Job Interview

Tell me why you should be hired

0-2 years of experience in Financial Analysis position Exceptional analytical skills and the ability to understand the impact of operations on our financial results Strong verbal and written communication and presentation skills. Problem solving skills & independently coming up with solutions. Sense of urgency Accountability Ability to multi-task Team Member.

Different types of bonds

Ans. A bond is a fixed income security which has a coupon payment attached to it which is paid by the bond issuer annually or as per the conditions set at the time of issuance. These are the types of bonds: Corporate Bond, which is issued by the corporations. Supra-National Bond is issued by super-national entities like IMF and World Bank. Sovereign National Bond is a bond issued by the government of the country.

Securitized Bonds

Ans. A bond which is repaid by the issuing entity by the cash flows which come from the asset set as collateral for the bond issued is known as securitized Bond. We can understand by the example: A bank sells its house loans to a Special Purpose Entity and then that entity issues the bonds which are repaid by the cash flows generated by those house loans, in this case, it is the EMI payments made by the house owners.

Forwards v Futures Contract

Ans. A futures contract is a standardized contract which means that the buyer or seller of the contract can buy or sell in lot sizes which are already specified by the exchange and is traded through exchanges. Future markets have clearing houses which manage the market and therefore, there is no counterparty risk. Forwards Contract is a customizable contract which means that the buyer or seller can buy or sell any amount of contract they wish to. These contracts are OTC (over the counter) contracts i.e. no exchange is required for trading. These contracts do not have a clearinghouse and therefore, the buyer or the seller of the contract is exposed to the counterparty risk.

#2 - Explain Cash Flow Statement in detail

Ans. Cash Flow Statement is an important financial statement that tells us about the cash inflow and cash outflow from the company. Cash Flow can be prepared by the Direct method and Indirect method. Generally, company uses Direct method for preparing the Cash Flow Statement as seen in the annual report of the company. The direct method starts with cash collected from customers adding interests and dividends and then deducting cash paid to suppliers, interest paid, income tax paid. Indirect method starts from net income and then we add back all the non-cash charges which are depreciation and amortization expense, we also add working capital changes. Cash Flow Statement is categorised into three activities: Cash Flow from Operations, Cash Flow from Investing and Cash Flow from Financing. Cash Flow from Operations consists of cash inflows and outflows which are generated from the company's core business or product. Cash Flow from Investing consists of the cash inflows and outflows from a company in the form of investments like purchase or sale of PP&E (property, plant & equipment). Cash Flow from Financing consists of cash inflows and outflows generated from all the financing activities of the company like issuance of Bonds or early retirement of Debt.

Clean and Dirty Price of a Bond

Ans. Clean price is a price of a coupon bond not including the interest accrued. In other words, clean price is the present value of the discounted future cash flows of a bond excluding the interest payments. Dirty price of a bond includes accrued interest in the calculation of bond. Dirty price of the bond is the present value of the discounted future cash flows of a bond which include the interest payments made by the issuing entity.

DCF

Ans. DCF is Discounted Cash Flow method. This method is used by analysts to value a company by discounting its future cash flow and bringing it down to its current value. Discounted Cash Flow uses different techniques to value a company. These techniques or methods are:

Deferred Tax Liability

Ans. Deferred Tax Liability is a form of tax expense which was not paid to the income tax authorities in the previous years but is expected to be paid in future years. This is because of the reason that the company pays less in taxes to the income tax authorities than what is reported as payable. For example, if a company uses straight-line method for charging depreciation in its income statement for shareholders but it uses double declining method in the statements which are reported to income tax authorities and therefore, the company reports a Deferred Tax Liability as the paid less than what was payable.

What is EPS?

Ans. EPS is Earnings per Share of the company. This is calculated for the common stockholders of the company. As the name suggests, it is the per share earnings of the company. It acts as an indicator of profitability. Calculation: EPS = (Net Income - Preferred Dividends) / weighted average number of shares outstanding during the year

#1 - What are Financial Statements of a company and what do they tell about a company?

