London Stock Exchange Group Analyst Interview Questions and Answers

Investment banking involves providing financial services to corporations, governments, and other institutions.

• Helping companies raise capital through issuing stocks and bonds

• Advising on mergers and acquisitions

• Providing strategic financial advice to clients

• Assisting with IPOs (Initial Public Offerings)

• Trading securities for clients

Preference shares have fixed dividend rates and priority over equity shares in terms of dividends and assets during liquidation.

• Preference shares have a fixed dividend rate, while equity shares do not guarantee dividends.

• Preference shareholders have priority over equity shareholders in terms of receiving dividends and assets during liquidation.

• Preference shares are less risky compared to equity shares.

• Preference shares...read more

Trial balance is a list of all general ledger accounts with their balances, while balance sheet is a financial statement showing assets, liabilities, and equity at a specific point in time.

• Trial balance is an internal document used to ensure the total debits equal total credits before preparing financial statements.

• Balance sheet is a financial statement that shows a company's financial position at a specific point in t...read more

Derivatives are financial instruments whose value is derived from an underlying asset or group of assets.

• Types of derivatives include futures, options, swaps, and forwards.

• Derivatives can be used for hedging, speculation, or arbitrage.

• Examples of derivatives include stock options, commodity futures, and interest rate swaps.

Future and forward derivatives are similar in nature but differ in terms of standardization, trading location, and counterparty risk.

• Futures contracts are standardized and traded on exchanges, while forward contracts are customized and traded over-the-counter.

• Futures contracts have daily settlement and margin requirements, while forward contracts settle at maturity.

• Futures contracts have lower counterparty risk due to ...read more

A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets.

• Hedge funds are typically only available to accredited investors due to their complex and risky nature.

• They often use leverage and derivatives to amplify returns.

• Hedge funds charge both a management fee and a performance fee based on the fund's profits.

• Examples of hedge funds i...read more

Cash and cash equivalents are highly liquid assets that can be easily converted into cash, such as bank accounts and short-term investments.

• Cash in hand

• Bank accounts

• Short-term investments like money market funds

• Petty cash

• Where to record: Typically recorded under current assets on the balance sheet

Dividend is a distribution of a portion of a company's earnings to its shareholders, typically in the form of cash or additional shares.

• Dividends are recorded in the income statement as a deduction from the company's net income.

• They are also recorded in the statement of changes in equity.

• In the trial balance, dividends are typically recorded as a reduction in the retained earnings account.

• Dividends can be paid out in t...read more

The dividend is typically received by the shareholders of a company.

• Dividends are payments made by a company to its shareholders as a distribution of profits.

• Shareholders receive dividends in proportion to the number of shares they own.

• Dividends can be paid in the form of cash, stock, or property.

• Dividend payments are usually declared by the company's board of directors.

Capital refers to the financial assets or resources owned by a company, and it is recorded in the balance sheet under the equity section.

• Capital represents the funds contributed by the owners or shareholders of a company.

• It can include common stock, preferred stock, retained earnings, and additional paid-in capital.

• Capital is recorded in the balance sheet under the equity section, which shows the company's total assets...read more