Jack Of Interviews: Finance

Banking Interview Questions -7

• Whats the difference between RTGS and NEFT

• What are the possibilities of a public sector bank to compete with private sector banks.

• Define Prime Lending Rate
        It is the rate at which commercial banks give loan to its prime customers.

• What is the understanding on RTI act?

• How intangible assets are entered in balance sheet?

• name 5 private sector insurance companies

• what is parallel economy

• Define sub-prime crisis

• What is currency of Russia?

• What is the difference between bearer and ordered cheque

• What are intangible net worth

• What is your understanding on financial Inclusion.

• What is your understanding on capital markets

• What are the different accounts in banks and/or other financial institutions.

o Deposit account

       Checking accounts or current account

       Savings accounts

      Money market deposit account:

      Time deposit

o Personal account

o Sweep account

o Transactional account or demand accounts or demand deposit accounts

Interview Qts - Bank/BPO - 6

Banking Interview Questions -6

• What is the full form of ICICI ? Industrial Credit and Investment Corporation of India..

• Why were banks nationalised?

• What is the total count of no. Of PSU banks in India?

• Name any two banks which have overseas centre?

• What is the full form of HDFC ?

• What are the nationalized banks?

• What is the difference between c and visual basic and where are these used in Banks

• How and why computers are used in banks?

• Do you Indian Banking sector is too regulated

• What are fiscal deficit? What is its value

• What is Forex reserve of India?

• Whats is you understanding on Inflation,

• Where is the note printing press?

• What is NRE Account?

• What are your views on privatization of banks?

• What are the various divisions of NPA?

• When is an asset classified as NPA?

• What is GDP?

• Hows GDP calculated

• What is GNI?

• What is recession?

• what is meant by GDP? What r the services that r not included while calc GDP?

• What is the current GDP of India and proposed GDP for next year.

• Define RTGS

• Define NEFT?

Interview Qts - Bank/BPO - 5

Banking Interview Questions - 5

• What are the tools used by a bank to do there asset liability mismatch.

• Whats are the tools with RBI to control liquidity in market

• Who is the chairperson of RBI

• What is the role of FICCI

• Explain monetary and fiscal policy in brief?

• Which is the first bank established in India ?

• How net profit is entered in Balance sheet?

• Name few major mergers in banking sector

• What’s your view on consolidation of banking sector

• how many days rbi publishes its policies

• What is KYC

• What is diminishing marginal utility?

• How will you ascertain the risk of a customer?

• Whats is CIBIL?. What is its role

• Name few private banks

Interview Qts - Bank/BPO -4

Banking Interview Questions -4

• How is the importance of insurance sector? What are the growth drivers.

• What is the role of RBI

• What are SMEs?

• What is the role of IRDA?

• How does a bank earn its profit?

• What are the various kind of business undertaken by Banks

• What do you understand from “overdraft”
It is the loan facility on customer current account at a bank permitting him to overdraw up to a certain agreed limit for a agreed period ,interest is payable only on the amount of loan taken up.

• What are NBFC’s?

• Name few famous NBFC’s in India?

• What’s the role of NBFC’s In India?

• How a project is appraised?

• Which organizations regulates NBFC’s

• What are dated securities

• What is NPA?

• What is RR(Repo rate)?
Under repo transaction the borrower places with the lender certain acceptable securities against funds received and agree to reverse this transaction on a predetermined future date at agreed interest cost. Repo rate is also called (repurchase agreement or repurchase option).

Interview Qts - Bank/BPO -3

Banking Interview Questions -3

• Name few regulatory agencies in Indian Banking Sector

• What considerations should be taken while making a portfolio ?

• What is the role of SEBI

• Where does an insurance company invests its funds ?

• What is single entry system?

• Benefits of double entry system to single entry system.

• What are treasury bills?

• How can we increase the foreign reserve of the country?

• What is your understanding on Core Banking?

• What is Yield

• what is basel accord?

• How is yield related to market price ?

• What is HTM & AFS ?

• Define ALM?

• What is mark to market?

Interview Qts - Bank/ BPO-2

Banking Interview Questions-2

• What is insurance liability?

• What is asset liability matching

• What is public liability?

• What is trade deficit?

• What is India's forex reserve?

• What is SEZ?

• Why companies setup Sez?

• What is balance sheet of the company?

• Functions of a bank?

• IRDP Scheme

• Rupee closing value yesterday/GBP closing value/ Euro closing value?

• What do you understand form mutual Funds

• What are SIPS?

• What are the normal investments options for a ordinary person

• What is Reinsurance?

