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1. ⭐What are mutual funds and types of mutual funds ?? : A mutual fund is a type of investment that
pools money from many people to invest in a variety of assets like stocks, bonds, or other securities.
This pooling allows individuals to diversify their investments and access a broader range of strategies
or assets than they might be able to on their own.

a. stock funds : stocks / equity

b. bond funds : govt/ corporate funds. constant returns. safe.

c. index funds : govt. funds like S&P 500, DJIA.

d. balanced fund : mix f all, reduce risks.

2. ⭐Wat do u knw abt capital market or financial market??

Time Horizon:

 Money Market:

 Deals with short-term financial instruments, typically with maturities of less than one
year. These instruments are highly liquid, meaning they can be easily bought and sold
without significant price fluctuations.
 Capital Market: Focuses on long-term investments, with maturities exceeding one
year. Instruments in the capital market can be less liquid than those in the money
market.

Purpose:

 Money Market: Primarily functions to facilitate borrowing and lending for short-
term needs. Businesses and financial institutions use the money market to manage
their cash flow and liquidity.
 Capital Market: Plays a crucial role in raising capital for businesses and
governments. Companies can issue stocks and bonds in the capital market to raise
funds for expansion, projects, or acquisitions.

Instruments:
  Money Market: Common instruments include treasury bills, commercial paper,
certificates of deposit (CDs), and repurchase agreements (repos). These instruments
are generally low-risk and offer lower returns compared to the capital market.
 Capital Market: Stocks, bonds, and derivatives are the primary instruments traded in
the capital market. These instruments offer the potential for higher returns but also
carry greater risk compared to money market instruments.

Examples:

 Money Market: A company needs to cover payroll expenses before receiving

customer payments. They might borrow money in the money market through a
commercial paper issuance.
 Capital Market: A company wants to raise funds to build a new factory. They might
issue stocks or bonds in the capital market to investors.

Risk and Return:

 Money Market: Generally considered lower risk due to the short maturities and high
liquidity of the instruments. However, returns are also typically lower.
 Capital Market: Offers the potential for higher returns, but the instruments can be
more volatile and carry greater risk of loss.

Regulation:

 Money Market: Money market transactions are often subject to less stringent
regulations compared to the capital market.
 Capital Market: Capital market activities are typically more heavily regulated to
protect investors and ensure market stability.

In conclusion, the money market is ideal for short-term borrowing and lending needs with
lower risk and lower potential returns. The capital market caters to long-term investments
with the potential for higher returns but also carries greater risk.

3. What is investment banking?

Investment banking is a specialized area of finance that deals with high-stakes financial
transactions for institutions like corporations and governments. Imagine it as a financial
matchmaker, connecting those who need money (companies or governments) with those who
have money (investors). Here's a breakdown of the key things investment banks do:

 Raising Capital: Investment banks help companies and governments issue new
stocks or bonds to raise money for growth, projects, or acquisitions. They act as
intermediaries, ensuring a smooth process for both the company issuing the securities
(like stocks) and the investors buying them.
 Mergers & Acquisitions (M&A): Investment bankers advise companies on buying
other companies (acquisitions), merging with competitors, or selling off parts of their
 business (divestitures). They handle the complex negotiations, valuations, and legal
aspects of these deals.
 Providing Financial Advice: Investment banks offer a variety of consulting services
to clients. This might include helping them develop financial plans, manage risk, or
value their business for potential transactions.

Typical Clients:

 Corporations: Public and private companies seeking capital, M&A guidance, or

other financial expertise.
 Governments: Sovereign nations raising funds through bond issuance or needing
help managing their finances.
 Institutional Investors: Large investment firms, pension funds, and other institutions
looking for investment opportunities.

Benefits of Investment Banking:

 Increased Capital: Companies gain access to the funds they need to grow and
expand.
 Expertise and Efficiency: Investment banks bring specialized knowledge and
experience to complex financial transactions.
 Market Access: Banks help companies connect with a wider pool of investors,
raising capital more efficiently.

4. What is a Demat a/c? In India, a demat account, short for dematerialized account, acts like a
digital vault for your investments in financial securities. Instead of holding physical stock certificates,
you hold these investments electronically.

5. Difference between NSE and BSE? Here's a breakdown of the key differences between
NSE (National Stock Exchange) and BSE (Bombay Stock Exchange), the two leading stock
exchanges in India:

Establishment:

 NSE: Founded in 1992, a relatively newer entrant but has become the dominant stock
exchange in India.
 BSE: Established in 1875, the oldest stock exchange in Asia with a rich history.

Trading Platform:

 NSE: Primarily a fully electronic trading platform, offering faster and more efficient
trade execution.
 BSE: Started with a traditional open outcry auction system but has transitioned to
electronic trading. However, it may still have some elements of the legacy system.

Market Capitalization:
  NSE: Generally has a larger market capitalization, meaning the total value of all the
companies listed on the exchange is higher.
 BSE: Has a smaller market capitalization compared to NSE.

Number of Listed Companies:

 NSE: Lists around 1,600 companies, focusing on larger and more liquid companies.
 BSE: Lists over 5,500 companies, offering a wider range of companies, including
some smaller ones.

Products Offered:

 NSE: Offers a wider range of products, including derivatives like options and futures
contracts.
 BSE: Primarily focuses on equity cash trading but also offers some derivative
products.

Market Indices:

 NSE: NIFTY 50 is the benchmark stock market index for NSE, widely followed by
investors.
 BSE: SENSEX is the benchmark stock market index for BSE, also a significant
indicator.

Here's a table summarizing the key differences:

Feature NSE BSE

Established 1992 1875
Primarily electronic (legacy elements
Trading Platform Fully electronic
might exist)
Market Cap Larger Smaller
Listed
Around 1,600 Over 5,500
Companies
Wider range (including Primarily equity cash trading (some
Products Offered
derivatives) derivatives)
Market Index NIFTY 50 SENSEX

6. What do you understand by the term NAV (Net Asset value) n hw do u calculate it?

Net Asset Value (NAV), in the context of finance, refers to the per-share market value of a
mutual fund or exchange-traded fund (ETF). It essentially represents the underlying value of
all the assets held by the fund on a specific date, divided by the total number of outstanding
shares.

Here's how NAV is calculated:

 1. Calculate Total Assets: This involves finding the market value of all the securities
(stocks, bonds, etc.) held by the fund at the end of the trading day.
2. Subtract Liabilities: Any liabilities of the fund, such as operating expenses or
outstanding debts, are deducted from the total assets.
3. Divide by Number of Shares: The resulting net asset value is then divided by the
total number of outstanding shares in the fund.

Formula:

NAV per Share = (Total Assets - Liabilities) / Number of Outstanding Shares

What NAV Tells You:

The NAV provides investors with an idea of the intrinsic value of a mutual fund or ETF
share. It's not necessarily the same as the market price at which shares are traded, but it offers
a benchmark for comparison.

Here are some additional points to consider about NAV:

 NAV is calculated daily: The net asset value is typically calculated after the market
closes each trading day, reflecting the closing market prices of the fund's holdings.
 NAV doesn't reflect fees: The expense ratio, which covers the fund's operating costs,
is not factored into the NAV calculation.
 NAV vs. Market Price: The market price of a mutual fund share can sometimes
deviate from its NAV. This can happen due to factors like supply and demand for the
fund's shares.

Overall, NAV is a valuable tool for investors to understand the underlying value of their
mutual fund or ETF holdings. It helps them assess the performance of the fund and make
informed investment decisions.

7. Have you invested in Mutual Funds, if yes then which company? If no, then why dint you?

8. What is Equity capital and types of Equity Capital? Equity capital, also referred to as
shareholder's equity, is the portion of a company's capital that is raised by issuing shares
to investors. In simpler terms, it's the money that a company gets from selling ownership
stakes in itself to investors. This ownership stake represents a claim on the company's assets
and profits. here are two main types of equity capital:

1. Common Stock: This is the most basic type of equity capital. Common shareholders
have voting rights on certain company decisions, such as electing the board of
directors. They also have the potential to receive dividends, but are not guaranteed
any.

  Preferred Stock: Preferred shareholders typically don't have voting rights, but they
have certain preferences over common shareholders. These preferences can include:
  Priority on dividends: Preferred shareholders receive dividends before common
shareholders if they are declared.
 Fixed or cumulative dividends: Preferred stock may have a fixed dividend amount
or cumulative dividends, which means any unpaid dividends from previous periods
accumulate and must be paid before common shareholders receive any.
 Liquidation preference: In the event of company liquidation, preferred shareholders
may be entitled to receive their investment back before common shareholders.

