10+ Northern Trust Analyst 1 Interview Questions and Answers

Call and put options are financial contracts that give the holder the right, but not the obligation, to buy or sell an asset at a specified price within a specific time period.

• Call option: gives the holder the right to buy an asset at a specified price before a certain date.

• Put option: gives the holder the right to sell an asset at a specified price before a certain date.

• Difference: Call options are used by investors who expect the price of the underlying asset to rise, while...read more

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

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

• Common types of derivatives include options, futures, forwards, and swaps.

• For example, a call option gives the holder the right to buy a stock at a specified price within a certain time frame.

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

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 in the general ledger.

• Balance sheet is a financial statement that shows a company's financial position at a specific point in time, including assets, liabilities, and equity.

• Trial balance is prepared b...read more

Trade life cycle refers to the stages involved in a trade from initiation to settlement.

• Trade initiation: Trade is proposed and agreed upon by parties involved.

• Trade execution: Trade is executed on the agreed terms.

• Trade confirmation: Parties confirm the details of the trade.

• Trade settlement: Payment and transfer of securities occur to finalize the trade.

• Trade reconciliation: Ensuring all details match between parties' records.

• Trade reporting: Reporting the trade to relevant ...read more

An option is a financial derivative that gives the holder the right, but not the obligation, to buy or sell an asset at a specific price within a specific time period.

• Options can be call options (the right to buy) or put options (the right to sell).

• The price at which the asset can be bought or sold is called the strike price.

• The specific time period during which the option can be exercised is called the expiration date.

• Options are commonly used for hedging, speculation, and g...read more

A mortgage-backed security is an investment product that is backed by a pool of mortgages.

• Mortgage-backed securities are created when a financial institution pools together a group of mortgages and sells them to investors.

• Investors receive payments based on the interest and principal payments made by the borrowers of the underlying mortgages.

• These securities can be issued by government-sponsored entities like Fannie Mae or Freddie Mac, or by private financial institutions.

• Mor...read more

A stock exchange is a marketplace where securities, such as stocks and bonds, are bought and sold.

• Stock exchanges provide a platform for companies to raise capital by issuing shares to investors.

• Investors can buy and sell securities through brokers on the exchange.

• Examples of stock exchanges include the New York Stock Exchange (NYSE) and the Nasdaq.

• Stock exchanges play a crucial role in the economy by facilitating the flow of capital between investors and companies.

Short selling is a trading strategy where an investor borrows a security and sells it with the hopes of buying it back at a lower price.

• Investor borrows a security they do not own

• Sells the borrowed security in the market

• Hopes to buy back the security at a lower price to return to the lender

• Profits from the difference between selling price and buying price

Secondary market is where existing securities are bought and sold by investors, not from the issuing company.

• Secondary market provides liquidity to investors by allowing them to buy and sell securities after the initial issuance.

• Examples of secondary markets include stock exchanges like NYSE and NASDAQ, where investors trade shares of publicly listed companies.

• In the secondary market, prices of securities are determined by supply and demand, rather than the issuing company.

A custodian bank is a financial institution that holds and safeguards assets for individuals, corporations, and other entities.

• Provides safekeeping of assets such as stocks, bonds, and other investments

• Processes transactions related to the assets held

• May also provide additional services such as fund accounting and administration

• Examples include State Street Corporation, BNY Mellon, and J.P. Morgan Chase

ETF stands for Exchange-Traded Fund, a type of investment fund traded on stock exchanges.

• ETFs are similar to mutual funds but trade like a stock on an exchange.

• They typically hold assets such as stocks, commodities, or bonds.

• Investors can buy or sell ETF shares throughout the trading day at market prices.

• ETFs offer diversification, liquidity, and lower fees compared to traditional mutual funds.

• Examples of popular ETFs include SPDR S&P 500 ETF (SPY) and Vanguard Total Stock Ma...read more

Repo rate is the rate at which the central bank lends money to commercial banks for short-term periods.

• Repo rate is used by central banks to control inflation and liquidity in the economy.

• A higher repo rate means higher borrowing costs for banks, leading to lower money supply and lower inflation.

• Conversely, a lower repo rate means lower borrowing costs for banks, leading to higher money supply and higher inflation.

• Repo rate is an important tool in monetary policy implementati...read more

My master thesis focused on the impact of social media on consumer behavior.

• Researched how social media platforms influence purchasing decisions

• Analyzed data from surveys and case studies

• Identified trends in online shopping behavior

• Examined the role of influencers in shaping consumer preferences