30+ Northern Trust Analyst Interview Questions and Answers

The interview covered topics such as mutual funds, hedge funds, derivatives, Northern Trust, fixed income, financial statements, and more.

• Mutual funds are investment vehicles that pool money from multiple investors to purchase securities.

• Hedge funds are private investment funds that use advanced strategies to generate high returns for wealthy investors.

• Derivatives are financial instruments that derive their value from an underlying asset or security.

• Examples of derivatives in...read more

Capital market is a platform where companies and governments raise funds through financial instruments like stocks, bonds, and derivatives.

• Capital market is a market for long-term investments

• It includes stock markets, bond markets, and derivatives markets

• Companies and governments raise funds through issuing stocks and bonds

• Investors buy and sell these financial instruments to earn profits

• Examples of financial instruments are stocks, bonds, mutual funds, and options

• Capital mar...read more

NT can refer to several things, including Windows NT, neural networks, and the neurotransmitter serotonin.

• NT stands for New Technology and was the name of Microsoft's operating system before Windows 2000.

• NT can also refer to neural networks, which are a type of artificial intelligence that mimic the structure and function of the human brain.

• In biology, NT often refers to neurotransmitters, which are chemicals that transmit signals between neurons in the brain and nervous syst...read more

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 are a hybrid form of financing, combining features of bot...read more

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 the form of cash or additional shares of stock.

• Companies ma...read more

Asset management involves managing investments on behalf of clients, while investment banking involves advising clients on financial transactions.

• Asset management involves managing portfolios of stocks, bonds, and other assets for clients

• Investment banking involves advising clients on mergers and acquisitions, underwriting securities, and raising capital

• Asset managers earn fees based on the performance of the assets they manage, while investment bankers earn fees for their ad...read more

Bank reconciliation statement is a document that matches the balance in a company's bank account with the corresponding amount on a bank statement.

• Bank reconciliation statement is prepared to identify any discrepancies between the bank balance and the company's books.

• It helps in identifying any errors or omissions made by the bank or the company.

• It includes items such as outstanding checks, deposits in transit, bank fees, and interest earned.

• The statement is prepared by compa...read more

I use Python, Java, and SQL regularly in my work.

• Python for data analysis and scripting

• Java for building enterprise applications

• SQL for database management and querying

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

Golden rules of accounting and equities vs debt instruments

• Golden rules of accounting are: 1. Debit the receiver, credit the giver 2. Debit what comes in, credit what goes out 3. Debit expenses and losses, credit income and gains

• Equities are ownership shares in a company, while debt instruments are loans made to a company

• Equities provide ownership and potential for profit, while debt instruments provide a fixed return on investment

• Examples of equities include stocks and share...read more

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 minus its total liabilities.

• For example, if a company iss...read more

I follow several technical websites to stay updated with the latest trends and developments.

• I follow TechCrunch for news on startups and emerging technologies

• I read Wired for in-depth analysis on tech trends and their impact on society

• I visit GitHub for open-source projects and code repositories

• I check out Stack Overflow for technical Q&A and problem-solving

• I follow Ars Technica for news and reviews on science and technology

• I read The Verge for coverage on consumer technology...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.

Bonds are debt securities issued by companies or governments, while shares represent ownership in a company.

• Bonds are a form of debt financing where investors lend money to a company or government in exchange for periodic interest payments and the return of the principal amount at maturity.

• Shares, also known as stocks, represent ownership in a company and entitle the shareholder to a portion of the company's profits through dividends and potential capital appreciation.

• Bondhol...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 time, including assets, liabilities, and equity.

• Trial balan...read more

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 the involvement of a clearinghouse, while forward contract...read more

Equity represents ownership in a company, derivatives are financial contracts based on underlying assets, and trade involves buying and selling securities.

• Equity refers to stocks or shares that represent ownership in a company

• Derivatives are financial contracts that derive their value from an underlying asset, such as futures or options

• Trade involves the buying and selling of securities, such as stocks, bonds, or commodities

I will talk about the importance of mental health in the workplace.

• Mental health is crucial for overall well-being and productivity

• Employers should prioritize creating a supportive environment

• Offering mental health resources and support can benefit both employees and the company

• Examples: Employee assistance programs, mental health days, open communication channels

Derivatives are financial contracts that derive their value from an underlying asset or security.

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

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

• Options give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price and date.

• Swaps involve exchanging cash flows based on different financial instruments.

• Forwards are similar to futures, but are c...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.

