Arcesium Interview Questions, Process, and Tips

Market capitalisation is the total value of a company's outstanding shares.

• Market capitalisation is calculated by multiplying the current market price of a company's stock by the total number of outstanding shares.

• It is used to determine the size of a company and its relative importance in the market.

• Companies with higher market capitalisation are generally considered to be more stable and less risky investments.

• For ex...read more

A financial contract between two parties based on an underlying asset or security.

• Derivatives are used to hedge against risk or speculate on future market movements.

• Examples include options, futures, swaps, and forwards.

• Derivatives can be traded on exchanges or over-the-counter.

• They are complex financial instruments that require expertise to understand and use effectively.

Call and put options are financial contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified time period.

• Call option: gives the buyer the right to buy an underlying asset at a predetermined price within a specified time period.

• Put option: gives the buyer the right to sell an underlying asset at a predetermined price within a specified...read more

EV is the total value of a company, including debt and equity, while equity value is the value of a company's equity only.

• Enterprise value (EV) is the total value of a company, including debt and equity. It is calculated by adding the market value of equity, debt, minority interest, and preferred shares, and then subtracting cash and cash equivalents.

• Equity value is the value of a company's equity only. It is calculate...read more

Shares are units of ownership in a company. Different types of shares include common shares, preferred shares, and dual-class shares.

• Common shares give shareholders voting rights and a share in the company's profits.

• Preferred shares give shareholders priority in receiving dividends and assets in case of bankruptcy.

• Dual-class shares give certain shareholders more voting power than others.

• Other types of shares include re...read more

Yes, an individual can set up a mutual fund company.

• The individual needs to fulfill the eligibility criteria set by SEBI.

• They need to have a minimum net worth of Rs. 50 lakhs.

• They need to have a team of professionals with relevant experience.

• Examples of individuals who have set up mutual fund companies include Radhakishan Damani (D-Mart founder) and Rakesh Jhunjhunwala (investor).

A pivot table is a data summarization tool used in spreadsheet programs like Excel.

• It allows users to quickly summarize and analyze large amounts of data.

• Users can easily rearrange the table to view data from different perspectives.

• Pivot tables can perform calculations such as sums, averages, and counts.

• They are commonly used in financial analysis and business reporting.

• Example: A pivot table can be used to summarize s

IF function in Excel is used to test a condition and return one value if the condition is true and another value if the condition is false.

• IF function is a logical function in Excel

• It takes three arguments: logical_test, value_if_true, and value_if_false

• Logical_test is the condition that needs to be tested

• Value_if_true is the value that is returned if the condition is true

• Value_if_false is the value that is returned if...read more

Depreciation is the decrease in value of an asset over time, while amortization is the process of spreading out the cost of an intangible asset over its useful life.

• Depreciation is used for tangible assets like buildings, machinery, and vehicles.

• Amortization is used for intangible assets like patents, copyrights, and trademarks.

• Both are non-cash expenses that reduce the value of an asset on the balance sheet.

• Depreciati...read more

Preferential shares have priority over equity shares in terms of dividend payment and liquidation proceeds.

• Preferential shares have a fixed dividend rate, while equity shares do not.

• Preferential shareholders have priority over equity shareholders in receiving dividend payments.

• In case of liquidation, preferential shareholders have priority over equity shareholders in receiving proceeds.

• Preferential shares are less risk...read more

Alpha and Beta are measures of investment performance compared to a benchmark.

• Alpha measures the excess return of an investment compared to its benchmark.

• Beta measures the volatility of an investment compared to its benchmark.

• Alpha and Beta are commonly used in finance to evaluate the performance of investment portfolios.

• A positive alpha indicates that the investment outperformed its benchmark, while a negative alpha i...read more

Intrinsic value is the true value of an asset based on its fundamental characteristics.

• Intrinsic value is not influenced by market fluctuations or emotions.

• It is calculated by analyzing the asset's financial and operational data.

• For example, the intrinsic value of a stock can be calculated by analyzing its earnings, assets, and liabilities.

• Investors use intrinsic value to determine whether an asset is undervalued or ov...read more

IPO process involves several steps from selecting underwriters to listing on stock exchange.

• Selecting underwriters

• Preparing registration statement

• Roadshow and investor presentations

• Pricing the IPO

• Listing on stock exchange

• Post-IPO activities such as reporting and compliance

A conglomerate is a company that owns multiple subsidiaries operating in different industries.

• Conglomerates are formed through mergers and acquisitions.

• They have diversified business interests and operate in multiple sectors.

• Examples include Berkshire Hathaway, Tata Group, and Samsung.

