Investment associate Interview Questions

Mutual funds allow you to put your money together with other investors to buy stocks or bonds. This is a good option for smaller investors to diversify investments.

Income Statement: Because depreciation is an expense, Operating income (EBIT) decreases by $10. Net income also declines by EBIT*(1-tax rate). Assuming a 35% tax rate, NI decreases by $6.50. Balance Sheet: Cumulative depreciation increase $10, so PP&E (Plant Property and Equipment) decreases by $10). The reduction in net income also causes a Reduction in Retained Earnings by $6.50. Cashflow Statement: Net income decreased by $6.50 and D&A increased $10, cashflow from operations increases by $3.50.

Wouldn't that merely occur @ n = 1?

sorry, forgot to mention other than the trivial case at n=1. the answer should be around 20000 if i recall correctly (think its 19991 but need double check on that)

f(0) = 0, if we are dealing with real numbers, zero counts

Draw a tree to have an idea of how to compute the probability. The flips are all independent with each other.

1/3

1/3 Because if he requires 2 heads = $2, then it means he require HH out of {HH,HT ,TH,TT} We cannot consider TT because it would turn to zero. Therefore, he has 1 chance out of 3. Hence 1/3.

The quantitative way to answer this is the perpetuity growth formula. You would take the monthly payments. Don't really know why, that is what the interviewer told me.

The answer should be the $1000...$1000 today is worth more than $1000 ten months from now or $100 every month for 10 months due to the time value of money.

Money loses value over time...

I answered as practiced earlier. Added a relevant example about how I have handled a similar issue in the past. They like to see concrete evidence of the sort.

Can you please provide some more questions asked and if there were any technical questions asked too?

Communication is the key. We must come together and get the issues on table. A lot time it is just a misunderstanding. But I find that it's deeper than that we will find a resolution.

IRR is higher for property generating no cash flows, since it carries greater risk.

I hope you didn't tell them that. In fact, the IRR is the rate which allows all incoming and outgoing cash flows to be equal. The question is a bit ambiguous considering the IRR is also heavily dependent on the money invested (outgoing). With respect to the question, if you are receiving high returns relative to the amount invested, that would lead to a higher IRR. In fact, an investment that generates nothing at all would have an IRR of -100%. Hope this helps anyone who actually receives a poorly worded question like this. Extra bit of help: IRR > Risk free rate of return -> Project should be considered IRR You just lost your company a lot of money

I see this question as really asking: "Do you know the definition of an IRR?" since the original question is so ambiguous. It merits a discussion of IRR rather than a yes/no answer.