9. What are Shares, Debentures Securities ?? Types of shares. Shares, debentures, and
securities are all financial instruments used for investment, but they differ in terms of
ownership, risk, and return. Here's a breakdown:

Securities:

 Broadest category: A security is a general term for any tradable financial asset that
represents a claim on something of value. This can include:
o Equity: Shares of ownership in a company (common and preferred stock).
o Debt: Loans to an entity (government or company) in the form of bonds or
debentures.
o Derivatives: Contracts derived from the value of underlying assets (stocks,
bonds, commodities, etc.).

Shares (Equity):

 Ownership interest: Represent ownership in a company. Shareholders are considered

"owners" with voting rights on certain company decisions.
 Return on Investment: Can potentially earn returns through dividends (a portion of
the company's profit) and capital appreciation (increase in share price).
 Risk: Generally considered riskier than debt because shareholders are last in line to
be repaid if the company goes bankrupt. However, they have the potential for higher
returns.

Types of Shares:

 Common Stock: Basic form of equity ownership with voting rights and potential for
dividends (not guaranteed).
 Preferred Stock: Offers certain preferences over common stock, like priority on
dividends or fixed dividend payouts. Typically doesn't have voting rights.

Debentures (Debt):

 Loan to a company: Represent a loan to a company. Debenture holders are

considered creditors, not owners.
 Fixed Interest: Offer a fixed interest rate (like a coupon on a bond) paid periodically
by the company.
  Lower Risk: Generally considered less risky than shares because debenture holders
get repaid before shareholders in case of liquidation. However, the return is usually
lower than potential equity returns.

Here's a table summarizing the key differences:

Feature Securities Shares (Equity) Debentures (Debt)

Category Broadest category Equity investment Debt investment
Claim on something of
Represents Ownership in a company Loan to a company
value
Varies (dividends, Dividends, capital Fixed interest
Return
appreciation) appreciation payments
Risk Varies (depends on security) Higher Lower
Voting
May or may not have Yes (common stock) No
Rights

10. What is a primary and secondary market? The financial markets can be broadly
categorized into two main parts: primary markets and secondary markets. These markets
play distinct roles in how securities are issued and traded. Here's a breakdown of their key
differences:

Primary Market:

 Function: The primary market is where new securities are issued for the first time.
This is where companies and governments raise capital by selling new bonds or
stocks to investors.
 Examples of Issuance:
o Initial Public Offering (IPO): A company's first public offering of shares on
a stock exchange.
o Seasoned Equity Offering (SEO): A company issuing additional shares to
the public after its IPO, to raise further capital.
o Bond Issuance: Governments and corporations can issue bonds in the primary
market to raise funds.
 Participants: Investment banks play a crucial role in the primary market by acting as
intermediaries between companies or governments issuing securities and investors
looking to purchase them.
 Price Discovery: The price of a new security in the primary market is often
determined through a book-building process, where investment banks gauge investor
interest to set a price.

Secondary Market:

 Function: The secondary market is where previously issued securities are traded
among investors. This is the more active and visible part of the financial system.
 Examples of Trading: Investors can buy and sell existing shares of companies,
government bonds, and other securities on secondary markets.
  Trading Venues: Stock exchanges like the New York Stock Exchange (NYSE) or the
National Stock Exchange of India (NSE) are the primary platforms for secondary
market trading.
 Price Fluctuations: Unlike the primary market where prices are set during issuance,
security prices in the secondary market constantly fluctuate based on supply and
demand.

Here's an analogy:

 Think of the primary market as a company issuing new merchandise for the first time.
They set an initial price based on production costs and market research.
 The secondary market is like a marketplace where people can buy and sell that
merchandise among themselves. The price may go up or down depending on factors
like popularity, demand, and overall market conditions.

Key Differences in a Nutshell:

Feature Primary Market Secondary Market

Function Issuing new securities Trading existing securities
Participants Issuers, Investment banks Investors
Price Discovery Through book-building Based on supply and demand
Examples IPOs, bond issuance Stock exchanges, OTC markets

11.⭐What is a portfolio or balanced portfolio or portfolio management??

A portfolio, in the financial world, refers to a collection of investments that you hold. These
investments can include a variety of assets, such as:

 Stocks: Shares of ownership in companies.

 Bonds: Loans you make to companies or governments, in return for regular interest
payments.
 Mutual funds: Professionally managed pools of money that invest in a variety of
assets.
 Exchange-traded funds (ETFs): Similar to mutual funds, but trade like stocks on
exchanges.
 Cash equivalents: Highly liquid assets that can be easily converted to cash, such as
money market accounts or certificates of deposit (CDs).
 Real estate (depending on the type of portfolio): In some cases, a portfolio may
include ownership of real estate properties.

A balanced portfolio is a type of investment strategy that aims to balance risk and return by
combining assets from different asset classes in your portfolio. It's designed to provide some
growth potential while also mitigating risk through diversification.

Here's a breakdown of the key features of a balanced portfolio:

  Asset Allocation: The core principle of a balanced portfolio is asset allocation. This
involves dividing your investment capital among different asset classes, such as:
o Stocks: Represent ownership in companies and offer the potential for capital
appreciation (increase in value) but also carry higher risk.
o Bonds: Loans made to companies or governments, offering a more stable
return with lower risk compared to stocks.
o Cash equivalents: Highly liquid assets like money market accounts or CDs,
providing safety and stability but typically lower returns.
 Risk Management: By diversifying across asset classes, a balanced portfolio aims to
reduce the overall risk of your investments. The idea is that when one asset class goes
down in value, another might go up, helping to offset losses.
 Investment Mix: The specific mix of assets in a balanced portfolio can vary
depending on your individual circumstances, such as your age, risk tolerance, and
financial goals.
o Younger investors with a longer time horizon may have a higher allocation to
stocks for growth potential, while also including bonds and cash equivalents
for stability.
o As you get closer to retirement, your portfolio might become more
conservative, with a higher allocation to bonds and cash equivalents to
preserve capital and generate income.
 Benefits: Balanced portfolios can offer several advantages:
o Reduced Risk: Diversification helps mitigate the impact of market volatility.
o Potential for Growth: Stocks in the portfolio can provide the potential for
capital appreciation over time.
o Income Generation: Bonds and other fixed-income securities can provide a
steady stream of income.

Here are some examples of asset allocation for balanced portfolios, but keep in mind these
are just a starting point and can vary depending on your circumstances:

 60% stocks / 40% bonds: This is a fairly common allocation for balanced portfolios,
offering a moderate balance between risk and return.
 50% stocks / 50% bonds: This is a more conservative allocation, suitable for
investors with a lower risk tolerance closer to retirement.
 70% stocks / 30% bonds: This is a more aggressive allocation, suitable for younger
investors with a higher risk tolerance and a longer time horizon.

It's important to remember that there's no one-size-fits-all balanced portfolio. The ideal
asset allocation for you will depend on your specific financial goals and risk tolerance.
Consider consulting with a financial advisor to develop a balanced portfolio strategy that
aligns with your needs.

Portfolio management is the process of planning, selecting, monitoring, and rebalancing a collection
of investments to meet your financial objectives. It's essentially the art of strategically managing your
investment portfolio to get the best possible returns while keeping risk under control.

12. Difference between a share & mutual fund.

13.⭐⭐ WAT IS STANDARD DEVIATION? In finance, standard deviation is a statistical measure used to
quantify the historical volatility of an investment's returns. It essentially tells you how much the
investment's returns deviate from its average return (mean) over a specific period.

14) How does mean mode help in capital market analysis?

Use in Capital Markets (Strengths

Measure Description Example (Stock Prices)
& Weaknesses)
* Limited Use: Sensitive to A stock stays around $10
outliers, doesn't reflect data most of the year, then
The sum of all
distribution. * Starting Point for jumps to $100 in the last
Mean values divided
Simple Comparisons: If price month. Mean price would
(Average) by the number
ranges are similar and no major be ~$20, but not
of values.
outliers, can be a basic comparison representative of most of
metric (use with caution). the year.
* Preferred Measure: Represents
The middle Same stock: The median
the "typical" value, less affected by
value when all price would be $10,
Median outliers. * Focus on Central
data points are reflecting the price for
Tendency: Provides a better sense
ranked in order. most of the year.
of the most common price or return.
* Limited Usefulness: Doesn't
provide insight into overall
Same stock: There might
distribution, less informative in
The most not be a single most
capital markets with constant price
Mode frequent value frequent price throughout
fluctuations. * Rare Case: May
in a data set. the year, making the mode
indicate a data entry error if the
uninformative.
mode significantly deviates from the
expected price range.

16)⭐⭐ Wat is alpha beta?Please Wikipedia CAPITAL MARKET. Alpha and beta are two key
metrics used to evaluate the performance and risk of investments like stocks or mutual funds.
Here's a breakdown of what they each represent:

Alpha (α):

 Measures excess return: Alpha indicates how much an investment has outperformed
its benchmark index (a broad market indicator like the S&P 500) after adjusting for
market risk.
 Positive alpha: A positive alpha suggests the investment has returned more than what
would be expected based on its level of risk (compared to the benchmark).
 Negative alpha: A negative alpha indicates the investment has underperformed the
benchmark, even after considering risk.
  Interpretation: A consistently positive alpha over time suggests an investment
manager's ability to outperform the market through stock selection or other strategies.
However, past performance doesn't guarantee future results.