• Conglomerates can provide economies of scale and risk diversification, but can also be difficult to manage.

• They may face challenges in i...read more

Valuation ratios are used to evaluate the financial health of a company by comparing its stock price to relevant financial metrics.

• Price-to-earnings ratio (P/E ratio)

• Price-to-sales ratio (P/S ratio)

• Price-to-book ratio (P/B ratio)

• Enterprise value-to-EBITDA ratio (EV/EBITDA ratio)

• Dividend yield ratio

CAPM stands for Capital Asset Pricing Model.

• CAPM is a financial model used to determine the expected return on an investment based on its risk.

• It takes into account the risk-free rate, market risk premium, and beta of the investment.

• The formula for CAPM is: expected return = risk-free rate + beta x (market risk premium).

• CAPM is widely used in finance and investment management.

• It helps investors make informed decisions ...read more

Ratio analysis is a tool used to evaluate a company's financial performance. There are different types of ratio analysis.

• Liquidity ratios

• Profitability ratios

• Solvency ratios

• Efficiency ratios

• Coverage ratios

• Examples: Current ratio, Gross profit margin, Debt-to-equity ratio, Inventory turnover ratio

Mergers and acquisitions refer to the consolidation of companies through various financial transactions.

• Mergers involve two companies joining together to form a new entity

• Acquisitions involve one company purchasing another company

• Mergers and acquisitions are often used as a growth strategy for companies

• Examples include Disney's acquisition of Marvel, and the merger of Exxon and Mobil

Three important statements in annual report are income statement, balance sheet, and cash flow statement.

• Income statement shows the company's revenue and expenses over a period of time.

• Balance sheet shows the company's assets, liabilities, and equity at a specific point in time.

• Cash flow statement shows the company's inflow and outflow of cash over a period of time.

• These statements provide important financial informati...read more

DCF stands for Discounted Cash Flow, a valuation method used to estimate the value of an investment based on its future cash flows.

• DCF takes into account the time value of money, meaning that a dollar received in the future is worth less than a dollar received today.

• It involves projecting future cash flows of an investment and discounting them back to their present value using a discount rate.

• The resulting present valu...read more

The obligation in options and futures lies with the seller or writer of the contract.

• In options, the seller has the obligation to sell or buy the underlying asset at the agreed price if the buyer decides to exercise the option.

• In futures, the seller has the obligation to deliver the underlying asset at the agreed price and date.

• The buyer of options and futures has the right, but not the obligation, to exercise the cont...read more

Investment banking is a type of financial service that helps companies and governments raise capital by underwriting and selling securities.

• Investment banks provide services such as mergers and acquisitions, securities trading, and asset management.

• Examples of investment banks include Goldman Sachs, JPMorgan Chase, and Morgan Stanley.

• Investment banking is a highly competitive and lucrative industry, with professionals ...read more

Wealth and asset management involves managing and growing an individual's or organization's financial assets.

• Wealth management focuses on managing high net worth individuals' assets and investments.

• Asset management involves managing a portfolio of assets, such as stocks, bonds, and real estate, to maximize returns.

• Both wealth and asset management involve developing investment strategies, monitoring performance, and mak...read more

IRR stands for Internal Rate of Return, a financial metric used to calculate the profitability of an investment.

• IRR is a discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero.

• It is used to compare the profitability of different investments.

• A higher IRR indicates a more profitable investment.

• IRR can be calculated using Excel or financial calculators.

• For example, if an in...read more

Qualitative analysis involves subjective evaluation of non-numerical data while quantitative analysis involves objective evaluation of numerical data.

• Qualitative analysis involves analyzing factors such as management quality, brand reputation, and industry trends.

• Quantitative analysis involves analyzing financial statements, ratios, and other numerical data.

• Both types of analysis are important in fundamental analysis a...read more

Acid test ratio measures a company's ability to pay off its current liabilities with quick assets. Ideal ratio is 1:1.

• Acid test ratio is also known as quick ratio.

• It excludes inventory from current assets as it may not be easily convertible to cash.

• An ideal acid test ratio is considered to be 1:1, which means the company has enough quick assets to pay off its current liabilities.

• A ratio below 1:1 indicates that the com...read more

Capital is money used to start or grow a business. Primary market is where new securities are issued. Secondary market is where existing securities are traded.

• Capital is the money used to start or grow a business.

• Primary market is where new securities are issued for the first time, such as initial public offerings (IPOs).

• Secondary market is where existing securities are traded, such as stocks and bonds.

• Investors buy se...read more

Nifty is a stock market index of National Stock Exchange (NSE) comprising of 50 actively traded companies.

