10+ Alphom Advisory Interview Questions and Answers

Golden rules of accounting are basic principles to be followed while recording financial transactions. Accrual journal entries record revenue or expenses when they are earned or incurred, regardless of when payment is received or made.

• The three golden rules of accounting are: debit the receiver, credit the giver; debit what comes in, credit what goes out; and debit all expenses and losses, credit all incomes and gains.

• Accrual journal entries record revenue or expenses when th...read more

High water mark, corporate actions, journal entries, forwards, options, and in the money options are all important concepts in hedge funds.

• High water mark refers to the highest peak in a hedge fund's net asset value (NAV) history.

• Corporate actions such as splits and spin-offs can affect the value of a hedge fund's holdings.

• Journal entries are used to record transactions in a hedge fund's accounting system.

• Forwards are contracts that allow investors to buy or sell an asset at ...read more

Journal entries for buying securities or accruing expenses involve debiting the relevant account and crediting cash or accounts payable.

• When buying securities, debit the securities account and credit cash

• When accruing expenses, debit the relevant expense account and credit accounts payable

• Journal entries should always balance with debits equaling credits

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

• Mutual funds are managed by professional fund managers

• Investors can buy and sell mutual fund shares at the end of each trading day

• Examples of mutual funds include Vanguard 500 Index Fund, Fidelity Contrafund, and American Funds Growth Fund of America

Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.

• Mutual funds are managed by professional fund managers who make investment decisions on behalf of the investors.

• Investors buy shares of the mutual fund, which represent a portion of the holdings of the fund.

• People invest in mutual funds to diversify their investment portfolio, reduce risk, and access professional management.

• Mu...read more

Corporate action refers to any event initiated by a publicly traded company that impacts its shareholders or securities.

• Types of corporate actions include dividends, stock splits, mergers and acquisitions, rights issues, and spin-offs.

• Dividends are payments made to shareholders from a company's profits.

• Stock splits involve dividing existing shares into multiple shares to lower the price per share.

• Mergers and acquisitions occur when two companies combine or one company buys an...read more

Derivatives are financial instruments whose value is derived from an underlying asset. Examples include forward contracts, futures contracts, options, and the Black-Scholes model.

• Derivatives are financial instruments that derive their value from an underlying asset, such as stocks, bonds, commodities, or currencies.

• An example of a derivative is a forward contract, which is an agreement between two parties to buy or sell an asset at a specified price on a future date.

• A forward...read more

NAV stands for Net Asset Value and is a measure of a fund's value. A hedge fund is an investment fund that uses various strategies to generate high returns.

• NAV is calculated by subtracting a fund's liabilities from its assets

• Hedge funds are typically only available to accredited investors due to their high-risk strategies

• Hedge funds can use leverage, short selling, and derivatives to generate returns

• Some hedge funds specialize in specific industries or markets, such as techno...read more

I will handle client queries by actively listening, empathizing, and providing clear and concise solutions.

• Listen actively to understand the client's concern

• Empathize with the client's situation

• Provide clear and concise solutions

• Follow up to ensure client satisfaction

Derivative is a financial contract whose value is derived from an underlying asset. Spot refers to the current market price of an asset. Option is a contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price. Forward is a contract that obligates the buyer and seller to trade an asset at a predetermined price and date in the future.

• Derivative is a contract whose value is derived from an underlying asset

• Spot refers to the c...read more

Corporate actions are events initiated by a public company that impact its shareholders and securities.

• Dividends - distribution of profits to shareholders

• Stock splits - dividing existing shares into multiple shares

• Mergers and acquisitions - combining two companies into one

• Spin-offs - creating a new independent company from an existing one

• Rights issues - offering existing shareholders the right to buy additional shares at a discounted price

Accrual accounting is a method of accounting that records revenues and expenses when they are incurred, regardless of when cash is exchanged.

• Revenue and expenses are recognized when they are earned or incurred, not when cash is received or paid.

• Accrual accounting provides a more accurate picture of a company's financial position and performance.

• It follows the matching principle, where revenues are matched with the expenses that generated them.

• Examples include recognizing reve...read more

The 3 golden rules of accounts are the basic principles of accounting that every accountant should follow.

• Rule 1: Debit the receiver, credit the giver - This means that when a business receives something, it should debit the account that receives it and credit the account that gave it.

• Rule 2: Debit what comes in, credit what goes out - This means that when a business receives something, it should debit the account that receives it and credit the account that gave it.

• Rule 3: D...read more

Corporate actions are events initiated by a public company that can affect its stock price or ownership structure.

• Corporate actions can include dividends, stock splits, mergers, acquisitions, spin-offs, and rights issues.

• These events can impact shareholders by changing the value of their investments or the number of shares they own.

• Investors need to stay informed about corporate actions to make informed decisions about their investments.

• Examples of corporate actions include A...read more

Futures are standardized contracts traded on exchanges, while forwards are customized contracts traded over-the-counter.

• Futures are traded on exchanges, while forwards are traded over-the-counter.

• Futures have standardized terms and are highly liquid, while forwards have customized terms and are less liquid.

• Futures are marked-to-market daily, while forwards are not.

• Examples of futures include S&P 500 futures, while examples of forwards include customized currency contracts.