Nick's Finance Interview Questions
This section is on Finance Interview Questions...
Largely Fixed Income.
These are some of my favourite interview questions to ask in a finance interview.
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17. Finance Interview Questions - Bond Rich / Cheap Spread
What is meant by Bond Rich / Cheap Spread ?
- How do you work out whether a bond is rich or cheap ?
16. Finance Interview Questions - Interpolation
What is Interpolation ?
What are the different ways commonly used to Interpolate ?
Here is an interesting video
Here is an interesting video on Non-Linear interpolation (more info here)
that IS an excellent video.
that IS an excellent video.
what is interpolation?
in FI finance, it's coming up with zero rates or par yields that are associated with certain time periods not quoted in the typical yield curve.
Typical:
3M
6M
1Y
2Y
5Y
10Y
20Y
30Y
interpolation finds rates between these time periods. can be linear, but cubic spline is the most popular.
15. Finance Interview Questions - Yield Curve Risk
What's the riskiest part of the yield curve ?
Yield Curve Risk
The longer maturities are the riskiest. Here the duration /price sensitivity of interest rate instruments is greatest, and the instruments most illiquid.
Yield Curve Risk
Not necessarily longer maturities are the riskiest. If the Yield Curve is inverted ? Short Maturities could be riskier than the longer term maturities.
14. Finance Interview Questions - Discount Factor
What is a Discount Factor ?
Describe the shape of a Discount Factor curve.
What's the difference between a zero coupon bond price and a discount factor ?