A bank is a financial institution that accepts deposits from the public and creates credit. There are different types of banks such as retail banks, commercial banks, and investment banks.

• Banks accept deposits from customers and provide loans and other financial services.

• Retail banks cater to individual customers and offer services like savings accounts, checking accounts, and personal loans.

• Commercial banks focus on providing services to businesses and corporations, such as ...read more

Northern Trust is a financial services company that provides wealth management, asset servicing, and asset management services.

• Founded in 1889 in Chicago, Illinois

• Offers services such as investment management, fund administration, and banking solutions

• Known for its focus on wealth management for high-net-worth individuals and institutions

• Has a global presence with offices in major financial centers around the world

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

The commercial market refers to the buying and selling of goods and services between businesses and consumers.

• Involves transactions between businesses and consumers

• Includes products and services sold for profit

• Can be local, national, or global in scope

Nifty is a stock market index in India that represents the weighted average of 50 Indian company stocks.

• Nifty is short for National Stock Exchange Fifty

• It is also known as Nifty 50

• It is used as a benchmark for Indian stock market performance

Financial instruments are assets that can be traded and have a monetary value, such as stocks, bonds, derivatives, and currencies.

• Financial instruments are assets that can be traded on financial markets.

• They represent a contractual agreement between two parties.

• Examples include stocks, bonds, derivatives, commodities, and currencies.

Financial markets consist of various components that facilitate the trading of financial assets.

• Stock exchanges where equities are traded, such as NYSE and NASDAQ

• Bond markets for trading debt securities

• Commodity markets for trading raw materials like gold, oil, and agricultural products

• Forex markets for trading currencies

• Derivatives markets for trading financial contracts based on underlying assets

Financial management involves planning, organizing, directing, and controlling financial activities within an organization.

• Budgeting: Creating a financial plan for the organization's future expenses and revenues.

• Financial Reporting: Providing financial information to stakeholders to make informed decisions.

• Risk Management: Identifying and managing financial risks to ensure the organization's stability.

• Investment Management: Making decisions on where to invest the organization...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 include Bridgewater Associates, Renaissance Technologies, a...read more

Capital markets are financial markets where long-term debt or equity-backed securities are bought and sold.

• Capital markets facilitate the buying and selling of long-term financial instruments such as stocks and bonds.

• They provide a platform for companies and governments to raise funds for various projects or operations.

• Investors can trade securities in the capital markets to earn returns on their investments.

• Examples of capital markets include stock exchanges like NYSE and NA...read more

Derivatives in finance are financial instruments whose value is derived from the value of an underlying asset or index.

• Derivatives can be used for hedging against risk, speculating on price movements, or gaining exposure to assets without owning them.

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

• Options give the holder the right, but not the obligation, to buy or sell an asset at a specified price before a certain date.

• Futures are contracts to buy ...read more

BRS stands for Bank Reconciliation Statement, which is a document that compares the bank's records with the company's records of its checking account balance.

• BRS helps in identifying discrepancies between the two sets of records

• It ensures that the company's financial statements are accurate and complete

• Examples of items on a BRS include outstanding checks, deposits in transit, bank errors, and service charges

A bond is a debt investment where an investor loans money to an entity (corporate or governmental) for a defined period at a fixed interest rate.

• Bonds are issued by governments, municipalities, corporations, and other entities to raise capital.

• Investors purchase bonds as a form of fixed-income investment.

• Bonds have a maturity date when the principal amount must be repaid to the bondholder.

• Interest payments are made periodically to the bondholder until the bond matures.

• Bond pr...read more

My strength is attention to detail and weakness is public speaking.

• Strength: Attention to detail - I am meticulous in my work and always ensure accuracy.

• Weakness: Public speaking - I struggle with speaking in front of large groups and get nervous.

A ledger is a record of financial transactions that shows the balance of accounts.

• A ledger is used to keep track of all financial transactions within a business or organization.

• It includes details such as date, description, and amount of each transaction.

• Ledgers are typically organized by account, with separate sections for assets, liabilities, equity, revenue, and expenses.

• The balance of each account is calculated by adding up the debits and credits for that account.

• Examples...read more

The golden rules of accounting are basic principles that guide the process of recording financial transactions.

• The golden rule of accounting is that for every debit entry, there must be an equal credit entry.

• There are three types of accounts: real, personal, and nominal. The golden rules differ for each type of account.

• For real accounts, the golden rule is: Debit what comes in, Credit what goes out. For example, when cash is received, it is debited.

• For personal accounts, the ...read more