Preview Questions Financial Analyst | Role Specific Skill

Question 1: Which financial metric is most critical in assessing the attractiveness of an investment in a real estate project?

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Net operating income (NOI)

Dividend yield

Internal rate of return (IRR)

Price-to-earnings ratio (P/E)

Question 2: When calculating liquidity ratios in a financial model, what is the critical component to focus on?

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The level of bank reserves held without considering liquidity needs

The structure and timing of cash inflows and outflows, including short-term liabilities

The regulatory capital requirements as a liquidity buffer

The size of the bank's loan portfolio relative to total assets

Question 3: What is the primary advantage of using a rolling forecast in financial budgeting within BFSI?

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It provides a static view of financial performance

It eliminates the need for periodic budget reviews

It simplifies the budgeting process by fixing the forecast period

It allows continuous updating and adjustment of forecasts based on the latest data

Question 4: For forecasting operational risk losses in a bank's trading division, which approach effectively integrates internal loss data, external loss events, and forward-looking scenario analysis?

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Historical loss distribution fitting without scenario input

Linear extrapolation of internal loss trends

Loss distribution approach augmented with scenario-based stress tests and external data scaling

Simple Monte Carlo on past loss frequency and severity

Question 5: In the context of investment analysis, what does the term "alpha" represent for a portfolio manager in BFSI financial services?

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The correlation between the portfolio's returns and the market's returns

The portfolio's return relative to its benchmark, adjusted for risk

The portfolio's volatility compared to the market

The total return of the portfolio

Question 6: Which valuation method is least commonly used in financial models for BFSI companies?

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Sum-of-the-Parts Analysis

Price-to-Book Ratio

Dividend Discount Model (DDM)

Net Asset Value (NAV)