10+ Senior Fund Accountant Interview Questions and Answers

Private equity is investing in private companies with the aim of generating high returns. Hedge funds are pools of capital from accredited individuals.

• Private equity firms invest in private companies and aim to generate high returns by improving the company's operations and financials.

• Hedge funds are pools of capital from accredited individuals and invest in a variety of assets, including stocks, bonds, and derivatives.

• Private equity investments are illiquid and have a longer...read more

Performance fee is a fee charged by investment managers based on the performance of the fund. Carry interest is a share of profits earned by investment managers.

• Performance fee is usually a percentage of the fund's profits above a certain benchmark

• Carry interest is a percentage of the profits earned by the investment manager above a certain hurdle rate

• Performance fee and carry interest are common in private equity and hedge funds

• These fees incentivize investment managers to p...read more

Zero bonds are bonds that do not pay interest but are sold at a discount to their face value.

• Zero bonds are also known as discount bonds.

• They are issued at a discount to their face value and do not pay any interest.

• The benefit of zero bonds is that they offer a higher yield than traditional bonds.

• They are often used by corporations and governments to finance long-term projects.

• Investors can benefit from zero bonds by purchasing them at a discount and receiving the full face v...read more

CFD is a financial derivative, accrual journal entries record expenses/revenues, journal entry for stock purchase affects balance sheet.

• CFD stands for Contract for Difference, a financial derivative that allows investors to speculate on the price movements of an underlying asset without owning it.

• Accrual journal entries are used to record expenses or revenues that have been incurred but not yet paid or received.

• A journal entry for the purchase of stock would typically involve...read more

The impact of CA and dividends on NAV, journal entries for dividends, and consequences of unbooked trades in fund accounting.

• CA can impact NAV by affecting the valuation of assets and liabilities in the fund.

• Dividends can impact NAV by increasing or decreasing the fund's total value.

• Journal entries for Dividend payable: Debit Dividend Payable, Credit Cash; Dividend receivable: Debit Cash, Credit Dividend Income.

• Unbooked trades can lead to inaccurate financial reporting, misre...read more

Hedge funds are less regulated, have higher risk and returns, and are only available to accredited investors. Mutual funds are more regulated, have lower risk and returns, and are available to anyone.

• Hedge funds are only available to accredited investors, while mutual funds are available to anyone.

• Hedge funds have higher risk and returns, while mutual funds have lower risk and returns.

• Hedge funds are less regulated than mutual funds.

• Hedge funds often use complex investment st...read more

Journal entries for prepaid expenses, subscriptions, and redemptions

• Prepaid expenses: Debit Prepaid Expense account, Credit Cash/Bank account

• Subscriptions: Debit Subscription Revenue account, Credit Cash/Bank account

• Redemptions: Debit Cash/Bank account, Credit Redemption account

Management fees are charges paid by investors to the fund manager for managing their investments.

• Management fees are typically a percentage of the assets under management.

• They are charged to cover the costs of managing the fund, including salaries, rent, and other expenses.

• Management fees can vary widely depending on the type of fund and the investment strategy.

• For example, a hedge fund may charge a management fee of 2% of assets under management, while a mutual fund may char...read more

Hedge funds are investment funds that pool capital from accredited individuals or institutional investors and use various strategies to generate high returns.

• Hedge funds are typically only available to accredited investors due to their complex and risky nature.

• They often use leverage and derivatives to amplify returns.

• Hedge funds can employ a variety of strategies such as long/short equity, global macro, event-driven, and quantitative.

• They charge both a management fee and a p...read more

A hedge fund is a type of investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets.

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

• They use a variety of investment strategies, such as long-short equity, global macro, and event-driven.

• Hedge funds often charge a management fee and a performance fee based on the fund's returns.

• They are known for their ability to gen...read more

Equity refers to ownership in a company, while mutual funds are investment vehicles that pool money from multiple investors to invest in various securities.

• Equity represents ownership in a company and can be in the form of stocks or shares

• Mutual funds are investment vehicles that pool money from multiple investors to invest in various securities

• Mutual funds offer diversification and professional management

• Equity investments carry higher risk but also have the potential for hi...read more

A call option is a financial contract that gives the holder the right, but not the obligation, to buy an asset at a specified price within a specific time period.

• Call options are commonly used in stock trading and can be bought or sold on various exchanges.

• The specified price at which the asset can be bought is known as the strike price.

• The specific time period during which the option can be exercised is known as the expiration date.

• Call options provide the opportunity for in...read more

Accrual journal entries are used to recognize revenue or expenses that have been incurred but not yet recorded in the financial statements.

• Accrual journal entries involve debiting an expense account and crediting a liability account for expenses incurred but not yet paid

• Accrual journal entries involve debiting a revenue account and crediting an accounts receivable account for revenue earned but not yet received

• Accrual journal entries are necessary to ensure that financial sta...read more

GAV is the total value of a fund's assets, while NAV is the per-share value of the fund.

• GAV stands for Gross Asset Value, representing the total value of all assets in a fund.

• NAV stands for Net Asset Value, representing the per-share value of the fund after deducting liabilities.

• GAV is calculated by adding up the value of all assets in the fund, including cash, investments, and other holdings.

• NAV is calculated by subtracting the fund's liabilities from its assets and dividing...read more

Different types of fees include management fees, performance fees, and incentive fees.

• Management fees are charged by the fund manager for managing the fund's investments.

• Performance fees are based on the fund's performance relative to a benchmark.

• Incentive fees are typically a percentage of the fund's profits.

• Other types of fees may include administration fees, custody fees, and distribution fees.

Private equity is a form of investment where funds are raised from investors to acquire ownership stakes in companies.

• Private equity firms raise capital from institutional investors and high-net-worth individuals.

• The funds raised are used to acquire ownership stakes in private companies.

• Private equity firms aim to improve the performance of the acquired companies and eventually sell them for a profit.

• Investments in private equity are illiquid and typically have a long-term in...read more