FIMS INTERVIEW QUESTIONS

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1. What is Amortization?
The repayment of the loan by instalment to cover principal amount with
interest is known as Amortization.

2. What is the difference between bank guarantee and letter of

credit?
There is not much difference between bank guarantee and letter of credit
as they both take the liability of payment. A bank guarantee contains
more risk for a bank than a letter of credit as it is protecting both parties
the purchaser and seller.
3. What ACH stands for?
ACH stands for Automated Clearing House, which is an electronic transfer
of funds between banks or financial institutions.
4. What is meant by mark-to-market?
Mark-to-market is the process by which securities are recorded on
financial statements using current market prices, as opposed to
purchase prices or accounting values.
5. What are the different types of securities market?
Debt, Equity and Derivatives
6. Debt market is further divided into.?
- Government securities market
- Money market
- Corporate Debt market

7. Equity market is divided into?

- Primary market
- Secondary market
8. What do you mean by Derivatives? Give an example
The word derivative refers to a variable which has been derived
from another variable. Thus derivatives have no value of their own
as they derive their value from the value of some other assets which
is known as 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 in the future at a predetermined price.
The value of the contract depends on the expiry period and also on
the price of the underlying asset. For example Derivative contract
on crude oil depends on the price of crude oil.

9. What are the characteristics of Government securities market?

- It is the largest segment of debt market in India.
- It accounts for nearly 2/3rd of the issues in primary market.
- It accounts for nearly 4/5th of the turnover in secondary market.
- Issues are regulated by RBI under Public Debt Act.
- These securities are issued through an auction mechanism.
- Perspective investors are banks, insurance companies, mutual
funds, trusts, provident funds etc.
- These instruments can be traded in WDM segment of NSE which is
fully automated screen based trading system.
10.

What is Beta of an asset?

Beta of an asset is a way of measuring systematic risk of an asset. It

shows how price of a security responds to changes in market price.
It indicates the extent of movement of the returns of the stock with
respect to the movement of market returns. Assets that are riskier
than average will have Betas that exceed 1 and assets that are safer
than average will have Betas lower than 1. The riskless asset will
have a value of Beta=0. The Beta of the market portfolio or the
average of Betas across al assets in the market is 1.
11.

What do you understand by Stock market indices? Name the

major stock market indices.

Stock market indices are used to measure the general movement of
the stock market. It is used as a proxy for overall market movement.
The major stock market indices are:
- Bombay Stock Exchange Sensitive Index (BSE) popularly known as

Sensex. It reflects the movements of 30 sensitive shares from

specified and non specified groups.
- S and P CNX nifty, known as Nifty Index. It reflects the movements
of 50 scrips selected on the basis of market capitalization and
liquidity.

12.

What is the difference between Bombay Stock Exchange and

National Stock Exchange?

- Bombay Stock Exchange index or Sensex was started in 1986
whereas National Stock Exchange index namely Nifty started in
1995.
- The base year for the sensex is 1978-79 and base value is 100
whereas the base year for nifty is 1994 and base value is 1000.
- BSE consists of 30 scrips whereas NSE consists of 50 scrips.
- BSE is screen based trading whereas NSE is ringless, national,
computerized exchange.
- BSE has adopted both quote driven system and order driven
system whereas NSE has opted for an order driven system.
13.
What do you understand by Money Market? Give an example.
Money market is the market where short term instruments of credit
with a maturity period of one year or less than that are traded. Such
instruments are known as near money. The borrowers of money
market are traders, government, speculators and lenders in this
market are commercial banks, central bank, financial institutions
and insurance companies etc

14.
On what basis securities should be selected?
There are three factors which should be considered in selecting fixed
income securities:
-

Yield to maturity,
Risk to default,
Tax shield and
Liquidity.

There are three approaches to selection of equity shares:

fundamental analysis, technical analysis and random selection

15.

What are the important macroeconomic indicators that

influence stock market?

Following are the macroeconomic indicators that influence stock
market:
-

16.

GDP Growth Rate

Behaviour of monsoon and performance of agriculture
Trends in public investment and savings
Monetary and fiscal policy
Economic and political stability
Inflation
Infrastructural facilities and arrangements

Who are the stakeholders in an organization?

A stakeholder can be a person, an organization, a social group or a society at

large that has a stake in a business where stake is an essential interest in the
business or its activities. It can include ownership and property interests, legal
interests and obligations, and moral rights.