Financial Services Interview Questions & Answers

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Financial Services Interview Questions & Answers

The field Financial Services encompass a wide range of career options like banks, credit management, financial analyst, financial advisor and financial manager. The knowledge required to perform the job responsibilities huge too. How is the interviewer going to test your skill set for hiring is million dollar question for many job seekers. Though you might have attended many interviews, you might be puzzled with the set of unexpected questions from the interviewer, job interview questions at wisdomjobs help you cross the hurdle easily. Financial Services job interview questions and answers are framed covering every subject of the finance the interviewer wants to test on while hiring you for the job profile. Browsing through the job questions at the portal will help you to easily get the job.

Financial Services Interview Questions

Financial Services Interview Questions
    1. Question 1. State The Types Of Lease In Financial Services?

      Answer :

      1. Capital lease
      2. Operating lease
      3. Sale and lease back
      4. Leveraged lease
      5. International lease
      6. Domestic lease 

    2. Question 2. What Is The Meaning Of Mergers?

      Answer :

      Merger refers to combining of two or more company and forming new company. Two or more company merge to form one new company is called as merger. 

    3. Question 3. State The Types Of International Factoring?

      Answer :

      1. Single or direct factoring system
      2. Direct export factoring
      3. Direct import factoring
      4. Back to back factoring 

    4. Question 4. State The Types Of Merger?

      Answer :

      1. Horizontal Merger
      2. Vertical Merger
      3. Conglomerate Merger
      4. Acquisition

    5. Question 5. State The Disadvantages Of Hire Purchase System?

      Answer :

      1. Ownership of asset is transferred only after the payment of the last installment.
      2. The magnitude of funds involved in hire purchase are very small and only small types of assets like office equipment's, automobiles, etc., are purchased through it.
      3. The cost of financing through hire purchase is very high.

    6. Question 6. What Is Meant By The Term "financial Services"?

      Answer :

      Financial Services is a term used to refer to the services provided by the finance . Financial Services is also the term used to describe organizations that deal with the management of money. Examples are the Banks, investment banks, insurance companies, credit card companies and stock brokerages.

    7. Question 7. State The Benefits Of Factoring?

      Answer :

      1. Facilitate liquidity
      2. Reduces the risk
      3. Expertise services
      4. Maximize profitability
      5. Time saving 

    8. Question 8. Describe The Purpose Of Housing Finance?

      Answer :

      The purpose of a housing finance system is to provide the funds which home-buyers need to purchase their homes. This is a simple objective, and the number of ways in which it can be achieved is limited. Notwithstanding this basic simplicity, in a number of countries, largely as a result of government action, very complicated housing finance systems have been developed. However, the essential feature of any system, that is, the ability to channel the funds of investors to those purchasing their homes, must remain.

    9. Question 9. A 120 Load Is Connected Across A Voltage Source With Vs = 12 V And Rs = 8 . The Voltage Across The Load Is A. 11.25 V B. 0 V C. 12 V D. 1.13 V ?

      Answer :

      The types of Domestic factoring are discussed below:

      1. Recourse Factoring
      2. Non-Recourse Factoring
      3. Advance Factoring
      4. Confidential and Undisclosed Factoring
      5. Maturity Factoring.
      6. Supplier Guarantee Factoring
      7. Bank Participation Factoring 

    10. Question 10. State The Difference Between Bill Of Exchange And Factoring?

      Answer :

      1. Bill discounting is always of recourse type while factoring can be either with or without recourse. In case of recourse the factor does not assume the credit risk and it is the company which assumes the credit risk. 
      2. Factoring is an off balance sheet entry in the sense that both amount of receivables and bank credit are not shown in the balance sheet which is not the case with the bill discounting which is shown in the balance sheet.
      3. In bill discounting there is only provision of finance while in factoring factor provides in addition to finance facility other facilities like sales ledger maintenance, collection etc..
      4. Discounted bills may be re-discounted several times before they mature for payment which is not the case with factoring.

    11. Question 11. What Factors Go Into Designing The Vapor Space Of Kettle Type Reboiler?

      Answer :

      Lease is a financial contract between the business customer (user) and the equipment supplier (normally owner) for using a particular asset/equipment over a period of time against the periodic payments called Lease rentals.

      Hire Purchase is a kind of installment purchase where the businessman (hirer) agrees to pay the cost of the equipment in different installments over a period of time. This installment covers the principal amount and the interest cost towards the purchase of an asset for the period the asset is utilized.

    12. Question 12. What Is The Meaning Of Fee Based Financial Services?

      Answer :

      Financial services can be defined as the products and services offered by institutions like banks of various kinds for the facilitation of various financial transactions and other related activities in the world of finance like loans, insurance, credit cards, investment opportunities and money management as well as providing information on the stock  and other issues like  trends. Fee based financial services are those which are paid for a flat fee rather than commission.

    13. Question 13. What Is The Meaning Of Venture Capital?

      Answer :

      Venture capital is financing that investors provide to start up companies and small businesses that are believed to have long-term growth potential. For start ups without access to capital s, venture capital is an essential source of money. Risk is typically high for investors, but the downside for the start up is that these venture capitalists usually get a say in company decisions.

