Deutsche Bank Analyst Interview Questions and Answers

Different types of securities include stocks, bonds, options, and mutual funds.

• Stocks represent ownership in a company

• Bonds are debt securities issued by governments or corporations

• Options give the holder the right to buy or sell an asset at a specified price

• Mutual funds pool money from multiple investors to invest in a diversified portfolio

• Other types include ETFs, futures, and derivatives

Capital markets are financial markets where long-term debt or equity-backed securities are bought and sold.

• Capital markets facilitate the buying and selling of long-term financial instruments such as stocks and bonds.

• They provide a platform for companies and governments to raise funds for various projects and initiatives.

• Investors can trade securities in the capital markets to earn returns on their investments.

• Examples...read more

Corporate actions are events initiated by a public company that can affect its stock price or ownership structure.

• Corporate actions include dividends, stock splits, mergers, acquisitions, spin-offs, and rights issues.

• These actions can impact shareholders by changing the value of their investments or the number of shares they own.

• Investors need to stay informed about corporate actions to make informed decisions about th...read more

Bonus declaration affects liabilities and retained earnings on the balance sheet.

• When a bonus is declared, it creates a liability for the company, recorded as 'Bonus Payable'.

• The journal entry would be: Debit 'Retained Earnings' and Credit 'Bonus Payable'.

• For example, if a company declares a $10,000 bonus, it reduces retained earnings by $10,000.

• Upon payment of the bonus, the company will debit 'Bonus Payable' and cred...read more

The actual rate of return is more than 10% due to the bond being issued at a discount. The method used for its calculation is Yield to Maturity (YTM).

• Bond issued at discount means the actual rate of return is higher than the fixed rate.

• Yield to Maturity (YTM) is used to calculate the actual rate of return on a bond.

• YTM takes into account the bond's current market price, par value, coupon payments, and time to maturity.

If a company declares a dividend but does not pay it, the balance sheet of the shareholder will show an increase in their retained earnings and a corresponding decrease in their cash or assets.

• The shareholder's equity will increase by the amount of the declared dividend.

• The company's liabilities will also increase by the same amount until the dividend is paid.

• The shareholder will see an increase in their retained earni...read more

Mutual fund buys shares on trade date and settles on settlement date.

• Mutual fund purchases shares on the trade date, which is the date the transaction is executed.

• Settlement date is the date on which the mutual fund actually pays for the shares and receives ownership.

• The journal entry on the trade date would debit the investment account and credit the cash account.

• The journal entry on the settlement date would reverse ...read more

Investment opportunities include stocks, bonds, real estate, commodities, and startups.

• Stocks - buying shares of a company

• Bonds - lending money to a corporation or government

• Real estate - purchasing property for rental income or appreciation

• Commodities - investing in physical goods like gold or oil

• Startups - funding early-stage companies in exchange for equity

Derivatives are financial instruments whose value is derived from an underlying asset or group of assets.

• Types of derivatives include futures, options, swaps, and forwards.

• Futures contracts obligate the buyer to purchase an asset at a specific price on a future date.

• Options give the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified timeframe.

• Swaps involve the e...read more

I have worked on various analytical projects, focusing on predictive modeling and comparative analysis of different algorithms.

• Developed a customer segmentation model using K-means clustering to identify key demographics.

• Implemented a regression model to predict sales, comparing linear regression and decision tree regression results.

• Worked on a classification project for loan default prediction, evaluating logistic reg...read more

Logistic regression is preferred for interpretability and simplicity compared to random forests.

• Logistic regression is a linear model that is easier to interpret and implement compared to the complex ensemble method of random forests.

• Logistic regression is better suited for binary classification problems where the relationship between the independent variables and the outcome is linear.

• Random forests are more computati...read more

Classification models are used to predict the category or class of a new observation based on past data.

• Classification models assign new data points to a specific category or class based on patterns in the training data.

• Common classification algorithms include logistic regression, decision trees, random forests, and support vector machines.

• These models are evaluated based on metrics like accuracy, precision, recall, an...read more

Model performance can be assessed using various metrics such as accuracy, precision, recall, F1 score, ROC curve, and confusion matrix.

• Evaluate accuracy to measure overall correctness of the model's predictions.

• Use precision to assess the proportion of true positive predictions among all positive predictions.

• Consider recall to evaluate the proportion of true positive predictions among all actual positives.

• Calculate F1 ...read more

Assumptions of Linear Regression include linearity, independence, homoscedasticity, and normality.

• Linearity: The relationship between the independent and dependent variables is linear.

• Independence: The residuals are independent of each other.

• Homoscedasticity: The variance of the residuals is constant across all levels of the independent variables.

• Normality: The residuals are normally distributed.

• Example: If we are pred...read more