10+ ICICI Bank Interview Questions and Answers

CDS are Credit Default Swaps, a type of financial derivative used to transfer credit risk from one party to another.

• CDS are contracts between two parties where one party agrees to compensate the other in case of a credit event, such as default or bankruptcy, of a third party.

• Companies underwrite CDS to hedge against the risk of default by a borrower or counterparty, or to speculate on the creditworthiness of a particular entity.

• CDS played a significant role in the 2008 financ...read more

NAV stands for Net Asset Value. It is the value of a mutual fund's assets minus its liabilities.

• NAV is calculated by dividing the total value of a mutual fund's assets by the number of outstanding shares.

• NAV is calculated at the end of each trading day.

• NAV is used to determine the price at which investors can buy or sell shares in a mutual fund.

• NAV can be affected by changes in the value of the underlying assets, as well as by fees and expenses.

• For example, if a mutual fund h...read more

Shorting securities involves borrowing and selling securities in the hopes of buying them back at a lower price.

• Shorting is a bet that the price of a security will decrease.

• Shorting involves borrowing securities from a broker and selling them on the market.

• If the price of the security decreases, the short seller can buy it back at a lower price and return it to the broker, making a profit.

• If the price of the security increases, the short seller will have to buy it back at a h...read more

When trading in equity stock market, I check various factors such as company financials, market trends, news, and technical analysis.

• Company financials - revenue, profit margins, debt levels

• Market trends - overall market direction, sector performance

• News - company announcements, industry news

• Technical analysis - price movements, volume trends

Shorting a put option involves selling a put option with the expectation that the price of the underlying asset will rise.

• Shorting a put option is a bearish strategy

• The seller of the put option is obligated to buy the underlying asset at the strike price if the buyer decides to exercise the option

• Shorting a put option can be profitable if the price of the underlying asset rises or remains stable

• However, if the price of the underlying asset falls significantly, the seller of t...read more

Hedge funds are alternative investment vehicles that use pooled funds from accredited investors to generate high returns.

• Hedge funds are managed by professional fund managers.

• They use a variety of investment strategies, including leveraging, short-selling, and derivatives trading.

• Hedge funds are only available to accredited investors due to their high-risk nature.

• They are not regulated by the SEC like mutual funds.

• Examples of hedge funds include Bridgewater Associates, Renais...read more

Stock split is a corporate action where a company increases the number of its outstanding shares by dividing each share into multiple shares.

• Stock split is done to make shares more affordable for investors and increase liquidity.

• There are different types of stock splits such as 2-for-1, 3-for-1, etc.

• Other types of corporate actions include mergers, acquisitions, spin-offs, and dividend payments.

• Corporate actions can affect the value of a company's stock and should be carefull...read more

OTC Derivatives are privately negotiated financial contracts between two parties, not traded on an exchange.

• OTC stands for Over-The-Counter

• OTC Derivatives are customized contracts between two parties

• They are not traded on an exchange

• They are used for hedging, speculation, and arbitrage

• Examples include swaps, options, and forwards

Price and yield have an inverse relationship. Binomial tree valuation model is a method to price options using a tree structure.

• Price and yield have an inverse relationship - as price increases, yield decreases.

• Binomial tree valuation model is a method to price options by creating a tree of possible price movements.

• The model calculates option prices at each node of the tree and works backwards to determine the option's present value.

• It is a flexible model that can handle vari...read more

Black and Scholes Model inputs include interest rate, stock price, volatility, time to expiration, and dividend yield. IRS stands for Interest Rate Swap and CDS stands for Credit Default Swap.

• Black and Scholes Model inputs: interest rate, stock price, volatility, time to expiration, dividend yield

• IRS (Interest Rate Swap) involves exchanging fixed interest rate payments for floating rate payments

• CDS (Credit Default Swap) is a financial derivative that allows investors to hedge...read more

Reconciliation is the act of restoring harmony or resolving conflicts between individuals or groups.

• Reconciliation involves acknowledging past wrongs and working towards forgiveness and understanding.

• It often requires open communication, empathy, and a willingness to compromise.

• Examples include reconciling with a friend after a disagreement, or countries seeking reconciliation after a war.

• Reconciliation can also refer to financial processes, such as balancing accounts or reso...read more

Right issue procedure refers to the process by which a company offers existing shareholders the opportunity to purchase additional shares at a discounted price.

• Company announces the right issue, specifying the number of shares offered and the subscription price.

• Existing shareholders are given the option to purchase the additional shares in proportion to their existing holdings.

• Shareholders can either exercise their rights or sell them on the open market.

• The subscription perio...read more

Bonus issue procedure involves issuing additional shares to existing shareholders at no cost.

• Bonus issue is a way for companies to reward shareholders without affecting their cash reserves.

• Shareholders receive additional shares in proportion to their existing holdings.

• The procedure involves approval from the board of directors and shareholders.

• Companies may issue bonus shares to increase liquidity or improve market perception.

• Example: Company X announces a 1:1 bonus issue, me...read more

Options are financial instruments that give 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 used for speculation, hedging, or generating income.

• There are two types of options: call options (which give the holder the right to buy an asset) and put options (which give the holder the right to sell an asset).

• Options have an expiration date and a strike price, which is the price at which the ass...read more