Beta (β):

 Measures relative volatility: Beta compares the volatility of an investment to the

volatility of the overall market.
 Beta = 1: The investment's price movement tends to follow the market movement.
 Beta > 1: The investment's price is more volatile than the market (fluctuates more
significantly).
 Beta < 1: The investment's price is less volatile than the market (fluctuates less
significantly).
 Interpretation: Beta helps you understand the level of risk associated with an
investment compared to the broader market. Higher beta stocks carry more risk but
also have the potential for higher returns.

Here's an analogy:

Imagine you're racing on a track. Alpha represents how much faster you finish compared to
the average racer (benchmark). Beta represents how consistently you finish near the average
racer (market) throughout the race.

17) Nav? How it is calculated? NAV stands for Net Asset Value. It represents the per-share
value of an investment fund's underlying assets, minus its liabilities. In simpler terms, it's the
total value of everything the fund owns (stocks, bonds, etc.) divided by the number of shares
outstanding.

Here's how NAV is calculated:

NAV = (Total Assets - Liabilities) / Number of Outstanding Shares

Explanation of the formula:

 Total Assets: This includes the market value of all the securities (stocks, bonds) and
cash equivalents that the fund holds.
 Liabilities: These are any expenses or debts the fund owes, such as management fees
or accrued operating costs.
 Number of Outstanding Shares: This represents the total number of shares that the
fund has issued to investors.

NAV essentially reflects the intrinsic value of a single share in the fund.

Here's an analogy:

Imagine you co-own a basket of fruits with some friends. The NAV would be the total value
of all the fruits in the basket divided by the number of people who own shares (i.e., your
friends and you).

Why is NAV important?

  Provides a benchmark: NAV helps investors understand the true worth of a fund's
holdings, independent of its market price.
 Investment decisions: Investors can compare the NAV to the market price of the
fund's shares. If the market price is lower than the NAV, it might be a buying
opportunity (assuming the fund is fundamentally sound). The opposite scenario might
suggest the fund is overpriced.

Things to keep in mind about NAV:

 NAV is calculated daily (at the end of the trading day) based on the closing
market prices of the fund's holdings. The actual market price of a fund's shares can
fluctuate throughout the day, and may differ slightly from the NAV.
 NAV doesn't necessarily reflect future performance. While a high NAV might
suggest a valuable fund, it doesn't guarantee future returns.

I hope this explanation clarifies what NAV is and how it's calculated! Let me know if you
have any other questions.

18) What is Error 404? 20) What is error 503 and resolution for that?

Error 404 is a standard HTTP response code indicating that the server could not find the
requested page. In other words, the client (usually a web browser) was able to communicate
with the server, but the server could not locate the requested resource. This error is
commonly referred to as "404 Not Found."

Some of the most common HTTP error codes include:

1. 200 OK: This is a standard response for successful HTTP requests, indicating that the
request was successful.
2. 201 Created: The request has been fulfilled, resulting in the creation of a new
resource.
3. 204 No Content: The server successfully processed the request but there is no
additional content to send in the response.
4. 400 Bad Request: The server cannot or will not process the request due to a client
error, such as malformed syntax.
5. 401 Unauthorized: Similar to 403 Forbidden, but specifically for cases where
authentication is required and has failed or has not been provided.
6. 403 Forbidden: The server understood the request but refuses to authorize it.
7. 404 Not Found: The server cannot find the requested resource.
8. 500 Internal Server Error: A generic error message indicating that an unexpected
condition was encountered by the server and no more specific message is suitable.
9. 503 Service Unavailable: The server is not ready to handle the request. Common
causes include a server that is down for maintenance or is overloaded.
10. Error 404, specifically "404 Not Found," is a server-side issue. It indicates that the
server, which hosts the website or web application, cannot find the requested resource
(e.g., web page, file, or document). This could happen for various reasons, such as the
file or page being moved, renamed, or deleted, or due to a mistake in the URL.
 11. The error is generated by the server and then sent to the client (typically a web
browser) as an HTTP response. It is not a problem with the user's computer but rather
a communication between the client and the server. Users often see a standard "404
Not Found" page displayed in their browser when the server encounters this issue.

19) What is Html? HTML, or HyperText Markup Language, is the standard markup language used to
create and design web pages. It is the backbone of most web content and provides the basic
structure for creating and organizing information on the internet. HTML uses a system of tags and
attributes to define and describe the various elements within a web page

21) What is etf? An ETF, or Exchange-Traded Fund, is a type of investment fund that
trades like a stock on a stock exchange. It essentially bundles together a basket of underlying
assets, such as stocks, bonds, or commodities, and offers shares in that basket to investors.

Here are some key characteristics of ETFs:

 Traded on Exchanges: You can buy and sell ETF shares throughout the trading day
just like you would individual stocks. This provides liquidity and flexibility for
investors.
 Tracks an Index: Many ETFs are designed to track a specific market index, such as
the S&P 500 or a sector index like technology or healthcare. This allows investors to
gain exposure to a broad market segment or investment theme with a single purchase.
 Passively Managed: Unlike mutual funds, which may have actively managed
portfolios where fund managers try to outperform the market, ETFs are generally
passively managed. This means the ETF simply holds the same assets as the index it
tracks, aiming to replicate its performance. This often leads to lower expense ratios
for ETFs compared to actively managed mutual funds.
 Diversification: By investing in an ETF, you gain instant diversification across
multiple assets within the chosen index. This helps spread out risk and reduces the
impact of any single security's performance on your overall investment.
 Transparency: The holdings of an ETF are typically published daily, providing
investors with transparency into what the fund owns.

Benefits of Investing in ETFs:

 Low Cost: Due to their passive management style, ETFs typically have lower
expense ratios compared to actively managed mutual funds.
 Diversification: ETFs offer a convenient way to achieve instant diversification across
a variety of assets.
 Liquidity: The ability to buy and sell shares throughout the trading day provides
flexibility for investors.
 Transparency: Investors have clear visibility into the holdings of an ETF.
 Tax Efficiency: ETFs can be tax-efficient due to their structure and trading
characteristics.

Here's an analogy:

Imagine an ETF like a pre-made smoothie. Instead of buying and blending individual fruits
(stocks) yourself, you can buy a pre-made smoothie (ETF) that combines various fruits
(represents the underlying assets) to give you a well-rounded mix
22) How it traded and does it has Nav?

*MORNING STAR - ENTERPRISE L1 QUESTIONS - IMRAN KHAN 20 JULY 2022*

22) What is TOTAL RETURNS ? .

23) What is API ?

24) if a fund manager need to choose a company for growth perspective will he choose alpha or
beta.?

25) Which are the two legal documents of a mutual fund issued ?

26) What is JSON ?

27) Java script full form

28) Types of mutual funds

29) What is open ended and close ENDED. ??

30) If NAV of open ended is listed daily how is the NAV of close ended shown or LISTED?? . HOW
do u trade

BOTH?

31) If fund manager wants to analyse the risk .. which risk he shud consider.?

32) What is price to earning ratio ?

*Recently asked questions to Retail Candidates - 29 DEC 2022*

⭐⭐What is expense ratio; The expense ratio is a measure of the costs associated with managing
and operating an investment fund, such as a mutual fund, exchange-traded fund (ETF), or
other similar funds. It is expressed as a percentage of the fund's average net assets. The
expense ratio represents the total annual costs incurred by the fund and is deducted from the
fund's assets.

The expense ratio typically includes various costs, such as:

1. Management Fees: The fees paid to the fund manager or management company for
overseeing the fund's portfolio.
2. Administrative Costs: Expenses related to the general administration and operation
of the fund, including legal and accounting fees.
3. Operating Expenses: These may include marketing, distribution, and other
operational costs.
4. 12b-1 Fees: These fees are associated with the marketing and distribution of the fund.
5. Other Expenses: Miscellaneous expenses incurred in the management and operation
of the fund.

The expense ratio is important for investors because it directly affects the returns they receive
from the investment. A lower expense ratio is generally favorable for investors, as it means a
smaller portion of their investment is being used to cover fund expenses, leaving more of the
returns for the investor.

Investors should consider expense ratios when comparing different funds, especially those
with similar investment objectives. It's important to note that expense ratios can vary widely
among funds, and low-cost funds are not always the most suitable for every investor, as other
factors such as performance, investment strategy, and risk should also be taken into account.

Trading ETFs:

ETFs trade like stocks on a stock exchange. This means you can:

 Buy and sell shares: You can place orders through a brokerage account just like you
would with individual stocks.
 Trade throughout the day: Unlike mutual funds, which are typically priced only at
the end of the trading day, ETFs offer real-time trading throughout market hours.
 Experience price fluctuations: The market price of an ETF share can fluctuate
throughout the day based on supply and demand, similar to individual stocks.

