Finance Interview Questions And Answers

A broad term used to describe many aspects of finance or the financial industry, such as financial instruments, financial services, financial institutions, financial advisers or financial planning.

When an interview question about your motivation is asked it is designed to determine whether you have the right motivation to be a good fit for the company and the position offered.
Make sure you make you describe your motivation in manner that is relevant to the job.

Choose one of your most notable achievements and why you felt it was important.
Keep it relevant to the finance position you are applying for. Discuss the challenges you faced and tell the interviewer how your achievement can help you succeed in your new position.

Finance interviewers are looking for team players who can build strong relationships and play an integral role in the team's success.
In the financial industry it is imperative that you can successfully work in a team environment and that you are highly adaptable.

Think carefully before you answer, because the object of this question is to explore whether you are capable of communication information and whether you have the ability to communicate in a way that will gain the acceptance and agreement you are seeking.

In the finance industry financial professionals often have to persuade influential people to count on their expertise, follow their advice and use their services.
Your interviewer will want to make sure you are able to determine the best approach to achieve what you want by influencing clients.

Your answer to this question needs to highlight your knowledge of the company, that you understand the company's goals, achievements, and the challenges it faces.

Make sure the interviewer knows you understand the current economic times, the financial sectors issues relating to reputation issues, regulatory changes, cost reduction, industry innovations and credit availability. If you want to increase your likelihood of getting the position, give this question the attention it deserves.

A Debenture is a certificate of agreement of loans which is given under the company's stamp and carries an undertaking that the debenture holder will get a fixed return and the principal amount whenever the debenture matures.

The finance industry is always under pressure and the interviewer is looking to see if you are able to perform under pressure, that you can stay calm and defuse a stressful situation.

Tact is nothing but a situational rating power. Once I had gone to a government office for getting a certification. There I was told to offer excess fee more than the prescribed amount. I dealt tactfully just by asking the concerned person to acknowledge the excess fee. I also told him that the acknowledgement is for claiming educational allowance by my father. The person caught in the dilemma and dropped the issue.

Treasury bills are money market instruments to finance the short term requirements of the Government of India. These are discounted securities and thus are issued at a discount to face value.

The bondholder is always more senior. Stockholders (including those who own preferred stock) must wait until bondholders are paid during a bankruptcy before claiming company assets.

A journal is also called as a book of prime entry. Transactions occurred are first entered in this book to show which accounts should be debited and which should be credited.
On the basis of entries made in the journal, accounts are prepared, the book which contains the accounts is called a ledger. transactions entered in the journal are classified according to their nature and posted in their respective accounts in ledger. it is also called as book of final entry.

A trial Balance is statement of balances of all the accounts in the ledger prepared to prove the arithmetical accuracy of the books of accounts. It is also a list of Debit and Credit or a list of Debit & Credit Balance of all the ledger accounts prepared on any particular date.

Accounting management is the piratical application of management techniques to control and report on the financial health of the organisation. It involves the analysis, planning, implementation and control of programs designed to provide financial data reporting for managerial decision making.

In terms of financial management Net Worth of a company is share capital plus reserve and surplus reserve could be general reserve or reserve for bad & doubtful debts and in terms of accounting net worth is total assets minus total liabilities.

Nominal money is related to the measure of counting. Nominal figure is what is written on the bill. Where as real money relates to it is purchasing power.
Example:
If 10 units in nominal money can buy 2 chocolates in 1980 and 1 chocolate in 2000, in the same way, 10 units of nominal money is 10 units of real money in 1980 and 5 units of real money in 2000.

RAROC is a risk adjusted framework for profitability measurement and profitability management. It is a tool for measuring risk-adjusted financial performance. And it provides a uniform view of profitability across businesses (Strategic Business Units / divisions). RAROC and related concepts such as RORAC and RARORAC are mainly used within (business lines of) banks and insurance companies. RAROC is defined as the ratio of risk-adjusted return to economic capital.

Crossover rates have to do with the amount of earnings that are generated by two different but similar projects. The crossover rate is the point at which the two projects achieve the same net present value. In terms of investments, calculating a crossover rate between two similar securities can help an investor determine what to buy and what to sell.

A demat account is the account which is required for an individual to trade the securities to buy stocks or sell the stocks)in the stock market and it is also taken care by SEBI to control, guide and promotes the securities and to protect the interest of the investors.

An investor that wants the upside potential of equity but wants to minimize risk would buy preferred stock. The investor would receive steady interest-like payments (dividends) from the preferred stock that are more assured than the dividends from common stock. The preferred stock owner gets a superior right to the company's assets should the company go bankrupt. A corporation would invest in preferred stock because the dividends on preferred stock are taxed at a lower rate than the interest rates on bonds.

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. EBITDA came into wide use among private capital firms, wanting to calculate what they should pay for a business.

If you are applying for an investment management firm as an MBA, you would better have a good answer for this one. Also, if you think you are going to say it has outperformed the S&P each year, you better be well prepared to explain why you think this happened.

EFT is short for Electronic Funds Transfer. An EFT is a method of transferring money from one bank account directly to another account without any paper money actually changing hands. The two accounts do not have to be in the same bank.