Northern Trust Operating Services Interview Questions, Process, and Tips

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

• Derivatives can be used for hedging or speculation.

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

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

• Derivatives can be complex and involve high levels of risk.

• They are widely used in the financial industry.

Equity shares represent ownership in a company while preference shares have priority in receiving dividends and assets in case of liquidation.

• Equity shares represent ownership in a company while preference shares have priority in receiving dividends and assets in case of liquidation.

• Equity shareholders have voting rights while preference shareholders do not.

• Preference shares have a fixed dividend rate while equity shar...read more

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

• Derivatives can be used for hedging or speculation.

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

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

• Derivatives can be used to manage risk or to take on additional risk for potential profit.

• Examples of underlying assets include stocks, bonds, commod

OTC market is regulated by various regulatory bodies depending on the type of financial instrument being traded.

• In the US, the Commodity Futures Trading Commission (CFTC) regulates OTC derivatives such as swaps and options.

• The Securities and Exchange Commission (SEC) regulates OTC stocks and bonds.

• In Europe, the European Securities and Markets Authority (ESMA) regulates OTC derivatives.

• Regulations aim to increase trans...read more

Derivatives are created to manage risk, speculate, and hedge against market fluctuations.

• Derivatives allow investors to take positions on the future value of an underlying asset without actually owning it.

• They can be used to hedge against potential losses or to speculate on potential gains.

• Derivatives can also be used to manage risk by providing a way to transfer risk from one party to another.

• Examples of derivatives i...read more

Types of risk include market risk, credit risk, operational risk, liquidity risk, and systemic risk.

• Market risk: the risk of financial loss due to changes in market prices

• Credit risk: the risk of loss due to a borrower's failure to repay a loan or meet contractual obligations

• Operational risk: the risk of loss due to inadequate or failed internal processes, people, and systems

• Liquidity risk: the risk of loss due to the ...read more