NAV (Net Asset Value) in ETFs:

 Represents intrinsic value: The NAV reflects the per-share value of an ETF's
underlying assets minus its liabilities. It essentially tells you the theoretical worth of a
single ETF share based on the value of its holdings.
  Calculated daily: The NAV is calculated at the end of each trading day based on the
closing market prices of the assets held by the ETF.
 May differ from market price: While the NAV reflects the intrinsic value, the actual
market price of an ETF share can trade at a premium (higher) or discount (lower) to
the NAV due to supply and demand dynamics in the market.

Here's an analogy:

Imagine an ETF that holds a basket of apples and oranges. The market price of an ETF share
is like the price at which people are currently willing to buy and sell those shares on the stock
exchange. This price can fluctuate throughout the day. The NAV, on the other hand, is like
the total value of all the apples and oranges in the basket divided by the number of ETF
shares outstanding. This represents the theoretical worth of a single share based on the
underlying assets.

Why the Difference Between Market Price and NAV?

 Intraday Fluctuations: Since the NAV is calculated based on closing prices, it may
not reflect the real-time value of the underlying assets during trading hours.
 Supply and Demand: If there's high demand for an ETF, the market price can trade
at a premium to the NAV. Conversely, if there are more sellers than buyers, the
market price might trade at a discount to the NAV.

Arbitrageurs play a role in keeping the market price close to the NAV. They take
advantage of price discrepancies by buying shares when they trade at a discount and selling
them when they trade at a premium, helping to bring the market price closer to the NAV.

Overall, while NAV provides a good sense of the ETF's intrinsic value, the market price
is what you'll actually pay to buy or sell shares on the exchange.

⭐⭐What is the PE ratio? The Price-to-Earnings ratio, or PE ratio, is a financial metric that
compares a company's current share price to its earnings per share (EPS). It is one of the most
widely used valuation metrics by investors and analysts to assess the relative value of a stock.

The PE ratio is calculated by dividing the current market price of a stock by its earnings per
share. The formula is as follows:

PE Ratio=Market Price per ShareEarnings per Share (EPS)PE Ratio=Earnings per Share (EP
S)Market Price per Share

Here's a breakdown of the components:

 Market Price per Share: This is the current price at which the stock is trading in the
market.
 Earnings per Share (EPS): This is a measure of a company's profitability and is
calculated by dividing the company's net earnings by the number of outstanding
shares.
The PE ratio provides insight into how much investors are willing to pay for each dollar of
earnings generated by the company. A higher PE ratio may indicate that investors have
higher expectations for future earnings growth, while a lower PE ratio may suggest lower
growth expectations or undervaluation.

There are two common types of PE ratios:

1. Trailing PE Ratio: This ratio is based on the company's past earnings and is
calculated using the most recent annual or quarterly earnings.
2. Forward PE Ratio: This ratio is based on the company's estimated future earnings.
Analysts use projected earnings for the next fiscal year to calculate the forward PE
ratio.

It's important to note that the PE ratio has limitations and should be used in conjunction with
other financial metrics and analysis tools. A high PE ratio doesn't necessarily mean a stock is
overvalued, as it could be justified by strong growth prospects. Similarly, a low PE ratio
doesn't always indicate a good investment, as it could be due to poor future growth
expectations or other factors. Investors should consider various factors and use the PE ratio in
the context of the overall investment landscape.

ChatGPT can

⭐⭐Are you a individual player or team work

⭐⭐Sip or lumpsum :

Feature SIP Lumpsum Investment

Investment
Regular, fixed amounts One-time large amount
Style
Cost
Yes No
Averaging
Requires self-discipline to invest the lump
Discipline Encourages discipline
sum
Long-term investors, beginners, Investors with large sum, market timing
Suitability
limited capital skills, specific opportunities

⭐⭐Does ETF have expense ratio: Yes, Exchange-Traded Funds (ETFs) typically have expense
ratios. The expense ratio of an ETF represents the total percentage of a fund's assets that are
allocated to covering the fund's operating expenses. These expenses include the costs
associated with managing and administering the ETF. The expense ratio is expressed as a
percentage of the average net assets of the fund.

ETF expense ratios cover various costs, including:

1. Management Fees: Fees paid to the fund manager or management company for
overseeing the ETF's portfolio.
 2. Administrative Costs: General administrative and operational expenses, such as legal
and accounting fees.
3. Custodian Fees: Costs associated with the safekeeping and administration of the
ETF's assets by a custodian.
4. Operational Expenses: Various operational costs related to the day-to-day
functioning of the ETF.
5. Marketing and Distribution Fees (if applicable): Costs associated with marketing
and distributing the ETF.

Investors should be aware of the expense ratio when considering an ETF, as it directly affects
the returns they receive. Lower expense ratios are generally favorable for investors, as they
imply that a smaller portion of the investment is used to cover fund expenses, leaving more of
the returns for the investor.

Comparing expense ratios is essential when evaluating different ETFs, especially those with
similar investment objectives. It's important to note that expense ratios can vary among ETFs,
and investors should consider other factors such as performance, tracking error, liquidity, and
the underlying investment strategy when making investment decisions.

You shd know these 👇

⭐⭐Equity, Bonds, Money market, Mutual funds, open end fund, Close end fund & Exchange traded
fund

Hedge Fund , Variable Annuities, Variable Annuity Subaccounts ,Separate Accounts,

⭐⭐Index Fund : Let's briefly explain each of the financial instruments you mentioned:

1. Closed-End Fund (CEF):

o A closed-end fund is a type of investment fund with a fixed number of shares.
These funds are traded on an exchange like a stock. Unlike open-end mutual
funds, closed-end funds do not continuously issue new shares. The market
price of closed-end fund shares can be higher or lower than the net asset value
(NAV) per share.
2. Exchange-Traded Fund (ETF):
o An exchange-traded fund is a type of investment fund and exchange-traded
product, with shares that are tradeable on a stock exchange. ETFs can
represent various asset classes, including stocks, bonds, or commodities. They
are known for their liquidity, transparency, and typically have lower expense
ratios compared to many mutual funds.
3. Hedge Fund:
o A hedge fund is an investment fund that pools capital from accredited
individuals or institutional investors and employs various strategies to earn
returns for its investors. Hedge funds are known for their flexibility in
investment strategies and often use alternative investments and leverage.
4. Variable Annuities:
 o Variable annuities are insurance products that provide a stream of payments to
the holder, usually in retirement. The value of these payments can vary based
on the performance of underlying investment options chosen by the annuity
holder. Variable annuities offer the potential for investment growth but also
come with market risk.
5. Variable Annuity Subaccounts:
o Variable annuity subaccounts are investment portfolios within a variable
annuity. These subaccounts function similarly to mutual funds and can invest
in a variety of assets, such as stocks, bonds, and money market instruments.
The performance of subaccounts directly impacts the returns of the variable
annuity.
6. Separate Accounts:
o Separate accounts are investment accounts held by an insurance company.
These accounts are separate from the company's general assets and are
dedicated to specific insurance or annuity products. The funds in separate
accounts may be invested in a variety of assets.
7. Index Fund:
o An index fund is a type of mutual fund or ETF that aims to replicate the
performance of a specific market index, such as the S&P 500. Index funds
provide broad market exposure and are designed to track the returns of their
benchmark index. They often have lower expense ratios compared to actively
managed funds.

Unit Investment trust, Collective Investment Trust, 529 plan, UCITS,⭐⭐ Passive fund, Active Fund, ISIN,
Cusip, Sedol,Valor, WKN

1. Unit Investment Trust (UIT):

o A Unit Investment Trust is a type of investment company that offers a fixed
portfolio of stocks, bonds, or other securities in the form of "units" to
investors. UITs have a fixed life span, and the securities in the portfolio
remain relatively unchanged throughout the trust's existence.
2. Collective Investment Trust (CIT):
o A Collective Investment Trust is a tax-exempt, pooled investment fund
managed by a bank or trust company for the collective investment of qualified
retirement plans, such as 401(k) plans. CITs are not available to individual
investors directly; rather, they are designed for institutional investors.
3. 529 Plan:
o A 529 plan is a tax-advantaged savings plan designed to encourage saving for
future education expenses. These plans are sponsored by states, state agencies,
or educational institutions. They offer various investment options, and
withdrawals for qualified education expenses are typically tax-free.
4. UCITS:
o UCITS stands for Undertakings for the Collective Investment of Transferable
Securities. It's a regulatory framework within the European Union that allows
for the creation and operation of mutual funds. UCITS funds can be sold to
investors across EU member states, providing a standardized and regulated
investment product.
 5. Passive Fund:
o A passive fund, also known as an index fund, is a type of investment fund that
aims to replicate the performance of a specific market index. Passive funds
typically have lower management fees and turnover compared to actively
managed funds, as they aim to match the index rather than outperform it.
6. Active Fund:
o An active fund is a type of investment fund where fund managers actively
make investment decisions with the goal of outperforming a benchmark or
index. Active funds may involve higher management fees and typically
require more research and analysis by fund managers.
7. ISIN (International Securities Identification Number):
o ISIN is a unique identification code for securities. It provides a standardized
and globally recognized way of identifying a specific security, such as a stock,
bond, or mutual fund.
8. CUSIP (Committee on Uniform Securities Identification Procedures):
o CUSIP is a unique identifier assigned to financial instruments, including
stocks, bonds, and mutual funds, to facilitate the clearing and settlement
process.
9. SEDOL (Stock Exchange Daily Official List):
o SEDOL is a set of codes used to uniquely identify securities on stock
exchanges. It's commonly used in the United Kingdom.
10. Valor, WKN:
o Valor and WKN are identification codes used in the Swiss and German
financial markets, respectively. Valor is used in Switzerland, while WKN
(Wertpapierkennnummer) is used in Germany to uniquely identify financial
instruments.

