CareEdge Ratings Credit Rating Analyst Interview Questions and Answers

Q1. Options payoff for Long call and short put
Ans. 
Long call and short put have similar payoff structures.
• Both strategies have unlimited profit potential and limited loss potential.

• Long call profits when the underlying asset price rises above the strike price.

• Short put profits when the underlying asset price stays above the strike price.

• Both strategies have a breakeven point at the strike price plus the premium paid/received.

• Long call and short put can be used separate
Answered by AI
Add your answer
Q2. Interest rate risk for Zero coupon bond vs coupon bond
Ans. 
Zero coupon bonds have higher interest rate risk than coupon bonds.
• Zero coupon bonds have no coupon payments, so their prices are more sensitive to changes in interest rates.

• Coupon bonds have regular coupon payments, which can offset some of the price changes due to interest rate fluctuations.

• As interest rates rise, the price of zero coupon bonds falls more than the price of coupon bonds.

• As interest rates fall, the pri...read more
Answered by AI
Add your answer

Q1. Valuation of credit default swap
Ans. 
Valuation of credit default swap
• Valuation of credit default swap involves estimating the probability of default and the expected loss in case of default

• The valuation also takes into account the credit spread and the recovery rate

• Various models such as structural models, reduced-form models, and Monte Carlo simulations are used for valuation

• Market data such as credit spreads, interest rates, and volatility are also used
Answered by AI
Add your answer
Q2. Value at risk methods and uses
Ans. 
Value at risk (VaR) is a statistical measure used to quantify the level of financial risk within a portfolio.
• VaR estimates the maximum potential loss that an investment portfolio may suffer within a given time frame and confidence level.

• It is used by financial institutions to manage risk and set capital requirements.

• VaR can be calculated using various methods such as historical simulation, Monte Carlo simulation, and p...read more
Answered by AI
Add your answer

Assume you are consultant to an asset owner client. How will you consult the client for valuing the portfolio and risk.

It was a test which I have to complete in one hour

Q1. They asked me some technical questions related to my CV
Add your answer
Q2. They told about my responsibility
Add your answer

BFS/DFS question. The main catch is to identify its a graph traversal question. It would be in word problem format

Q1. System design for zomato question. Just be honest I was asked if my last internship was paid or unpaid. (I told truth that it was unpaid). Questions on your resume
Add your answer

Q1. General discussion about work experience
Add your answer

Q1. Questions about technology they are hiring for
Add your answer

Q1. Question about Greeks, Valuation and fundamental analysis of Banks
Add your answer

Q1. What is your strength and weakness?
Add your answer
Q2. Tell you about yourself?
Add your answer

Q1. What is current ratio
Ans. 
Current ratio is a financial ratio that measures a company's ability to pay its short-term obligations.
• Current ratio is calculated by dividing current assets by current liabilities.

• It is used to evaluate a company's liquidity and short-term financial health.

• A ratio of 1 or higher is generally considered good, indicating that the company can meet its short-term obligations.

• However, a very high current ratio may indicate...read more
Answered by AI
Add your answer
Q2. Ratio of current assets and liabilities
Ans. 
The ratio of current assets and liabilities is a measure of a company's ability to pay off its short-term debts.
• Current ratio = current assets / current liabilities

• A ratio of 2:1 or higher is considered healthy

• Low ratio may indicate liquidity issues

• Example: If a company has $100,000 in current assets and $50,000 in current liabilities, its current ratio would be 2:1
Answered by AI
Add your answer

3 rounds of gd. And then you are through . Topic was given by hr

Case study was related to account