Ans. Financial Statements of a company are statements, in which the company keeps a formal record about the company's position and performance over time. The objective of Financial Statements is to provide financial information about the reporting entity that is useful to existing and potential investors, creditors and lenders in making decisions about whether to invest, give credit or not. There are mainly three types of financial statements which a company prepares. 1. Income Statement - Income Statement tells us about the performance of the company over a specific account period. Financial performance is given in terms of revenue and expense generated through operating and non-operating activities. 2.Balance Sheet - Balance Sheet tells us about the position of the company at a specific point in time. Balance Sheet consists of Assets, Liabilities and Owner's Equity. Basic equation of Balance Sheet: Assets = Liabilities - Owner's Equity. 3.Cash Flow Statement - Cash Flow Statement tells us the amount of cash inflow and outflow. Cash Flow Statement tells us how the cash present in the balance sheet changed from last year to current year.

P/E

Ans. P/E Ratio also referred to as Price to Earnings Ratio is one of the Valuation Ratios which is used by analysts to see if the stock of the company is undervalued or overvalued. The formula is as follows P/E = current market price of the company's stock divided by Earnings per Share of the company.

#5 - A company buys an asset; walk me through the impact on the 3 financial statements

Ans. Purchase of Asset is a transaction done by the company which will impact all the three statements of the company. Let's say that the asset is an equipment of $5million. In Balance Sheet, cash will go down by $5million; decreasing the asset side of the balance sheet and at the same time the asset will be recorded as equipment of $5million which will increase the asset side of the balance sheet by the same amount. Hence, the balance sheet of the company will be tallied. In Income Statement, there will be no impact on the first year of income statement but after the first year the company will have to charge depreciation expense on the purchased equipment which the company will have to show it in the Income Statement of the company. Cash Flow Statement, assuming that only cash has been paid by the company to purchase the equipment. The Cash Flow from Investing will result in the cash outflow of $5million.

#3 - Explain three sources of short-term Finance used by a company

Ans. Short-term financing is done by the company to fulfill its current cash needs. Short-term sources of finance are required to be repaid within 12 months from financing date. Some of the short-term sources of financing are: Trade Credit, Unsecured Bank Loans, Bank Over-drafts, Commercial Papers, Secured Short-term loans. Trade Credit is an agreement between buyer and a seller of goods. In this case, the buyer of the goods purchases the goods on a credit i.e. the buyer pays no cash to the seller at the time of buying the goods, only to pay at a later specified date. Trade credit is based on mutual trust that the buyer of the goods will pay the amount of cash after a specified date Bank Overdraft is a type of short-term credit which is offered to an individual or a business entity having a current account which is subject to the bank's regulation. In this case, an individual or a business entity can withdraw cash more than what is present in the account. Interest is charged on the amount of over-draft which is withdrawn as a credit from the bank. Unsecured Bank Loan is a type of credit which banks are ready to give and is payable within 12 months. The reason why it is called an unsecured bank loan is that no collateral is required by the individual or a business entity taking this loan.

stock options

Ans. Stock Options are the options to convert into common shares at a predetermined price. These options are given to the employees of the company in order to attract them and make them stay longer. The options are generally provided by the company to its upper management to align management's interests with that of its shareholders. Stock Options generally have a venting period i.e. a waiting period before the employee can actually exercise his or her option to convert into common shares. A Qualified option is a tax free option which means that they are not subject to taxability after the conversion. An Unqualified option is a taxable option which is taxed immediately after conversion and then again, when the employee sells the stock.

WACC

Ans. WACC is the Weighted Average Cost of Capital which the company is expected to pay on the capital it has borrowed from different sources. WACC is sometimes referred to as Firm's Cost of Capital. The cost to the company for borrowing the capital is dictated by the external sources in the market and not by management of the company. Its components are Debt, Common Equity, and Preferred Equity.

Define working capital

Ans. Working Capital is basically Current Assets minus Current Liabilities. Working capital tells us about the amount of capital tied up to its business (daily activities) such as account receivables, payables, inventory in hand and many more. Working capital can also tell us the amount of cash needed to pay off the company's obligations which have to be paid off within 12 months.

11 Sectors of Stock Market

Financials Utilities Consumer Discretionary Consumer Staples Energy Healthcare Industrials Technology Telecom Materials Real Estate

Financial Modeling in Corporate Finance

First of all, financial modeling is a quantitative analysis which is used to make a decision or a forecast about a project generally in asset pricing model or corporate finance. Different hypothetical variables are used in a formula to ascertain what future holds for a particular industry or for a particular project. In Corporate Finance, Financial modeling means forecasting companies financial statements like Balance Sheet, Cash Flows, and Income Statement. These forecasts are in turn used for company valuations and financial analysis. With respect to Investment Banking, you can talk about the Financial Models that you have prepared. You may refer to these Financial Modeling Templates.

