Fixed Income Valuation Jobs Interview Questions and Answers

13 Questions

Fixed Income Valuation focuses on determining the fair market value of fixed income securities as part of monitoring trading activities and portfolio performance. Due to the complexity of cash flow structure of various fixed income instruments (such as those with embedded derivatives and/or asset-backed securities), the cash flow modeling and valuation process is often a black box and is difficult for investors to understand how their portfolio performance and securities values could be associated with or impacted by the presence of bond options / underlying assets. As such, fixed income valuation tends to go beyond the traditional DCF framework and involves more quantitative methods such as binomial lattice tree frameworks and/or Monte-Carlo simulations.