Interview Questions.

Question 1. What Do You Understand By Securities Market? What Are The Different Types Of Securities Market?

Answer :

Security market is a marketplace where securities are issued and traded. It is the market for different sorts of securities namely: Debt, Equity and Derivatives.

Debt market is in addition divided into three elements:

Government securities marketplace
Money marketplace
Corporate Debt market
Equity market is split into  parts:

Primary market
Secondary market
Derivatives marketplace is also divided into  parts:

Options marketplace
Futures market
Question 2. What Do You Mean By Derivatives? Give An Example.

Answer :

The word derivative refers to a variable which has been derived from any other variable. Thus derivatives don't have any value in their own as they derive their fee from the fee of a few different property that is called underlying asset. They are specialized contracts which signify an agreement to buy or sell the underlying asset of the derivate up to a certain time inside the future at a predetermined charge. The fee of the contract depends at the expiry duration and also on the price of the underlying asset. For instance – Derivative settlement on crude oil depends at the fee of crude oil.

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Question three. What Are The Advantages Of Derivatives?

Answer :

Increased hedge for buyers in cash market.
Enhance fee discovery method.
Increases quantity of transactions.
Lower transaction charges.
Increased liquidity for investors and growth of savings flowing into these markets.
Leads to faster execution of trades and arbitrage and hedge towards chance.
Question 4. What Are The Characteristics Of Government Securities Market?

Answer :

It is the biggest section of debt market in India.
It debts for almost 2/third of the troubles in primary market.
It debts for almost 4/fifth of the turnover in secondary marketplace.
Issues are regulated through RBI under Public Debt Act.
These securities are issued via an auction mechanism.
Perspective traders are banks, coverage companies, mutual price range, trusts, provident funds and many others.
These units may be traded in WDM phase of NSE which is completely automated screen based trading system.
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Question 5. What Is Beta Of An Asset?

Answer :

Beta of an asset is a way of measuring systematic risk of an asset. It shows how fee of a security responds to adjustments in market fee. It indicates the extent of movement of the returns of the stock with recognize to the movement of market returns. Assets which are riskier than common could have Betas that exceed 1 and assets that are more secure than common may have Betas lower than 1. The riskless asset can have a value of Beta=zero. The Beta of the marketplace portfolio or the average of Betas across al assets in the marketplace is 1.

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Question 6. What Do You Understand By Stock Market Indices? Name The Major Stock Market Indices?

Answer :

Stock marketplace indices are used to measure the general motion of the inventory market. It is used as a proxy for usual market motion. The predominant stock marketplace indices are:

Bombay Stock Exchange Sensitive Index (BSE) popularly referred to as Sensex. It reflects the actions of 30 sensitive stocks from specified and non specified organizations.
S and P CNX nifty, known as Nifty Index. It displays the moves of fifty scrips decided on on the idea of market capitalization and liquidity.
Question 7. What Is The Difference Between Bombay Stock Exchange And National Stock Exchange?

Answer :

Bombay Stock Exchange index or Sensex turned into started out in 1986 whereas National Stock Exchange index specifically Nifty started in 1995.
The base year for the sensex is 1978-79 and base cost is a hundred while the base 12 months for nifty is 1994 and base cost is 1000.
BSE consists of 30 scrips whereas NSE includes 50 scrips.
BSE is display based totally buying and selling whereas NSE is ringless, country wide, computerized alternate.
BSE has followed both quote pushed system and order pushed device whereas NSE has opted for an order pushed system.
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Question 8. What Are The Different Types Of Equity Market?

Answer :

Equity marketplace includes number one market and secondary marketplace.

Primary equity marketplace – is also called new troubles market as securities are issued to public for the very first time. In this market the new issues are made in following four methods:

Public difficulty
Rights issue
Private placements
Preferential allotment
Secondary equity market – also known as Stock exchanges which can be an important part of capital market. It is an organized market place wherein securities are traded. These securities are issued by way of authorities, semi-authorities bodies, public region undertakings, joint stock businesses etc.

Question 9. What Do You Understand By Money Market? Give An Example.

Answer :

Money marketplace is the marketplace in which quick time period instruments of credit score with a maturity length of 12 months or much less than which are traded. Such contraptions are known as near cash. The debtors of cash marketplace are buyers, authorities, speculators and creditors on this market are industrial banks, principal bank, economic institutions and insurance companies and so on.

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Question 10. On What Basis Securities Should Be Selected?

Answer :

There are 3 elements which must be taken into consideration in selecting constant earnings securities: 

Yield to adulthood, 
Risk to default, 
Tax guard and 
Liquidity. 
There are 3 strategies to selection of fairness stocks: fundamental evaluation, technical evaluation and random selection

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Question eleven. What Are The Important Macroeconomic Indicators That Influence Stock Market?