Where do you see yourself in 10 years

Move up, attend business school, move up with Dell

Problem with work

New boss after old boss was loose. I was only one of four bagroom workers not fired, others sent back to caddying and otherswere tough.

Qualifications of Jobs

PRINCIPAL DUTIES AND RESPONSIBILITIES Performs analysis on projects related to revenue recognition & project costs. Liaises closely with Project Managers to ensure the revenue forecast is aligned with the project deliverables. Assists in review of actuals vs. forecast and investigation of variances. Assists in validation and analysis of projects through completion including project tracking, monitoring, reporting and administration. Communicates project revenue status through publishing high quality project reports and presentations Develops tools for improving the forecasting and actual results reporting processes and rolls them out to the larger population Helps to resolve issues that arise between various groups Partner with business leaders and provide guidance, work with functional areas to understand and meet their financial needs to meet the long-range goal. Reporting - be involved in creating and establishing new reports related to Project analysis. SKILLS & QUALIFICATIONS: 0-2 years of experience in Financial Analysis position Exceptional analytical skills and the ability to understand the impact of operations on our financial results Strong verbal and written communication and presentation skills. Problem solving skills & independently coming up with solutions. Sense of urgency Accountability Ability to multi-task Team Member

Recruiter will just ask you questions about your previous employers and where you went to school/college...why you want this position and probably salary requirements

Performs analysis on projects related to revenue recognition & project costs. Liaises closely with Project Managers to ensure the revenue forecast is aligned with the project deliverables. Assists in review of actuals vs. forecast and investigation of variances. Assists in validation and analysis of projects through completion including project tracking, monitoring, reporting and administration. Communicates project revenue status through publishing high quality project reports and presentations Develops tools for improving the forecasting and actual results reporting processes and rolls them out to the larger population Helps to resolve issues that arise between various groups Partner with business leaders and provide guidance, work with functional areas to understand and meet their financial needs to meet the long-range goal. Reporting - be involved in creating and establishing new reports related to Project analysis. SKILLS & QUALIFICATIONS:

Behavioral Questions

Tell me about yourself. Walk me through your resume. Why do you want to work for a hedge fund? Do you have an industry preference? What do you plan to do in the next 5-10 years? Have you had a performance review? What did it say? What skills do you feel are transferable to this industry? What separates you from other candidates? Why are you working in your current industry? Do you plan on going to business school? Why or why not? Why do you want to work for our firm in particular? What is attractive about our firm? What would you say are our firm's strengths and weaknesses? What skills do you bring to our firm? Why do you think you'll be successful as a hedge fund analyst? What do you invest in? What do you think of the markets in general right now? If you could invest in anything, anywhere in the world right now, what would that be? Do you own any stocks or do any non-work related investing? Who is your favorite portfolio manager? What books are you currently reading? What happened when you worked with a team and one member wasn't contributing? How did you respond? What happens when you face more work than you can handle? What are you biggest strengths? Biggest weaknesses? What are the easiest decisions for you? Are you risk-averse or do you like taking risk? What would your work colleagues say about you? Who else are you interviewing with?

Consumer Discretionary

The consumer discretionary sector consists of retailers, media companies, consumer service providers, apparel companies and consumer durables. In general, these companies benefit from an improving economy when consumer spending accelerates. The most popular consumer discretionary ETFs include: Consumer Discretionary Select Sector SPDR (XLY A) Consumer Discretionary AlphaDEX Fund (FDX) Vanguard Consumer Discretion ETF (VCR A+)

Consumer Staples

The consumer staples sector consists of food and beverage companies as well as companies that create products consumers are unwilling to cut from their budgets. In general, these companies are defensive plays capable of withstanding an economic downturn. The most popular consumer staples ETFs include: Consumer Staples Select Sector SPDR (XLP A) Consumer Staples AlphaDEX Fund (FXG B+) Vanguard Consumer Staples ETF (VDC A+)

