Interview Questions and Answers

Option trade is a contract between two parties giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

• Option trade is a type of derivative contract

• It involves buying or selling the right to buy or sell an underlying asset at a predetermined price

• The buyer of an option pays a premium to the seller for the right to exercise the option

• Option trades can be used for hedging or speculation

• In cash and...read more

Call buyers expect the price of the underlying asset to rise, while call sellers expect it to fall.

• Call buyers have the right to buy the underlying asset at a predetermined price, so they expect the price to rise above that level.

• Call sellers have the obligation to sell the underlying asset at a predetermined price, so they expect the price to stay below that level.

• Call buyers' losses are limited to the premium they paid for the option, while call sellers' losses are potentia...read more

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

• Corporate actions include dividends, stock splits, mergers, acquisitions, rights issues, and spin-offs.

• These actions can impact the value of securities, alter ownership structure, or change the financial structure of the company.

• Investors need to stay informed about corporate actions to make informed decisions about their investments.

Net asset value (NAV) is the value of a fund's assets minus its liabilities, divided by the number of shares outstanding.

• NAV is calculated by subtracting the fund's liabilities from its assets.

• The result is then divided by the number of shares outstanding to determine the NAV per share.

• NAV is used to determine the price at which shares of a mutual fund are bought or sold.

• It is an important metric for investors to assess the value of their investments.

Management fees are charges paid by investors to a professional investment manager for managing their assets.

• Management fees are a percentage of the total assets under management (AUM) and are typically charged annually.

• These fees cover the costs of research, analysis, and decision-making involved in managing the investments.

• For example, a mutual fund may charge a management fee of 1% per year, which means investors pay $10 for every $1,000 invested.

• Management fees can vary d...read more

Different types of distributions refer to the various ways data can be spread out in a dataset.

• Normal distribution: bell-shaped curve with mean and standard deviation

• Uniform distribution: all outcomes are equally likely

• Binomial distribution: discrete distribution with fixed number of trials and probability of success

• Poisson distribution: used for count data with rare events

• Exponential distribution: used for continuous data with constant rate of decay