Wednesday, April 21, 2010

Questions on Finance 31-40

1. Define Hard currency Hard currency or strong currency, in economics, refers to a globally traded currency that can serve as a reliable and stable store of value
2. What do u understand from Spring Loading An option-granting practice in which options are granted at a time that precedes a positive news event. Spring loading relies on the fact that positive news typically causes the underlying company's stock to surge in value. Timing an option grant to precede the public news release provides the option holder with an almost instant profit
3. Explain Commodity swap A swap in which exchanged cash flows are dependent on the price of an underlying commodity. A commodity swap is usually used to hedge against the price of a commodity
4. Define Love Money Seed money or capital given by family or friends to an entrepreneur to start a business. The decision to lend money and the terms of the agreement are usually based on qualitative factors and the relationship between the two parties, rather than on a formulaic risk analysis.
5. Define Hobby Loss A non-deductible loss incurred as a result of doing an activity for personal pleasure instead of for profit. A taxpayer cannot deduct the hobby loss as a business loss. A "hobby loss rule" is used to determine whether an activity is a hobby or a business.
6. What do u understand from a Cafeteria Plan / Flexible benefit plan An employee benefit plan that allows staff to choose from a variety of benefits to formulate a plan that best suits their needs. Cafeteria plan options may include health and accident insurance, cash benefits, tax advantages and/or retirement plan contributions
7. What do u understand from Sin tax A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. These type of taxes are levied by governments to discourage individuals from partaking in such activities without making the use of the products illegal. These taxes also provide a source of government revenue
8. Define Crack spread The spread created in commodity markets by purchasing oil futures and offsetting the position by selling gasoline and heating oil futures. This investment alignment allows the investor to hedge against risk due to the offsetting nature of the securities.
9. Define transfer tax Any kind of tax that is levied on the transfer of official documents or other property. Transfer tax is paid by the seller of the property. Gift and estate taxes are both transfer taxes
10. Define surrender period The amount of time an investor must wait until he or she can withdraw funds from an annuity without facing a penalty. Withdrawing money before the agreed-upon holding period can result in a surrender charge.

Questions on Costing 11-20

1. What is conversion cost
Direct labour and overhead are called conversion cost

2. What is Prime Cost
Direct material and direct labour are referred to as prime cost

3. Define Variable cost
Variable costs are expenses that change in proportion to the activity of a business

4. Define Direct cost
Direct Costs, however, are costs that can easily be associated with a particular cost object

5. Are all variable cost classified as direct cost?
Not all variable costs are direct costs, however; for example, variable manufacturing overhead costs are variable costs that are not a direct costs, but indirect costs.

6. What is contribution margin
- Contribution margin is the marginal profit per unit sale.
- Contribution margin analysis is a measure of operating leverage: it measures how growth in sales translates to growth in profits.
- High contribution margins are prevalent in labour-intensive tertiary sector
- Low contribution margins are prevalent in capital-intensive industrial sector.

7. What is CVP analysis?
Cost-Volume-profit(CVP), in managerial economics is a form of cost accounting. It is a simplified model, useful for elementary instruction and for short-run decisions.

8. What are the assumptions used in CVP analysis
- The behaviour of both costs and revenues is linear throughout the relevant range of activity.
- Costs can be classified accurately as either fixed or variable.
- Changes in activity are the only factors that affect costs.
- All units produced are sold ie there is no finished goods inventory
- When a company sells more than one type of product, the sales mix (the ratio of each product to total sales) will remain constant.

9. What is break –even point.
In Cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain.

Break even point (for output) = fixed cost / contribution per unit
Contribution (per unit) = selling price (per unit) - variable cost (per unit)
Break even point (for sales) = fixed cost / contribution (per unit) * selling price (per unit)

10.Define Margin of safety
Margin of safety represents the strength of the business. It enables a business to know what is the exact amount he/ she has gained or lost and whether they are over or below the break even point.

The actual sales minus break even sales gives the margin of safety.

Questions on pricing 1- 10

1. What is cost pricing?
The cost pricing is the theory that the price of an object is determined by the sum of the cost of the resources that went into making it. The cost can compose any of the factors of production including labor, capital, or land and taxation.

2. What is full cost pricing.
Full cost pricing is a practice where the price of a product is calculated by a firm on the basis of its direct costs per unit of output plus a markup to cover overhead costs and profits. The overhead costs are generally calculated assuming less than full capacity operation of a plant in order to allow for fluctuating levels of production and costs.