Energy

The energy sector consists of oil and gas exploration and production companies, as well as integrated power firms, refineries and other operations. In general, these companies generate revenue that's tied to the price of crude oil, natural gas and other commodities. The most popular energy ETFs include: Energy Select Sector SPDR (XLE A) Alerian MLP ETF (AMLP A) Vanguard Energy ETF (VDE A)

Financials

The financial sector consists of banks, investment funds, insurance companies and real estate firms, among others. In general, the majority of the revenue generated by the sector comes from mortgages and loans that gain value as interest rates rise. The most popular financial ETFs include: Financial Select Sector SPDR Fund (XLF A) Vanguard Financials ETF (VFH A+) SPDR S&P Bank ETF (KBE A)

Healthcare

The healthcare sector consists of biotechnology companies, hospital management firms, medical device manufacturers and many others. In general, the sector is considered to be both a growth opportunity and defensive play since people will always require medical aid. The most popular healthcare ETFs include: Health Care Select Sector SPDR (XLV A) Nasdaq Biotechnology ETF (IBB B+) Vanguard Health Care ETF (VHT A+)

Industrials

The industrial sector consists of aerospace, defense, machinery, construction, fabrication and manufacturing companies. In general, the industry's growth is driven by demand for building construction and manufactured products like agricultural equipment. The most popular industrial ETFs include: Industrial Select Sector SPDR (XLI A) Vanguard Industrials ETF (VIS A+) iShares Transportation Average ETF (IYT A)

Materials

The materials sector consists of mining, refining, chemical, forestry and related companies that are focused on discovering and developing raw materials. Since these companies are at the beginning of the supply chain, they are vulnerable to changes in the business cycle. The most popular materials ETFs include: Market Vectors TR Gold Miners (GDX B+) Materials Select Sector SPDR (XLB A) iShares U.S. Home Construction ETF (ITB A-)

Real estate

The real estate sector consists of companies invested in residential, industrial, and retail real estate. The main source of revenue for these companies comes from rent income and real estate capital appreciation. As a result, this sector is sensitive to interest rate changes. The most popular real estate ETFs include: Vanguard REIT ETF (VNQ A+) Vanguard Global ex-U.S. Real Estate Index Fund ETF (VNQI A+) Schwab US REIT ETF (SCHH A)

Tech

The technology sector consists of electronics manufacturers, software developers and information technology firms. In general, these businesses are driven by upgrade cycles and the general health of the economy, although growth has been robust over the years. The most popular technology ETFs include: Technology Select Sector SPDR (XLK A) Vanguard Information Tech ETF (VGT A+) DJ Internet Index Fund (FDN B+)

Telecom

The telecom sector consists of wireless providers, cable companies, internet service providers and satellite companies, among others. In general, these companies generate recurring revenue from consumers, but some subsets of the industry are facing rapid change. The most popular telecom ETFs include: Vanguard Telecom ETF (VOX A+) iShares US Telecommunications ETF (IYZ B+) iShares Global Telecom ETF (IXP A-)

Utilities

The utilities sector consists of electric, gas and water companies as well as integrated providers. In general, the sector generates consistent recurring income by charging consumers and businesses that provide higher-than-average dividend yields. The most popular utilities ETFs include: Utilities Select Sector SPDR (XLU A) Vanguard Utilities ETF (VPU A+) iShares Global Infrastructure ETF (IGF A-)

Questions to ask them

What's the general career path look like for someone in this role? What are the next steps to take during this process? IS there anything else I should do to in this process? How would you describe the culture of RSA vs the culture of Dell?... about going above and beyond, really pushing workers but in a collaborative environment. IS there a training process? The job has 0-2 years experience.

Greatest Weakness

When I really want something, I occasionally get nervous and speak too quickly. In my work as a tour guide, I grew comfortable speaking in front of large groups but these situations were very scripted. So, I'm fine speaking in front of groups and giving presentations but in a situation like a job interview for a position like this, I tend to speak too quickly and need to focus on slowing down. I've definitely improved this skill but I'd still like to become a more effective public speaker.

May want to be prepared to provide examples of where you felt you helped a company or institution or even on a college project or something

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Exchange Traded Fund (ETF)

shares traded on securities markets that represent the legal right of ownership over part of a basket of individual stock certificates or other securities