    14. Question 14. What Is The Difference Between Mergers And Acquisition?

      Answer :

      A merger occurs when two firms, usually equal in size decide to continue business as a single firm rather than being owned and operate as separate entities. In order for a merger to happen, both companies should surrender their stocks so that a new company can be formed and new stock can be issued.

      In an acquisition, one company will purchase the other. In an acquisition, the company that acquires the target company will be entitled to target company's all the assets, properties, equipment, offices, patents, trademarks, etc. The acquirer will either pay in cash to acquire the firm or provide shares in the acquirer's firm as compensation. 

    15. Question 15. State The Demerits Of Mergers And Acquisitions?

      Answer :

      • Rationalization of your balance sheet
      • Securing financing at prevailing  interest rates
      • Achieving flexible terms that meet the requirements of your cash flow plan, etc.
      • Managing your funds efficiently
      • Unifying the terms of transactions with financial institutions
      • Securing liquidity

    16. Question 16. What Is The Meaning Of Loan?

      Answer :

      An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan.

    17. Question 17. What Is The Meaning Of Forfeiting?

      Answer :

      Method of export trade financing, especially when dealing in capital goods or with high risk countries. In forfeiting, a bank advances cash to an exporter against invoices or promissory notes guaranteed by the importer's bank. The amount advanced is always 'without recourse' to the exporter, and is less than the invoice or note amount as it is discounted by the bank. The discount rates depends on the terms of the invoice/note and the level of the associated risk.

    18. Question 18. What Are Some Good Strategies For Curing Tube Vibration In Shell And Tube Exchangers?

      Answer :

      1. Financing of an asset through hire purchase is very easy.
      2. Hire purchaser becomes the owner of the asset in future.
      3. Hire purchaser gets the benefit of depreciation on asset hired by him/her.
      4. Hire purchasers also enjoy the tax benefit on the interest payable by them.

    19. Question 19. What Is The Meaning Of Bills?

      Answer :

      A bill is a promissory note drawn by seller from buyer which undertakes liability to pay certain amount to bearer or specified person on or after maturity period.

    20. Question 20. State The De-merits Of Factoring?

      Answer :

      1. It is very costly.
      2. In factoring there are three parties: The seller, the debtor and the factor.
      3. It helps to generate an immediate inflow of cash.
      4. Here the full liability of debtor has been assumed by the factor.
      5. Factor has the right to take any legal action required to recover the debts. 

    21. Question 21. What Is A Lease Agreement?

      Answer :

      Written or implied contract by which an owner of a specific asset such as a parcel of land, building, equipment, or machinery grants a second party the right to its exclusive possession and use for a specific period and under specified conditions, in return for specified periodic rental or lease payments.

    22. Question 22. What Are Some Of The Consequences Of An Undersized Kettle Type Reboiler?

      Answer :

      1. The hire purchaser becomes the owner of the asset after paying the last instalment.
      2. Every instalment is treated as hire charge for using the asset.
      3. Hire purchaser can use the asset right after making the agreement with the hire vendor.
      4. The hire vendor has the right to repossess the asset in case of difficulties in obtaining the payment of instalment.

    23. Question 23. What Is The Meaning Of Factoring?

      Answer :

      Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs. Forfaiting is a factoring arrangement used in international trade finance by exporters who wish to sell their receivables to a forfaiter. Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing.

    24. Question 24. What Is The Meaning Of Housing Finance?

      Answer :

      Housing finance brings together complex and multi-sector issues that are driven by constantly changing local features, such as a country's legal environment or culture, economic makeup, regulatory environment, or political system.

    25. Question 25. State The Parties To Loan Syndication?

      Answer :

      1. Borrower
      2. Lead arranger
      3. Agent
      4. Participating Bank

    26. Question 26. What Is The Meaning Of Portfolio Management?

      Answer :

      The art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return is called as portfolio management.

      Portfolio management refers to managing an individual's investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame. Portfolio management refers to managing money of an individual under the expert guidance of portfolio managers.

    27. Question 27. What Is The Meaning Of Domestic Factoring?

      Answer :

      Domestic factoring means purchase, funding, management and collection of short term accounts receivable arising from supply of goods and services to domestic buyers. Goods are delivered on open account credit terms up to 180 days.

    28. Question 28. State The Advantages Of Venture Capital?

      Answer :

      Business expertise: Aside from the financial backing, obtaining venture capital financing can provide a start-up or young business with a valuable source of guidance and consultation. This can help with a variety of business decisions, including financial management and human resource management.

      Additional resources: In a number of critical areas, including legal, tax and personnel matters, a VC firm can provide active support, all the more important at a key stage in the growth of a young company. Faster growth and greater success are two potential key benefits.

      Connections: Venture capitalists are typically well connected in the business community. Tapping into these connections could have tremendous benefits.