These terms represent various aspects of the financial and investment landscape, each with its
own set of rules, regulations, and purposes. Investors should familiarize themselves with
these terms to make informed decisions in the financial markets.

⭐⭐NAV, AUM ,Total Net Asset,

⭐⭐Front end Load, Back end load, Fund Size, Share class

Return- Market Return, Price Return , Total Return , Excess return, Active share ,

Active Return: Investment Terminology Breakdown:

AUM (Assets Under Management):

 Represents the total market value of all the investments that a financial institution or fund
manager manages on behalf of its clients. This includes stocks, bonds, cash, and other assets.
 A higher AUM generally indicates a larger and more established investment firm.

Total Net Asset (Not commonly used):

  This term isn't as widely used in professional finance. It could potentially refer to the total
value of all assets held by an entity (like a company) minus its liabilities. However, "Total
Assets" is a more common term for this concept.

Front-End Load:

 A sales charge applied to an investment when you purchase it. This fee is typically a
percentage of the amount you invest.
 Example: A 2% front-end load on a $10,000 investment would be a $200 fee.

Back-End Load:

 A sales charge applied to an investment when you sell it before a certain timeframe (usually
within 6 or 7 years). This fee discourages frequent trading and encourages long-term
investment in the fund.
 Back-end loads typically decline or disappear altogether the longer you hold the investment.

Fund Size:

 The total market value of all the assets held by a mutual fund or ETF.
 Larger fund sizes can offer greater liquidity (ease of buying and selling shares) and potentially
lower expense ratios (fees) due to economies of scale.

Share Class:

 Different classes of shares offered by a mutual fund or ETF, often with varying fee structures
and investment minimums.
 Common share classes include Class A (with front-end loads), Class C (with ongoing sales
charges), and Investor Class (with no loads but potentially higher expense ratios).

Return Terminology:

 Market Return: The average return of a specific market index, such as the S&P 500. This
represents the overall performance of the market.
 Price Return: The change in the price of an investment over a specific period. It only
considers the capital appreciation or depreciation, not including any reinvested dividends or
interest.
 Total Return: This takes into account both the price return (capital
appreciation/depreciation) and any reinvested dividends or interest earned over a specific
period. It reflects the overall performance of the investment.
 Excess Return: The amount of return an investment generates that exceeds the return of its
benchmark index (e.g., S&P 500) over a specific period. A positive excess return indicates the
investment has outperformed the benchmark.
 Active Share: A measure of how much a portfolio's holdings differ from its benchmark index.
A high active share suggests the fund manager is actively trying to beat the market by
deviating from the benchmark composition.

Active Return:

 Represents the portion of an investment's return that is attributable to the skill of the fund
manager. It's calculated by subtracting the benchmark return from the fund's total return.
  A positive active return indicates the fund manager has outperformed the benchmark, while
a negative active return suggests they have underperformed.

Remember: Past performance is not necessarily indicative of future results. Actively

managed funds aiming for high active returns often come with higher fees. Carefully consider
your investment goals and risk tolerance when choosing investment options.

Gemini may display inaccurate info, including about people, so

Risk Measures:-

⭐⭐ Alpha, Beta, Standard Deviation,⭐⭐ R-Squared , Sharpe ratio

⭐⭐ These metrics all play a role in understanding and measuring investment risk, but they
assess different aspects. Here's a breakdown of each:

Alpha (α):

 Measures excess return: Alpha indicates how much an investment has outperformed
its benchmark index (a broad market indicator) after adjusting for market risk.
 Positive alpha: Suggests the investment has returned more than what would be
expected based on its level of risk (compared to the benchmark).
 Negative alpha: Indicates the investment has underperformed the benchmark, even
after considering risk.
 Focus: Risk-adjusted performance.

Beta (β):

 Measures relative volatility: Beta compares the volatility of an investment to the

volatility of the overall market.
 Beta = 1: The investment's price movement tends to follow the market movement.
 Beta > 1: The investment's price is more volatile than the market (fluctuates more
significantly).
 Beta < 1: The investment's price is less volatile than the market (fluctuates less
significantly).
 Focus: Volatility relative to the market.

Standard Deviation (σ):

 Measures overall volatility: Standard deviation measures the historical dispersion of

an investment's returns around its average return.
 Higher standard deviation: Indicates larger fluctuations in returns, signifying higher
risk.
  Lower standard deviation: Indicates smaller fluctuations in returns, signifying lower
risk.
 Focus: Overall volatility of returns.

R-Squared (R²):

 Measures correlation: R-squared doesn't directly measure risk, but it helps assess
how well the movement of an investment's return can be explained by the movement
of its benchmark return (like the S&P 500).
 Higher R² (closer to 1): Indicates the investment's returns tend to move in the same
direction as the benchmark, suggesting a strong positive correlation.
 Lower R² (closer to 0): Indicates the investment's returns may not be well-explained
by the benchmark, and other factors might influence its performance.
 Focus: Correlation with a benchmark, not directly risk.

Sharpe Ratio:

 Measures risk-adjusted return: The Sharpe ratio considers both the potential return
of an investment and its volatility (standard deviation) to provide a more
comprehensive risk-reward picture.
 Higher Sharpe Ratio: Indicates a better return relative to the level of risk taken
(compared to the risk-free rate).
 Lower Sharpe Ratio: Indicates a lower return relative to the level of risk taken.
 Focus: Risk-adjusted return, considering both potential gains and volatility.

Here's an analogy:

Imagine you're racing on a track.

 Alpha: How much faster you finish compared to the average racer (benchmark) after
considering the difficulty of the course (market risk).
 Beta: How consistently you finish near the average racer throughout the race,
regardless of how fast everyone is going (volatility relative to market).
 Standard Deviation: How much your finishing time varies from race to race (overall
volatility of your performance).
 R-Squared: How well your finishing time can be predicted by the average finishing
time (correlation with the average).
 Sharpe Ratio: Considers both how fast you finish (return) and how consistently you
finish near the average (volatility) relative to a "safe" investment (risk-adjusted
return).

Using these metrics together provides a more comprehensive picture of investment risk:

 Alpha and Beta: Help understand risk-adjusted performance and relative volatility.
 Standard Deviation: Provides a general sense of overall return fluctuations.
 R-Squared: Indicates how well an investment's returns are explained by the
benchmark.
 Sharpe Ratio: Considers both return and risk to give a risk-adjusted return measure.
Remember, past performance is not necessarily indicative of future results. Use these metrics
along with other factors like your investment goals and risk tolerance to make informed
investment decisions.

Treynor ratio

Percentile, decile, quintile, quartile:

The Treynor Ratio and percentiles, deciles, quintiles, and quartiles are different concepts used
in finance and statistics to measure risk and analyze data. Let's explore each of them:

1. Treynor Ratio:
o The Treynor Ratio is a risk-adjusted performance measure that evaluates the
returns of an investment relative to its systematic risk, often measured by beta.
The formula for the Treynor Ratio is as follows:
Treynor Ratio=Portfolio Return−Risk-Free RateBetaTreynor Ratio=BetaPortf
olio Return−Risk-Free Rate
o The Treynor Ratio helps investors assess the returns earned per unit of
systematic risk taken. A higher Treynor Ratio indicates better risk-adjusted
performance.
2. Percentile:
o A percentile is a statistical measure that represents the relative standing or
rank of a particular value within a dataset. It indicates the percentage of data
points that fall below a given value. For example, the 75th percentile means
that 75% of the data points are below that value.
3. Decile:
o A decile is a division of a dataset into 10 equal parts, each representing 10% of
the data. Deciles are often used to analyze the distribution of values and
identify patterns or trends.
4. Quintile:
o A quintile is a division of a dataset into five equal parts, each representing
20% of the data. Quintiles are commonly used in statistics and finance to
analyze the distribution of values and identify the position of a particular data
point.
5. Quartile:
o A quartile is a division of a dataset into four equal parts, each representing
25% of the data. Quartiles are often used to understand the spread and central
tendency of a dataset. The three quartiles are the first quartile (Q1), the second
quartile (Q2), and the third quartile (Q3).

