Interview Questions and Answers

Clean price is the price of a bond excluding accrued interest, while dirty price includes accrued interest.

• Clean price is the price of a bond without any accrued interest

• Dirty price is the price of a bond including accrued interest

• Accrued interest is the interest that has accumulated on a bond since its last coupon payment

• Clean price + accrued interest = dirty price

• Dirty price is also known as the full or invoice price

Trade Life Cycle is the process of a trade from initiation to settlement.

• Trade initiation

• Order routing

• Execution

• Confirmation

• Clearing and settlement

• Trade reporting

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 exchange or over-the-counter market.

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

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

• Trade reconciliation: Any discrepancies are resolved post-settlement.

Fixed income securities are debt instruments that pay a fixed interest rate over a specific period of time.

• Fixed income securities are also known as bonds.

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

• Investors receive regular interest payments until the bond matures, at which point they receive the principal amount.

• The interest rate on fixed income securities is determined by the creditworthiness of the issuer and the prevailing market int...read more

Investment banks perform various functions such as underwriting, M&A advisory, sales and trading, research, and asset management.

• Underwriting: helping companies issue securities and managing the process of selling them to investors

• M&A advisory: advising companies on mergers and acquisitions

• Sales and trading: buying and selling securities on behalf of clients

• Research: providing analysis and recommendations on companies and industries

• Asset management: managing investment portfo...read more