3. What is the guiding principle for full cost pricing?
The guiding principle underlying the Full Cost Pricing Policy is that a government business should not enjoy any net competitive advantage (or disadvantage) in respect of its private sector counterparts simply because of its public sector ownership. That is, the policy aims to achieve competitive neutrality between public and private sector businesses

4. What’s the difference between costing and pricing
Costing involves determining the value of resources consumed in the production of goods or the provision of a service. Costing's role in pricing is to act as a benchmark against which pricing and production decisions can be made. Pricing refers to the process of determining a figure at which products or services will be exchanged in the marketplace. The focus on pricing is on the income received from the exchange of the good or service.

5. What is market based pricing?
A pricing model wherin the concern is how to price , so that it can affect the company’s position in the marketplace. Value is included in this notion of price, and the underlying marketing theme is to set prices at ‘what the market will bear’. The assumption behind market-based pricing techniques is that prices are a major factor in achieving competitiveness.

6. What are the various methods of market based pricing?

- Penetration pricing
- Skimming
- Perceived value pricing
- Psychological pricing

7. Define Penetration pricing
Penetration pricing involves setting prices at a sufficiently low level to make them attractive to the mass market. The aim is to achieve high initial sales, which are maintained during the life cycle of the product. An associated aim is to deter competitors. Penetration pricing is particularly appropriate for products where unit cost reductions can be achieved through initial mass production. Setting-up costs are usually high and initial development costs are recovered over a long period. The task of marketing is to ensure that customers retain interest during the life of the product.

8. Define Skimming
A skimming approach adopts a high-price strategy, charging what the market will bear. The aim is to ’skim the cream off the market’. This policy is particularly attractive to a company with a new and unique product. When the cream has been skimmed, prices can be progressively reduced.

9. Define Perceived value pricing
Perceived value pricing determines prices from assumptions made about the beliefs that consumers have of the value of the product to them. These assumptions may be founded on market research aimed at establishing in buyers’ minds values about the basic product and the various special features in the product that appeal to them. If the company charges more than the buyer-recognized value, sales will suffer. Revenue may also fall below attainable levels if prices are lower than the perceived value.

10.Define Psychological pricing
Many consumers use price as an indicator of quality. Prestige pricing uses higher prices to promote the idea of value and status. Price levels can be set just below a round figure, for example Rs 9.99 rather than Rs 10.00. These pricing points, as they are called, persuade people to think that the price is in a lower range than they expected. Value for money can be emphasized by the effective presentation of discounts and free offers. The perceived value of offering one item free if four items are purchased may have a greater impact than a 20 per cent discount offered over the whole five purchases.

Questions on Costing 1- 1o

1. Define Product Costs.
Product cost includes all costs that are required to make a product. Product costs are Direct Material, Direct Labor, Manufacturing Overhead costs. Its included as part of inventory and shown on the balance sheet until the product is sold. Product costs are often called “inventoriable costs” or “manufacturing costs”.

2. Define Period Costs.
Period cost includes Selling and Administrative costs. These costs are reported on the income statement as they are incurred. Not part of manufacturing overhead, not related to making the product.

3. Give few examples of period cost
Any cost at corporate headquaters, anything related to selling the product, shipping costs, administrative salaries, executive salaries, administrative office expenses, sales commissions, advertising, research and development, etc. Warehouse costs and people who move inventory are period costs

4. Define Selling Costs
All cost associated with marketing the finished products and getting the product to the customer

5. Define Administrative Costs
Costs incurred for the general administration of the organization

6. Define Direct Materials
Raw materials that become a part of the finished product

7. Explain Manufacturing Overhead
All costs of manufacturing the product except direct materials and direct labor. Costs associated with operating the factory that makes the product. If the cost has the word “factory”, “plant”, “manufacturing”, as a descriptive word, the cost will be part of manufacturing overhead.

8. Give few examples of manufacturing overhead costs
Utilities at the plant such as electricity, water, phone. Support personnel at the plant such as an accountant, human resources or computer support. Training, maintenance and repairs, rent, insurance, taxes, etc.

Hint – it has to happen at the manufacturing facility.
Indirect labor and indirect material are part of manufacturing overhead.

9. Define Indirect labor
Labor involved in making the product at the plant but do not touch the product to make it. example: salaries of the plant managers, supervisors, and quality inspectors

10. Define Indirect Materials
Low cost materials that end up in the product or are used to make the product. Examples are glue, tape, screw, marking pens, etc. It is not easy to track exactly how much is used to make one product.If the cost of a particular material cannot be easily traced to one product, it is an indirect material and is part of manufacturing overhead. Examples of indirect materials are cheap screws, tape, glue.

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Wednesday, February 16, 2011

Interview Qts - Bank/BPO - 7