Answer :

Following are the macroeconomic signs that impact inventory market:

GDP Growth Rate
Behaviour of monsoon and overall performance of agriculture
Trends in public funding and savings
Monetary and financial coverage
Economic and political stability
Inflation
Infrastructural facilities and arrangements
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Question 12. What Is Efficient Market Hypothesis?

Answer :

Efficient marketplace is one where the marketplace rate of the security is an independent estimate of its intrinsic cost. The efficient market hypothesis is based totally on following assumptions:

Market is best and free with none change restrictions.
Market absorbs all of the statistics quick and efficiently.
Information is unfastened and costless and is freely to be had to all at the equal time.
Information is fair and correct.
Market gamers can analyze the records speedy and it is absorbed in the market through purchase and sell alerts.
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Question 13. What Are The Main Phases Of Portfolio Management?

Answer :

Portfolio control is the management of numerous financial property that make a portfolio. There are following seven phases in portfolio control:

Specification of Investment Objectives and Constraints
Choice of Asset Mix
Formulation of Portfolio Strategy
Selection of Securities
Portfolio Execution
Portfolio Revision
Portfolio Evaluation
Question 14. Explain Fundamental Analysis And Technical Analysis.

Answer :

Security evaluation consists of two sorts of evaluation specifically, essential analysis and technical analysis.

Fundamental evaluation takes into consideration 3 kinds of analysis:

Economy analysis
Industry evaluation
Company analysis 
Technical analysis facilitates in forecasting the destiny charge of proportion on foundation of ancient movements of charge.

Question 15. What Are The Types Of Risks?

Answer :

Generally there are  forms of danger: Systematic threat and Unsystematic threat.

Systematic dangers are:

Market hazard
Purchasing electricity risk
Interest charge hazard
Unsystematic dangers are:

Business threat
Financial danger
Liquidity threat
Default danger
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Question sixteen. What Are The Basic Principles Of Dow’s Theory?

Answer :

Dow’s Theory is the oldest and the maximum regarded theories of technical analysis. It became proposed via Charles H. Dow. Dow’s theory has put forward six basic ideas:

The averages bargain the whole lot. 
Market has three primary movements. These are number one, secondary and minor moves.
Lines suggest moves. Such a movement indicates both accumulation or distribution.
Price-extent relationships provide history.
The fee action determines the fashion within the marketplace.
The averages have to verify i.E. The moves of two extraordinary marketplace indices must affirm every other to confirm the general trend.
Question 17. What Are The Significant Factors To Company Analysis?

Answer :

Company evaluation is a part of Fundamental analysis. Following elements are considerable to business enterprise analysis:

Marketing Policies
Accounting Policies
Profitability
Dividend Policy
Capital Structure
Management
Financial statement evaluation
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Question 18. What Are The Assumptions On Which Capm Is Based? What Are The Essential Elements Of Capm?

Answer :

CAPM (Capital Asset Pricing Model) is a threat and go back model. It predicts the connection between chance of an asset and its expected end result. This model assumes that:

Investors are hazard averse.
Investors are acknowledged with all the market fluctuations and statistics.
There aren't any regulations and transaction fees on investment.
Information available inside the market might be digested via the capital markets.
Investors have equal time horizons.
Investors have homogeneous expectations approximately risk and go back of securities.
The critical factors of CAPM are:

Risk free charge
Market Risk Premium
Beta of the security
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Question 19. What Is Mutual Fund? State Types Of Mutual Funds Schemes.

Answer :

Mutual Fund is an affiliation which swimming pools the financial savings of the traders who percentage not unusual monetary dreams. The money accumulated through quantity of traders is invested in exceptional types of financial devices for the mutual benefit of its individuals. The profits earned on these investments is then shared by means of the unit holders in share to the number of devices held by way of them. A mutual fund has sponsor, trustees, asset Management Company and custodian. Mutual budget schemes are categorized on the following basis:

Maturity Period – Open ended and closed ended schemes.
Investment Objective – Growth scheme, Income scheme, and balanced scheme.
Other schemes – Liquid fund, Gilt fund Index fund, Sector fund and Tex saving fund.
Question 20. What Are The Rights And Obligations Of The Buyer And Seller For The Call And Put Options?

Answer :

Rights and Obligations of the Buyer for Call Option:

Pays premium
Right to workout and purchase the stocks
Profits from rising fees
Limited losses, unlimited advantage
Rights and Obligations of the Seller for Call Option:

Receives top rate
Obligation to promote stocks if exercised
Profits from falling charges or last impartial
Unlimited losses, constrained advantage
Rights and Obligations of the Buyer for Put option:

Pays top class Right to workout and sell shares
Profits from falling expenses
Limited losses, limitless gain
Rights and Obligations of the Seller for Put alternative:

Receives premium
Obligation to buy shares if exercised
Profits from growing fee or final neutral
Potentially limitless losses, restricted benefit
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