In summary, while the Treynor Ratio focuses on risk-adjusted performance, percentiles,

deciles, quintiles, and quartiles are statistical measures used to analyze the distribution of data
points in a dataset. They help provide insights into the spread and position of values within a
set of data. Each serves a different purpose but contributes to a comprehensive understanding
of risk and data distribution in their respective contexts.
⭐⭐What is systematic ratio?:

The term "systematic ratio" isn't a commonly used term in investment analysis. There might
be some confusion with two established risk-return measures:

1. Beta (β): This is a widely used metric that reflects the systematic risk of an
investment compared to the overall market. Beta essentially measures how much an
investment's price movement tends to follow the market movement.

 Beta = 1: The investment's price movement aligns with the market.

 Beta > 1: The investment's price is more volatile than the market (fluctuates more
significantly).
 Beta < 1: The investment's price is less volatile than the market (fluctuates less
significantly).

Systematic risk refers to the risk that affects the entire market or a large segment of it, and
cannot be diversified away through portfolio diversification.

2. Sharpe Ratio: This metric considers both the potential return of an investment and
its volatility (often measured by standard deviation) to assess risk-adjusted return.
While it doesn't directly measure systematic risk, it incorporates the concept since the
risk-free rate used in the calculation is considered almost free of systematic risk.

Here's a breakdown to clarify:

 Systematic Ratio (not commonly used): There's no established definition for a

"systematic ratio" in investment analysis. It might be a misinterpretation of Beta.
 Beta (β): Measures systematic risk (market-related risk) of an investment.
 Sharpe Ratio: Considers both return and volatility (including systematic risk) to
assess risk-adjusted return.

If you're looking to understand an investment's risk profile, Beta and Sharpe Ratio are the
more relevant metrics to consider.

GIFS- Global Investment fund Sector

GICS- Global Industry classification standard

ESG Funds: Environment, Social & Government Questions asked in the interview by Operations
Panel-

how to measure risk, what is a mutual fund, why sharpe ratio and not treynor ratio. What was ur
previous job about, nav difference in growth option and dividend option.
The NAV (Net Asset Value) of a growth option and a dividend option in a mutual fund will
differ due to how the fund handles profits:

Growth Option:

 Reinvests Profits: Profits generated by the fund's investments are retained and
reinvested back into the fund to purchase additional shares. This leads to a
compounding effect, where the reinvested earnings themselves can grow over time.

 Higher NAV: As the profits are reinvested and the number of shares held by the fund
increases, the NAV of the growth option will generally be higher than the dividend
option.

Dividend Option:

 Distributes Profits: A portion of the fund's profits are paid out to investors as
dividends. This provides investors with a regular stream of income.
 Lower NAV: Since profits are distributed to shareholders, the total value of the fund's
assets is reduced. This translates to a lower NAV compared to the growth option.

Here's a table summarizing the key points:

Feature Growth Option Dividend Option

Profit Handling Reinvested back into the fund Distributed to investors as dividends
NAV Generally Higher Generally Lower
Reinvestment Automatic compounding Manual reinvestment required (if desired)
Target Investor Long-term growth focused Income-oriented

Here's an analogy:

Imagine you have a piggy bank where you save money.

 Growth Option: Every time you get money, you add it all to the piggy bank
(reinvestment). This makes the piggy bank (NAV) fatter over time.
 Dividend Option: Every now and then, you take some money out of the piggy bank
(dividend payout). This reduces the amount of money left in the piggy bank (lower
NAV).

Choosing Between Growth and Dividend Option:

 Investment Horizon: For long-term growth goals (retirement), the growth option
might be preferable due to compounding benefits.
 Income Needs: If you need regular income, the dividend option can provide a steady
stream of cash flow.
 Tax Implications: Dividend payouts may be subject to taxation depending on your
tax bracket. Reinvested earnings in the growth option typically aren't taxed until you
sell your shares.
Remember: Past performance is not necessarily indicative of future results. Carefully
consider your investment goals, risk tolerance, and tax situation when choosing between a
growth option and a dividend option.

*Questions asked to Direct candidate - 12 Jan 2023*

1. If a company is liquidated who gets paid first? In India, when a company undergoes
liquidation, the distribution of proceeds follows a specific order of priority as outlined in the
Insolvency and Bankruptcy Code (IBC). The distribution waterfall prioritizes the repayment
of various creditors and stakeholders in a specific order. The general hierarchy of claims
during liquidation is as follows:

1. Secured Creditors:
o Secured creditors have a first claim on the company's secured assets. They are
entitled to the proceeds from the sale of these assets to recover their
outstanding debt.
2. Workmen's Dues:
o Outstanding dues to employees, such as unpaid salaries and other
employment-related benefits, are given priority after secured creditors.
3. Unsecured Creditors and Workmen's Dues (in excess of the prescribed limit):
o After the secured creditors and workmen's dues, unsecured creditors, along
with any remaining workmen's dues beyond the prescribed limit, are eligible
for repayment.
4. Government Dues (Tax Authorities):
o Dues owed to government authorities, such as taxes and other statutory
payments, are given priority after the claims of secured and unsecured
creditors.
5. Priority Shareholders and Preference Shareholders:
o Any outstanding claims of preference shareholders and certain priority
shareholders are addressed next.
6. Equity Shareholders:
o Equity shareholders are the last in line to receive any remaining proceeds. In
many cases, especially if the company is insolvent, equity shareholders may
not receive any repayment.

It's important to note that the actual distribution depends on the availability of assets and the
total amount of outstanding claims in each category. In cases where the assets are insufficient
to cover all claims, creditors in higher priority categories are paid first, and those in lower
priority categories may not receive full or any repayment.

The Insolvency and Bankruptcy Code (IBC) has established a framework to ensure a fair and
orderly distribution of assets during the liquidation process, and the specific details may be
subject to amendments and updates in the legal framework.
2. How will you handle 100 clients in a day? - expected answer is that you wl take assistance from
your team members.

3. What is forward trading? Forward trading, also known as forward contracts or forward
transactions, is a financial arrangement where two parties agree to conduct a future
transaction at a specified date and price. This type of contract is known as a forward contract.
Forward trading allows participants to hedge against price fluctuations, speculate on future
price movements, or fulfill future obligations.

4. What are risk free returns? Risk-free rate of return is a theoretical concept in finance that
refers to the expected return of an investment with zero risk. In essence, it's the interest
rate you would expect to earn on an investment that is guaranteed not to lose value.

Here's a breakdown of the concept:

 Theoretical Construct: Since there's no perfect investment with absolutely no risk,

the risk-free rate is a theoretical benchmark.
 Used as a Baseline: The risk-free rate is often used as a baseline for comparison
when evaluating the expected returns of other investments. For example, if the risk-
free rate is 2% and a stock is expected to return 8%, the stock offers a potential return
that is 6% higher (8% - 2%) than the risk-free rate, but also carries more risk.
 Examples (proxy): While there's no true risk-free investment, some government
bonds issued by very stable countries (e.g., U.S. Treasury bills) are considered close
substitutes due to their low default risk. The yields (interest rates) on such bonds are
often used as a proxy for the risk-free rate.

Why is the Risk-Free Rate Important?

 Investment Decisions: By comparing the risk-free rate to the expected return of other
investments, you can assess the potential risk-reward trade-off. Higher potential
returns often come with higher risk.
 Cost of Capital: Businesses use the risk-free rate as a part of calculating their cost of
capital, which influences investment decisions and financial planning.
 Discount Rates: The risk-free rate can be used as a discount rate when valuing future
cash flows from an investment.

Real vs. Nominal Risk-Free Rate:

 Nominal Rate: The stated interest rate on an investment without considering

inflation.
 Real Rate: The nominal rate minus the inflation rate. This reflects the purchasing
power of the return after inflation is considered. For example, if the nominal risk-free
rate is 2% and inflation is 1%, the real risk-free rate is 1%.
In conclusion, the risk-free rate of return is a theoretical concept that serves as a
benchmark for evaluating investment risk and return. While there's no true risk-free
investment, instruments like short-term government bonds are often used as proxies.

Gemini may display inaccurate info, including about people, so double-chec

5. What is the difference between preference shares and equity shares?

*Director round FAQ👇*

what is asset allocation, passive mutual funds, detailed role about previous job, what is rating,
balanced portfolio.

