• When interest rates rise, bond prices fall.

• When interest rates fall, bond prices rise.

• This is because existing bonds with lower interest rates become less attractive compared to new bonds with higher rates.

• Investors demand a discount on existing bonds to match the higher rates available on new bonds.

Bonus issue is free shares given to existing shareholders while stock split is dividing existing shares into multiple shares.

• Bonus issue increases the number of shares outstanding while stock split does not

• Bonus issue is usually done to reward shareholders while stock split is done to make shares more affordable

• Bonus issue does not affect the market capitalization while stock split does

• Example of bonus issue: Infosys gave 1:1 bonus issue in 2018

• Example of stock split: Apple d...read more

Yield on a bond can be calculated by dividing the annual interest payment by the current market price of the bond.

• Yield on a bond is calculated by dividing the annual interest payment by the current market price of the bond.

• The formula for calculating yield on a bond is: Yield = (Annual Interest Payment / Current Market Price) * 100%

• For example, if a bond pays $50 in annual interest and is currently priced at $1,000, the yield would be (50 / 1000) * 100% = 5%

Options are financial instruments that give the holder the right, but not the obligation, to buy or sell an asset at a specified price before or on a specified date.

• Options can be call options, which give the holder the right to buy an asset at a specified price, or put options, which give the holder the right to sell an asset at a specified price.

• The specified price at which the asset can be bought or sold is known as the strike price.

• Options have an expiration date, after w...read more

Stock buyback involves a company repurchasing its own shares, while a stock split involves dividing existing shares into multiple shares.

• Stock buyback reduces the number of outstanding shares, increasing the ownership stake of existing shareholders.

• Stock split increases the number of outstanding shares, making the stock more affordable for retail investors.

• Stock buybacks are often seen as a signal of confidence by the company in its own stock, while stock splits are usually d...read more

Options strategies involve buying or selling options contracts to achieve a specific investment goal.

• Some common options strategies include covered calls, protective puts, straddles, and strangles.

• Each options strategy has its own risk and reward profile, and is used based on market conditions and investor objectives.

• Options strategies can be used for speculation, hedging, income generation, or risk management.

• Understanding the basics of options trading and strategies is esse...read more