10+ Morgan Stanley Senior Associate Interview Questions and Answers

Hedge funds are investment funds that pool capital from accredited individuals or institutional investors and use various strategies to generate high returns.

• Hedge funds typically have high minimum investment requirements and are only available to accredited investors.

• They often use leverage and derivatives to amplify returns.

• Hedge funds can invest in a wide range of assets, including stocks, bonds, commodities, and real estate.

• Common hedge fund strategies include long/short ...read more

Bonds are debt securities issued by companies or governments to raise capital. Different types include corporate bonds, municipal bonds, and treasury bonds.

• Bonds are essentially loans that investors give to companies or governments in exchange for periodic interest payments and the return of the bond's face value at maturity.

• Corporate bonds are issued by corporations to raise capital for various purposes, such as expansion or acquisitions.

• Municipal bonds are issued by state a...read more

Dirty price includes accrued interest while clean price does not.

• Dirty price includes accrued interest that the buyer must pay to the seller on top of the bond's market price.

• Clean price is the market price of the bond without the accrued interest added.

• The difference between the dirty price and the clean price is the accrued interest.

• For example, if a bond has a clean price of $1,000 and accrued interest of $20, the dirty price would be $1,020.

Corporate actions are events initiated by a public company that impact its shareholders and securities.

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

• Dividends are payments made to shareholders from a company's profits.

• Stock splits involve dividing existing shares into multiple shares to lower the price per share.

• Mergers and acquisitions occur when two companies combine or one company buys another.

• Rights issu...read more

Function to calculate x to the power of n

• Create a function that takes two parameters, x and n

• Use a loop to multiply x by itself n times

• Return the result

Comparator is used to define custom sorting logic, while Comparable is used to implement natural ordering. Sort list of employee objects by salary using Comparator.

• Create a Comparator implementation to compare employee objects based on salary attribute

• Use Collections.sort() method with the custom Comparator to sort the list of employee objects

Black-Scholes-Merton (BSM) model is a mathematical model used for pricing options.

• BSM model assumes constant risk-free rate, constant volatility, and lognormal distribution of stock prices.

• It assumes no dividends are paid during the option's life.

• The model assumes the option can only be exercised at expiration.

• The underlying stock follows a geometric Brownian motion.

• The model is used to calculate the theoretical price of European-style options.

• BSM formula: C = S0*N(d1) - X*e^...read more

Classes and methods for bookmyshow to manage booking and ticketing system.

• Create a class for Ticket with attributes like ticket ID, showtime, seat number, etc.

• Create a class for Show with attributes like movie name, theater, showtime, etc.

• Create a class for Booking with attributes like booking ID, tickets booked, total price, etc.

• Methods like bookTicket() to book a ticket, cancelTicket() to cancel a ticket, getAvailableSeats() to check available seats, etc.

ATM option delta is 0.5 because it represents a 50% chance of the option expiring in-the-money.

• ATM option delta is 0.5 because it is at-the-money, meaning the option strike price is equal to the current underlying asset price.

• Delta measures the sensitivity of an option's price to changes in the underlying asset price.

• A delta of 0.5 indicates a 50% probability of the option expiring in-the-money.

• ATM options have the highest gamma and vega values compared to other options.

• For e...read more

Options are financial instruments that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specific time period.

• Options can be call options or put options

• Call options give the holder the right to buy the underlying asset at a specified price within a specific time period

• Put options give the holder the right to sell the underlying asset at a specified price within a specific time period

• The price of an option is de...read more

Intersection of two linked lists is finding the node where they merge.

• Traverse both lists to find their lengths and the difference in lengths

• Move the pointer of the longer list by the difference in lengths

• Traverse both lists in parallel until they intersect