Asset Allocation: Asset allocation is an investment strategy that involves dividing a portfolio
among different asset classes, such as stocks, bonds, and cash, to optimize risk and return
based on an investor's financial goals, risk tolerance, and time horizon. The goal of asset
allocation is to create a diversified portfolio that can weather market fluctuations and achieve
long-term financial objectives. The allocation to each asset class is determined based on the
investor's risk profile and investment strategy.

Passive Mutual Funds: Passive mutual funds, also known as index funds, aim to replicate
the performance of a specific market index, such as the S&P 500. Unlike actively managed
funds, which involve portfolio managers making individual investment decisions, passive
funds follow a predetermined set of rules to mirror the composition and performance of the
chosen index. Passive funds are known for their lower expense ratios compared to many
actively managed funds.

Rating: In the context of investments, a rating refers to an assessment or grade assigned to a

financial instrument, such as a bond or mutual fund, by a credit rating agency or investment
research firm. Credit rating agencies evaluate the creditworthiness and risk associated with
fixed-income securities, while mutual fund rating agencies assess the performance and risk of
mutual funds. Common rating agencies include Moody's, Standard & Poor's (S&P), and Fitch
for credit ratings, and Morningstar for mutual fund ratings.

Balanced Portfolio: A balanced portfolio is an investment portfolio that includes a mix of

different asset classes, typically stocks and bonds, in proportions that align with the investor's
risk tolerance and financial goals. The goal of a balanced portfolio is to achieve a balance
between potential returns and risk mitigation. The allocation to each asset class is determined
based on the investor's risk profile, and the portfolio is periodically rebalanced to maintain
the desired asset allocation.
In summary, asset allocation involves spreading investments across different asset classes to
achieve a desired risk-return profile. Passive mutual funds replicate the performance of
specific market indices, ratings provide assessments of creditworthiness or fund performance,
and a balanced portfolio combines different asset classes to create a well-rounded investment
strategy.

⭐How do u calculate intrinsic value? Calculating intrinsic value is an essential aspect of

fundamental analysis in investing. Intrinsic value represents the true worth of an asset, such
as a stock, and is often used to assess whether the current market price is overvalued,
undervalued, or fairly valued. Various methods exist to calculate intrinsic value, and the
choice of method may depend on the type of asset being evaluated. Here are a couple of
common approaches:

1. Discounted Cash Flow (DCF) Analysis:

o DCF analysis is a widely used method to estimate the intrinsic value of an
investment. The basic idea is to estimate the present value of all future cash
flows the investment is expected to generate. The formula for DCF is as
follows: Intrinsic Value=CF1(1+r)1+CF2(1+r)2+…
+CFn(1+r)nIntrinsic Value=(1+r)1CF1+(1+r)2CF2+…+(1+r)nCFn Where:
 CF1,CF2,…,CFnCF1,CF2,…,CFn are the expected future cash flows
in each period.
 rr is the discount rate, representing the rate of return required by the
investor.
2. Dividend Discount Model (DDM):
o DDM is a specific form of DCF analysis used for valuing stocks that pay
dividends. The formula is as follows: Intrinsic Value=D1(1+r)1+D2(1+r)2+…
+Dn(1+r)nIntrinsic Value=(1+r)1D1+(1+r)2D2+…+(1+r)nDn Where:
 D1,D2,…,DnD1,D2,…,Dn are the expected future dividends in each
period.
 rr is the required rate of return.
3. Relative Valuation:
o This approach compares the target asset's valuation metrics, such as price-to-
earnings ratio (P/E), price-to-sales ratio (P/S), or price-to-book ratio (P/B),
with similar metrics of comparable companies or industry averages. If the
target asset's metrics are lower than those of comparable assets, it might be
considered undervalued.

It's important to note that calculating intrinsic value involves making assumptions about
future cash flows, growth rates, and discount rates. Small changes in these assumptions can
lead to significant variations in the calculated intrinsic value. Therefore, it's crucial for
investors to conduct thorough research and exercise prudence when using intrinsic value as a
basis for investment decisions. Additionally, different investors may use different methods
based on their preferences and the nature of the asset being evaluated.

What is dynamic asset allocation? Dynamic asset allocation is an investment strategy that involves
frequently adjusting the mix of asset classes in a portfolio based on changing market conditions.
Unlike a static asset allocation where the percentages allocated to different asset classes (like stocks,
bonds, and cash) remain fixed, dynamic allocation aims to adapt to potential opportunities and risks.

Here's a breakdown of the key characteristics:

 Market-Driven Adjustments: Portfolio managers actively monitor market trends,

economic indicators, and other factors to determine when and how to adjust the asset
allocation.

 Flexibility: Dynamic allocation allows for more flexibility compared to a static

approach, potentially leading to better returns or reduced risk depending on market
conditions.
 Potential Complexity: Managing a dynamic allocation strategy can be complex and
requires ongoing analysis and potentially higher fees compared to a static approach.

How Does Dynamic Allocation Work?

 Investment Targets: The portfolio manager establishes target weightings for

different asset classes based on the investor's risk tolerance and investment goals.
 Monitoring and Rebalancing: Market conditions and economic data are constantly
monitored. If there are significant deviations from the target weightings, the portfolio
is rebalanced by buying or selling assets to bring the allocation back in line with the
targets.
 Risk Management: During periods of market volatility, dynamic allocation strategies
may involve reducing exposure to riskier assets like stocks and increasing holdings in
safer assets like bonds. Conversely, during bullish markets, the allocation might favor
stocks for potentially higher growth.

Who is Dynamic Allocation Suitable For?

 Active Investors: Investors who are comfortable with a more hands-on approach and
potentially higher fees associated with actively managed portfolios.
 Risk-Averse Investors (with limitations): While dynamic allocation can be used to
manage risk, it doesn't eliminate it entirely. Investors seeking absolute capital
preservation might be better suited for more conservative strategies.
 Long-Term Investors: The strategy is generally intended for a long-term investment
horizon, as frequent adjustments aim to capture opportunities over time.

Here's an analogy:

Imagine you're packing a backpack for a trip. A static allocation strategy would be like
packing the same essentials every time, regardless of the weather forecast. Dynamic
allocation would be like checking the weather and adjusting what you pack based on the
expected conditions (packing more rain gear if rain is likely).

Things to Consider Before Choosing Dynamic Allocation:

 Investment Costs: Dynamically managed funds often have higher expense ratios due
to the active management involved.
  Performance: Past performance is not necessarily indicative of future results. While
dynamic allocation aims to outperform static approaches, it doesn't guarantee success.
 Your Risk Tolerance: Dynamic allocation can involve more risk than a static
approach, especially during volatile market periods.

Overall, dynamic asset allocation can be a valuable strategy for investors seeking to
potentially improve returns or manage risk through active portfolio adjustments.
However, it's important to understand the risks involved and ensure it aligns with your
investment goals and risk tolerance.

Gemini may display inaccurate info, including about people, so do

What are corporate actions? Corporate actions refer to events initiated by a publicly-traded
company that can impact its stakeholders, including shareholders and investors. These actions
can have implications for the company's financial structure, ownership, and market value.
Corporate actions are typically approved by the company's board of directors and may require
regulatory approval. Here are some common types of corporate actions:

1. Dividends:
o Companies may declare and distribute dividends to shareholders as a way to
distribute profits. Dividends can be in the form of cash or additional shares of
stock.
2. Stock Splits:
o In a stock split, a company increases the number of outstanding shares while
proportionally decreasing the stock price. For example, in a 2-for-1 stock split,
shareholders receive two shares for every one they previously held, and the
stock price is halved.
3. Stock Buybacks (Share Repurchases):
o A company may choose to buy back its own shares from the open market.
This can lead to a reduction in the number of outstanding shares, potentially
increasing the value of remaining shares.
4. Rights Issues:
o Companies may issue rights to existing shareholders, allowing them to buy
additional shares at a discounted price. This is a way for companies to raise
additional capital.
5. Mergers and Acquisitions (M&A):
o Mergers involve the combination of two companies, while acquisitions
involve one company purchasing another. These actions can impact the
ownership structure and financial health of the companies involved.
6. Spin-offs:
o A spin-off occurs when a company separates a part of its business into a new,
independent entity. Shareholders of the original company may receive shares
in the newly created company.
7. Bonus Issues:
 Companies may issue bonus shares to existing shareholders without any
o
additional cost. Bonus issues increase the number of outstanding shares but do
not affect the overall market value of the investment.
8. Tender Offers:
o In a tender offer, a company invites shareholders to sell their shares at a
specified price, often higher than the current market price. This can be part of
a larger strategy, such as a takeover attempt.
9. Corporate Restructuring:
o Companies may undergo restructuring to streamline operations, improve
efficiency, or focus on core businesses. This can involve selling or divesting
certain business units.
10. Debt Issuance or Redemption:
o Companies may issue new debt to raise capital or redeem existing debt to
reduce interest expenses. These actions can impact the company's leverage and
financial position.