• Nifty is short for National Stock Exchange Fifty

• It is a benchmark index for Indian equity market

• The companies listed in NSE and BSE are constantly changing

• As of 2021, there are 50 companies listed in Nifty and over 5000 companies listed in BSE

• Some of the companies listed in Nifty are Reliance Industries, HDFC Bank,

Topline refers to revenue or sales, while bottom line refers to net income or profit.

• Topline is the first line of the income statement and represents the total revenue or sales generated by a company.

• Bottom line is the last line of the income statement and represents the net income or profit after all expenses have been deducted.

• Topline and bottom line are important metrics for evaluating a company's financial performa...read more

NAV stands for Net Asset Value and is the value of a fund's assets minus its liabilities.

• NAV is used to determine the price of a mutual fund or exchange-traded fund (ETF).

• It is calculated by dividing the total value of the fund's assets by the number of outstanding shares.

• NAV is updated at the end of each trading day.

• Investors can use NAV to track the performance of their investments and to buy or sell shares of the fu...read more

Corporate actions refer to events initiated by a company that can affect its stock price and shareholders.

• Corporate actions can be voluntary or mandatory

• Examples of corporate actions include stock splits, dividends, mergers and acquisitions, and spin-offs

• Corporate actions can have a significant impact on a company's stock price and shareholder value

Bonds are debt securities issued by companies or governments to raise capital. Types include corporate, municipal, and government bonds.

• Bonds are a form of debt financing where the issuer borrows money from investors and pays them interest over a fixed period of time.

• Corporate bonds are issued by companies to raise capital for business operations or expansion.

• Municipal bonds are issued by state and local governments to...read more

Money market refers to a segment of the financial market where short-term borrowing and lending of funds take place.

• Money market deals with short-term financial instruments such as treasury bills, commercial papers, certificates of deposit, etc.

• It is a low-risk market with high liquidity and is used by governments, corporations, and financial institutions to manage their short-term cash needs.

• Money market funds are a p...read more

Cash expenses are payments made in cash, while non-cash expenses are expenses that do not involve cash payments.

• Cash expenses are payments made in physical currency

• Non-cash expenses are expenses that do not involve physical currency

• Examples of cash expenses include rent paid in cash, cash purchases of supplies, etc.

• Examples of non-cash expenses include depreciation, amortization, etc.

Accounting concepts and conventions are the basic principles and guidelines followed in the preparation of financial statements.

• Accounting concepts are the fundamental ideas and assumptions that underlie the preparation of financial statements.

• Accounting conventions are the practices and procedures that are generally accepted in the accounting profession.

• Examples of accounting concepts include the going concern concept...read more

Revenue is the income generated by a company through its business activities.

• Revenue is the total amount of money earned by a company from the sale of goods or services.

• It can be forecasted by analyzing past sales data, market trends, and economic conditions.

• Revenue forecasting is important for budgeting, resource allocation, and decision-making.

• Factors that can impact revenue include competition, pricing, customer dem...read more

Working capital is the amount of money a company has available for its day-to-day operations.

• Working capital is calculated by subtracting current liabilities from current assets.

• It is important for a company to have enough working capital to pay for expenses such as salaries, rent, and inventory.

• A positive working capital indicates that a company has enough assets to cover its short-term liabilities.

• Examples of current...read more

Excel is a spreadsheet software developed by Microsoft for organizing, analyzing, and manipulating data.

• Excel allows users to create tables, charts, and graphs to visualize data

• It has built-in functions for calculations and data analysis

• Excel can be used for budgeting, financial analysis, and project management

• It supports macros and VBA programming for automation

• Excel files can be shared and collaborated on through clo

Covid has severely impacted the global economy and education sector.

• The pandemic has caused a significant decline in economic growth and increased unemployment rates worldwide.

• Many businesses have shut down, and the stock market has been highly volatile.

• The education sector has been forced to shift to online learning, causing disruptions in the learning process and affecting students' mental health.

• Many students have b...read more

Our company is a financial operations firm.

• We specialize in financial operations management.

• We provide services such as accounting, bookkeeping, and financial analysis.

• Our clients range from small businesses to large corporations.

• We have a team of experienced financial professionals.

• We use the latest technology to ensure accuracy and efficiency.

I possess strong analytical, problem-solving and communication skills with a keen eye for detail.

• Proficient in financial analysis and reporting

• Ability to identify and mitigate financial risks

• Excellent communication and interpersonal skills

• Strong attention to detail and accuracy

• Proficient in using financial software and tools

• Ability to work under pressure and meet deadlines