10+ Equity Research Analyst Interview Questions and Answers for Freshers

Answers to various questions related to finance and accounting.

• Financial statements include balance sheet, income statement, and cash flow statement.

• Shares represent ownership in a company, while debentures are a form of debt.

• Cash flow statement helps in analyzing the cash inflows and outflows of a company.

• Non-performing assets are loans or advances that are not generating income for the bank.

• Derivatives are financial instruments whose value is derived from an underlying asse...read more

Revenue drivers are factors that contribute to a company's ability to generate income.

• Sales volume

• Pricing strategy

• Market share

• Product mix

• Geographic expansion

• Cost control

• Marketing and advertising

• Mergers and acquisitions

Equity research analysts are professionals who analyze financial data and provide investment recommendations to clients.

• Equity research analysts analyze financial data of companies and industries to provide investment recommendations to clients.

• They use various tools and techniques to gather and analyze data, such as financial modeling, ratio analysis, and industry research.

• Their recommendations are based on their analysis of the company's financial performance, industry tren...read more

Microeconomics focuses on individual economic agents and their interactions, while Macroeconomics studies the economy as a whole.

• Microeconomics examines the behavior of individual consumers and firms, focusing on supply and demand for specific goods and services.

• Macroeconomics looks at the economy as a whole, analyzing factors such as inflation, unemployment, and economic growth.

• Microeconomics deals with issues like pricing of goods, consumer behavior, and production costs.

• Ma...read more

Repo rate is the rate at which the central bank lends money to commercial banks.

• Repo rate is an important tool used by central banks to control inflation and liquidity in the economy.

• A higher repo rate means that commercial banks will have to pay more interest to borrow money from the central bank, which can lead to higher interest rates for consumers and businesses.

• The current repo rate in India is 4.00% as of August 2021.

Asset allocation refers to the process of dividing an investment portfolio among different asset categories such as stocks, bonds, and cash.

• Asset allocation is important for diversification and risk management.

• It involves determining the investor's goals, risk tolerance, and time horizon.

• The allocation can be adjusted over time as the investor's circumstances change.

• For example, a young investor with a long time horizon may have a higher allocation to stocks, while an older i...read more

P/E ratio compares stock price to earnings, while dividend is a portion of company's profits distributed to shareholders.

• P/E ratio is a valuation metric calculated by dividing stock price by earnings per share.

• Dividend is a portion of company's profits distributed to shareholders as cash payments.

• P/E ratio helps investors assess the stock's valuation, while dividends provide income to shareholders.

• Companies with high P/E ratios may not pay dividends, as they reinvest profits ...read more

The US market is currently experiencing volatility due to factors such as trade tensions, interest rates, and economic indicators.

• Trade tensions between US and China have led to uncertainty in the market

• Interest rates set by the Federal Reserve impact borrowing costs and investment decisions

• Economic indicators such as GDP growth, unemployment rate, and consumer spending provide insights into the overall health of the economy

Equity represents ownership in a company, typically in the form of stocks or shares.

• Equity represents ownership in a company

• It is often in the form of stocks or shares

• Equity holders have a claim on the company's assets and earnings

• Equity can be bought and sold on the stock market

• Equity value can fluctuate based on the company's performance and market conditions

Value stocks are undervalued by the market, while growth stocks have high potential for future earnings growth.

• Value stocks are typically characterized by low price-to-earnings (P/E) ratios and high dividend yields.

• Growth stocks are companies that are expected to grow at a rate significantly above the average for the market.

• Value stocks are often considered safer investments, while growth stocks are more volatile.

• Examples of value stocks include utility companies and establis...read more

Public companies are listed on stock exchanges and have shares available for public trading, while private companies are not listed and have limited shareholders.

• Public companies have shares that are traded on stock exchanges, allowing for public ownership and trading.

• Private companies are not listed on stock exchanges and have limited shareholders, often including founders, employees, and private investors.

• Public companies are required to disclose financial information to th...read more

GDP measures the value of goods and services produced within a country, while GNP measures the value produced by a country's residents, regardless of location.

• GDP only includes production within a country's borders, while GNP includes production by a country's citizens regardless of location.

• GDP is used to measure a country's economic output, while GNP is used to measure a country's economic strength.

• For example, if a Japanese company produces goods in the US, the value of th...read more

Equity research provides an opportunity to analyze and evaluate companies, industries, and markets to make informed investment decisions.

• Equity research allows me to delve deep into financial statements, industry trends, and market dynamics to identify investment opportunities.

• I enjoy conducting thorough research and analysis to understand the drivers of a company's performance and its potential for growth.

• Equity research provides the chance to interact with management teams,...read more

Reverse repo rate is the rate at which RBI borrows money from banks.

• It is a monetary policy tool used by the central bank to control inflation and liquidity in the market.

• It is the opposite of repo rate, where RBI lends money to banks.

• Currently, the reverse repo rate in India is 3.35%.

• Higher reverse repo rate means banks earn more interest on their surplus funds with RBI, leading to lower liquidity in the market.