It's important for investors to stay informed about corporate actions, as they can influence
stock prices, dividends, and overall investment returns. Companies typically communicate
these actions through official announcements, regulatory filings, and other public disclosures.

ChatGPT can mak

Benefits of ETF?

Standard Deviation?

Other risk measures?

⭐Nav? How it is calculate d?

What is Error 404?Is it website issue of your company or server issue?

What is Html?

What is etf?

How it traded and does it has Nav?

1) What is TOTAL RETURNS ? : Total return, when measuring performance, is the actual rate of return
of an investment or a pool of investments over a given evaluation period. Total return includes
interest, capital gains, dividends, and distributions realized over a period.

2) What is API ? Application Programming Interface, software interface that offers service to other
pieces of software. based on ownership, method : polling ( multipke times) and webhooks (unless
gets the response)
3) if a fund manager need to choose a company for growth perspective will he choose alpha or
beta.? Alpha and beta are two of the key measurements used to evaluate the performance of a
stock, a fund, or an investment portfolio.Alpha measures the amount that the investment has
returned in comparison to the market index or other broad benchmark that it is compared
against.Beta measures the relative volatility of an investment. It is an indication of its relative risk.

4) Which are the two legal documents of a mutual fund issued ?There are 3 important documents:
Key Information Memorandum (KIM), Scheme Information Document (SID) and Statement of
Additional Information (SAI). These are prepared by the Asset Management Company (AMC) about a
particular scheme, and submitted to the Securities and Exchange Board of India (SEBI) for approval.

5) What is JSON ? JavaScript Object Notation (JSON) is a standard text-based format for representing
structured data based on JavaScript object syntax. It is commonly used for transmitting data in web
applications (e.g., sending some data from the server to the client, so it can be displayed on a web
page, or vice versa).

SON is a language-independent data format. It was derived from JavaScript, but many modern
programming languages include code to generate and parse JSON-format data. JSON filenames use
the extension .json.

6) Java script full form

7) Types of mutual funds

8) What is open ended and close ENDED. ?? A closed-end fund is a type of mutual fund that issues a
fixed number of shares through one initial public offering (IPO) to raise capital for its initial
investments. Its shares can then be bought and sold on a stock exchange, but no new shares will be
created, and no new money will flow into the fund.In contrast, an open-end fund, such as most
mutual funds and exchange-traded funds (ETFs), accepts a constant flow of new investment capital.
It issues new shares and buys back its own shares on demand

9) If NAV of open ended is listed daily how is the NAV of close ended shown or LISTED?? . HOW do
u trade BOTH?

11) If fund manager wants to analyse the risk .. which risk he shud consider.?

A fund manager should consider a variety of risks when analyzing an investment portfolio.
Here are some of the key ones:

Systematic Risk (Market Risk):

  This is the risk that the entire market goes down, and no asset class is immune. It's
often measured by beta, which compares the volatility of a particular investment to
the overall market.

Unsystematic Risk (Company-Specific Risk):

 This is the risk specific to a particular company or industry. It can be caused by

factors like poor management, product recalls, or changes in regulations.
Diversification helps mitigate this risk by spreading your investments across different
companies and sectors.

Interest Rate Risk:

 This is the risk that rising interest rates will cause bond prices to fall. Bonds with
longer maturities are generally more sensitive to interest rate changes.

Inflation Risk:

 This is the risk that inflation will erode the purchasing power of your investments
over time. Assets like real estate and commodities can sometimes act as a hedge
against inflation.

Liquidity Risk:

 This is the risk that you won't be able to easily sell an investment when you need to.
Less liquid investments may be riskier, especially if you have a short-term investment
horizon.

Currency Risk:

 This is the risk that fluctuations in foreign exchange rates will impact the value of
your investments. This is especially relevant for investments denominated in foreign
currencies.

Credit Risk:

 This is the risk that an issuer of a bond defaults on their debt. This can lead to a loss
of principal for the investor.

Other Risks:

 Depending on the specific investment strategy, there could be additional risks to

consider, such as political risk, technological risk, or environmental risk.

The Importance of Portfolio Diversification:

By considering all these different types of risk, a fund manager can create a diversified
portfolio that is less susceptible to any single risk factor. Diversification is a key principle of
modern portfolio theory, and it helps to reduce the overall risk of the portfolio without
sacrificing potential returns.
Additional Tips:

 A fund manager should also consider the risk tolerance of the investors in the fund. A
conservative investor will have a lower risk tolerance than an aggressive investor, and
the portfolio should be constructed accordingly.
 Risk analysis is an ongoing process. Market conditions and company fundamentals
can change over time, so the fund manager should regularly review the portfolio and
make adjustments as needed.

By carefully considering all the relevant risks, a fund manager can make informed investment
decisions and help their investors achieve their financial goals.

How to measure risks:=

1. Beta
2. Alpha
3. R-squared

R-squared is a statistical measure that represents the percentage of a fund portfolio or a

security's movements that can be explained by movements in a benchmark index. For fixed-
income securities and bond funds, the benchmark is the U.S. Treasury Bill. The S&P 500
Index is the benchmark for equities and equity funds.

R-squared values range from 0 to 100. According to Morningstar, a mutual fund with an R-
squared value between 85 and 100 has a performance record that is closely correlated to the
index. A fund rated 70 or less typically does not perform like the index.

4. Standard Deviation

Standard deviation measures the dispersion of data from its mean. Basically, the more spread
out the data, the greater the difference is from the norm. In finance, standard deviation is
applied to the annual rate of return of an investment to measure its volatility (risk). A volatile
stock would have a high standard deviation. With mutual funds, the standard deviation tells
us how much the return on a fund is deviating from the expected returns based on its
historical performance.

5. Sharpe Ratio

Developed by Nobel laureate economist William Sharpe, the Sharpe ratio measures risk-
adjusted performance. It is calculated by subtracting the risk-free rate of return (U.S.
Treasury Bond) from the rate of return for an investment and dividing the result by the
investment's standard deviation of its return.

The Sharpe ratio tells investors whether an investment's returns are due to wise investment
decisions or the result of excess risk. This measurement is useful because while one portfolio
or security may generate higher returns than its peers, it is only a good investment if those
higher returns do not come with too much additional risk. The greater an investment's Sharpe
ratio, the better its risk-adjusted performance.
12) What is price to earning ratio ?The price-to-earnings (P/E) ratio measures a company's share
price relative to its earnings per share (EPS).

PS is the price investors are willing to pay for Rs. 1 of EPS ( Earnings pf stock) . if PE ratio is very high
then the stocks are highly priced and the price might fall in near future.

1. absolute : forward( current share price and predicted future 4 months) and TTM ( current
share price and 12 months past earnings). Different sectors or industry operates in different
price range.
2. Relative: compares current PE ratio to past , if the highest PE in last 10 years is 30, and
current is 27. Then relative : 27/30.

*_Very IMPT - Please DO NOT share this anyone_*

1. Websites :Okay, so let me tell you about products of morningstar, which includes retail products
like websites of several regions around the world out of which the firm focuses mailings on the USA
website as we have most of the clients from usa,

2. Mornign star direct, Adviser workstation : then we have advisor level products like advisor
workstation, Morningstar Direct etc then there is also managed portfolios by morningstar, depends
on upon which of these department will you be joining as a manager which will help you with
managing the products and people at my level being a product consultant we directly connect with
clients and help them with products and take any product enhancement requests from the clients to
further enhance the usability of the product, you as a manager i believe will be managing the team
of product consultants and will be directly in touch with the Chicago office and give updates on any
ongoing issues/bugs and much more.

Product Customer Does what?

Morningstar A global investment analysis platform that combines
Direct Morningstar data and research with analytics, data
science, and productivity tools.
Advisor Workstation Financial advisors
Corporate Analytic model credit risk to your investment portfolio of
global corporate entities based on latest financial
data and forecasts from Morningstar Inc.
Plan Advantage Retirement plan How retirement advisors grow their business
businesses
Wealth Platform An intuitive wealth management platform to power
your business, investment options

Morningstar Direct Morningstar Direct is a comprehensive platform that helps asset

and wealth managers build their assets and manage their
portfolios by supporting market research, product creation,
positioning, marketing, and distribution strategies
Steps: Research and analysis product creation -> portfolio
management -> reporting

1. 2Research : strategies in alignment with business goals

 2. Product creation : Construct and analyze investment
strategies before they hit the market, then iterate on
them to continue to drive high performance.
3. Curate a library of model portfolios, custom benchmarks,
and accounts
4. Streamline the creation and distribution of collateral to
client

Equity and fund research.

MYCA

CSP :

data insights | spend analysis| compliance & risk benchmarking and building financial strategies
around T&E and B2B spend on card program

tech team (RDPS? ) = development.

communication team= content o team

testing team= UAT / testing scenarios

operations = agent / ccps.

there is a collections team(business team) who does PIV and UAT.

Scanners - petty balance, cancellations. all falls here.