    29. Question 29. State The Charges And Fees Payable For Housing Loan?

      Answer :

      1. Processing fees
      2. Legal and documentation charges
      3. Insurance charges
      4. Fine for default in payment of installation
      5. Technical charges

    30. Question 30. State The Importance Of Financial Services?

      Answer :

      Importance of Financial Services:

      1. Vibrant Capital .
      2. Expands activities of financial s.
      3. Benefits of Government.
      4. Economic Development.
      5. Economic Growth.
      6. Ensures Greater Yield.
      7. Maximizes Returns.
      8. Minimizes Risks. 

    31. Question 31. State The Advantages Of Portfolio Management?

      Answer :

      1. Investors make informed decision
      2. Improves business performance
      3. Equitable use of resources
      4. Align objectives with goals
      5. Monitors all business processes

    32. Question 32. What Is The Meaning Of Loan Syndication?

      Answer :

      Loan syndication is the process of involving several different lenders in providing various portions of a loan. Loan syndication most often occurs in situations where a borrower requires a large sum of capital that may be too much for a single lender to provide or outside the scope of a lender's risk exposure levels. Thus, multiple lenders work together to provide the borrower with the capital needed.

    33. Question 33. What Are Various Financial Services Organizations?

      Answer :

      1. Banks
      2. Mutual savings banks
      3. Savings banks
      4. Building societies
      5. Credit unions
      6. Financial advisers or brokers
      7. Insurance companies 

    34. Question 34. State The Advantages Of Foreign Collaboration?

      Answer :

      1. Optimum utilization of resources
      2. Technical assistance
      3. Economic development
      4. Improves standard of living
      5. Improves balance of payment
      6. International Relationship

    35. Question 35. What Is The Meaning Of Hire Purchase System?

      Answer :

      Hire-purchase system is a special system of purchase and sale of goods. Under this system purchaser pays the price of the goods in instalments. The instalments may be annual, six monthly, quarterly, monthly fortnightly etc. Under this system the goods are delivered to the purchaser at the time of agreement before the payment of instalments but the title on the goods is transferred after the payment of all instalments as per the hire-purchase agreement.

    36. Question 36. What Exactly Is Ad Hoc Testing? When Will You Use Ad Hoc Testing ?

      Answer :

      1. Tax benefits
      2. Alternative use of funds
      3. Boon to small firms
      4. Flexibility of payment
      5. Protect against obsolescence
      6. Leasing is faster and cheaper credit

    37. Question 37. Describe The Two Components Of Financial Restructuring?

      Answer :

      Debt restructuring:Debt restructuring is the process of reorganizing the whole debt capital of the company. It involves reshuffling of the balance sheet items as it contains the debt obligations of the company.??A company??s financial manager needs to always look at the options to minimize the cost of capital and improving the efficiency of the company as a whole which will in turn call for the continuous review of the debt part and recycling it to maximize efficiency.

      Equity restructuring:Equity restructuring is the process of reorganizing the equity capital. It includes reshuffling of the shareholders capital and the reserves that are appearing in the balance sheet. Restructuring of equity and preference capital becomes a complex process involving a process of law and is a highly regulated area.

    38. Question 38. State The Features Of Venture Capital?

      Answer :

      Venture capital has the following features: 

      1. Venture capital investments are made in innovative projects.
      2. Benefits from such investments may be realized in the long run.
      3. Suppliers of venture capital invest money in the form of equity capital.
      4. As investment is made through equity capital, the suppliers of venture capital participate in the management of the company.

    39. Question 39. State The Types Of Factoring?

      Answer :

      • Domestic Factoring
      • International Factoring

    40. Question 40. An 18 V Source Has An Internal Resistance Of 70 . If A Load Resistance Of 33 Is Connected To The Voltage Source, The Load Power, Pl, Is A. 0 W B. 1 W C. 175 Mw D. 18 Mw?

      Answer :

      International factoring is an ingenious and relatively simple concept. Factoring serves as export insurance. Factors, usually working for a factoring company, guarantee the import price of goods to the exporter. It is the exporter who hires the factor. The factor is totally responsible for the cash flow from the importer to the exporter. In essence, credit is outsourced to the factor company.

    41. Question 41. State The Features Of Financial Services?

      Answer :

      1. Intangibility
      2. Customer oriented
      3. Perishable in nature
      4. Inseparable
      5. Direct sale
      6. Labor intensive

    42. Question 42. State The Various Institutions Providing Housing Finance?

      Answer :

      1. Industrial Development Bank of India[IDBI]
      2. Tata Home Finance
      3. LIC Housing Finance
      4. State Bank of India
      5. Bank of Punjab 

    43. Question 43. State The Disadvantages Of Leasing?

      Answer :

      1. The lessee gets only the right to use the asset. In case the leasing company is wound up the asset may be taken back from the lessee thereby disrupting his operations.
      2. The lessee cannot make alterations or improvements in the asset without the prior approval of the lessor. The lessor may also put some restrictions on the lessee.
      3. The lessee has to pay lease rentals on a regular basis to the lessor.

    44. Question 44. State The Methods Of Venture Capital Financing As Per Indian Scenario?

      Answer :

      • Equity participation
      • Conventional loan
      • Conditional loan
      • Income notes 

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