Fixed-income people are given a fixed amount of salary every month. They are required to manage all the accounting and finance-related activities in the organization. These include management of cash flow statements, fund flow statements, recording transactions based on the cash inflows and outflows of a company so they are given fixed income for the same. Some easy questions related to accounts and finance are asked from the candidates to test their knowledge. Here, let’s know some Fixed Income Interview Questions.
Different kinds of interview questions are discussed below which will help you to understand and prepare well for your interview and increase the chances of getting hired. As is mentioned earlier, in the past few years there has been a tremendous increase in fixed income revenue in most of the organizations and banking sectors. It’s a great job even if you don’t have a particular interest in equities or commodities, you can earn a good amount of money from this career.
Fixed Income Interview Questions
Q1: Why have you chosen a fixed-income job?
Answer: To answer this question, you should be more target-oriented, as this question requires that you should be specific towards your goals. You need to mention what your future goals are and how much ambition you have to support the organization to achieve its targets.
Sample: I have the capabilities and good communication skills, technical knowledge, finance-related knowledge. I can provide advice on the share market or bonds or any other accounting-related skills. I will also help them to understand that I can perform the task based on my capabilities. I will contribute my efforts towards the organization to achieve organizational goals.
Q2. Explain the term bonds and why is it important?
Answer: This is one of the common questions asked in fixed-income interviews. Bond refers to those securities which consist of a fixed amount of interest every year even if the company is earning losses. The term bonds mean that they are given to a certain number of investors or the public for a particular period by organizations and companies. After the maturity of these bonds, the money needs to be reimbursed or renewed.
Sample: The time between the bonds issued and the bonds method is considered as a particular term period for a bond. For this particular period, an investor is provided with a specific effect amount of interest till the maturity date of bonds.
Q3. Explain the challenges faced by the fixed-income traders?
Answer: This is the most important question which is asked from the employees. There are many challenges faced by the company while working with a fixed income as they need to prepare for long working schedules. This creates pressure on the candidate so that they can focus on the positive aspects of the job. So a new recruiter is required to have a sufficient number of patients and experience in handling the challenges. It will help you stand apart in the fixed-income interview.
Sample: The fixed-income job requires knowledge related to debenture security markets and all the other kinds of securities of fixed cost. And also, doing a timely marketing analysis related to the market price and the cost price of the securities will help you to understand all the challenges.
Q4. Explain the yield to maturity term in a bond?
Answer: The yield to maturity bonds is the bonds that consist of the fixed cost around them which need to be paid to the investors. It is calculated based on the net profit of the return received from the maturity date of a bond after adjusting all the face value and the payment of the interest from the total amount received on maturity. It is considered the yield to maturity profit.
Q5. What are the current trends in the share market?
Answer: While asking the fixed income interview, it is a very formal question where you will be tested on the knowledge of the share market. A share market or trade market is a place where the securities are traded by the investors at the market price or the cost price. So you should have the basic knowledge related to the trading of the securities, about different types of securities, how the share market works, what is the opening time, what is Nifty, what is Sensex, and all the international companies.
Sample: So there is a need for the professional trader so that we can ascertain the trend of the market and suggest the investment strategies to have the best portfolio after taking into consideration all the types of risks.
So you should know the share market latest trends and also try to get more information from different business channels.
Q 6:What are the roles of debt capital market traders?
Answer: This type of question is mostly asked in the fixed income interview is required to show that you have some basic knowledge of the project at the capital market that if the market is a market similar to a share market that depends on the right securities are bought and sold with some amount of fixed costs that are fixed interest need to be paid even if the companies are earning losses.
Sample: A capital market is a place where companies and governments raise funds through the exchange of debt securities, bonds, government, and private bonds. So try to have the basic knowledge about it.
Q 7:Why have you decided to choose fixed income?
Answer: For this, you can tell them about your skills, experience, and capabilities in this area of fixed income. You can tell them some areas of interest in which you have experience of working in past organizations such as different kinds of trading in different areas, share market, capital market, debt market. Also, you can assure them that if you are given the chance, then you can provide your best services for the organization.
Sample: For working as a fixed-income, I have the fundamental knowledge related to different economic structures, organizational structures, market structures. I can discuss some principles, strategies, and trends that can guarantee some predictable future success and better cash flows in the organization.
Q 8:What are your areas of interest in fixed income?
Answer: In this question, you can give a simple answer to how passionate and interested you are in this kind of job and how consistently you can provide your services for the benefit of the organization. You can narrow down your area of interest.
Sample: I am interested in both types of bonds such as trading a government bond as well as trading a corporate bond because they are both the divisions of fixed income. So you have the experience and skill of dealing with different kinds of desks together.
Q9: State the difference between the futures and the forward contract?
Answer: Future and forward are types of international securities which are traded in the derivatives market. The future of the contract between the two parties where there is no predetermined rate is they are traded on the current rate. Why the forwards? Forwards are a contract between the two counterparties where the trade will take place at the predetermined standard rate, which is decided earlier and then at the same rate the things are traded in the future.
Sample: I have some basic knowledge about the future and forward as they are used as a hedging tool to reduce down the underlying risk in the market. They are liquid and can be easily converted into the cash market. While forwards are more engaged when a particular client wants exposure outside of the standardized contract of futures.
Q10: What is the difference between a loan and a bond?
Answer: Loans and wants both consists of the interest rate, so they may often look the same due to which the conclusions may occur between both of them. The loans are taken for the long-term or the short term. It is a form of credit that consists of some percentage of interest that can be paid along with the principal amount on a yearly or quarterly basis.
Sample: Bonds are a kind of government securities fixed at a fixed rate of income for years even if the government of the company is earning losses. And it is an asset that can be converted into cash. But a loan is a liability that needs to be paid within a stipulated period the loan amount has been taken. Loans have a fixed-term period, but bonds can be taken for larger term periods and their maturity date can be increased.
Conclusion
So now by reading the above article you must have a lot of information about the fixed-income interview and how to deal with it. It is almost an invariable division without any trading floor because it has a wide area of desks that helps in increasing the fixed income revenue related to sales and trading in the market. By preparing these questions, you can easily crack your interview and also help you to get a good position in the organization.
