Mansukh Securities & Finance Interview Questions, Process, and Tips

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

• Derivatives are used for hedging or speculation.

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

• They derive their value from the performance of an underlying asset or security.

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

• They can be used to manage risk or to make a profit.

• Derivatives played a role in the 2008 financia...read more

Derivatives are financial instruments whose value is derived from an underlying asset or benchmark.

• Derivatives can be classified into four main types: futures contracts, options contracts, swaps, and forward contracts.

• Futures contracts are agreements to buy or sell an asset at a predetermined price and date in the future.

• Options contracts give the holder the right, but not the obligation, to buy or sell an asset at a s...read more

Greek options are measures of sensitivity of option prices to various factors.

• Greek options include delta, gamma, theta, vega, and rho.

• Delta measures the change in option price with respect to the underlying asset price.

• Gamma measures the change in delta with respect to the underlying asset price.

• Theta measures the change in option price with respect to time.

• Vega measures the change in option price with respect to vola...read more

Companies buy back their own shares to return capital to shareholders and signal confidence in the company's future.

• Buybacks can increase the value of remaining shares by reducing the number of outstanding shares.

• It allows companies to utilize excess cash and improve financial ratios.

• Buybacks can be used to offset dilution caused by employee stock options or convertible securities.

• Companies may buy back shares to preve...read more

Primary market is where new securities are issued and sold for the first time, while secondary market is where existing securities are traded among investors.

• Primary market involves the issuance of new securities by companies or governments.

• In the primary market, securities are sold directly by the issuer to investors.

• Examples of primary market transactions include initial public offerings (IPOs) and bond issuances.

• Sec...read more

OTC refers to over-the-counter trading, while exchange traded refers to trading on a formal exchange.

• OTC trading occurs directly between two parties without the involvement of an exchange.

• Exchange traded refers to trading on a formal exchange, where trades are standardized and regulated.

• OTC trades are typically less transparent and have higher counterparty risk compared to exchange traded trades.

• OTC derivatives are cus...read more