Credit (Risk) Analyst

A security is marginable if it can be traded on margin through a brokerage or other financial institution. Securities with high liquidity and market capitalization are more likely to be marginable. Other securities, such as stocks priced below $5/share, are not marginable.

The rules governing which securities are marginable and which are not are set out in Regulation T and Regulation U of the Federal Reserve. Self-regulatory organizations such as the NYSE and FINRA​ are also involved in the regulatory process. Although individual brokers can adopt their own requirements, they must be at least as strict as those prescribed by law.

Debt security refers to a debt instrument, such as a government bond, corporate bond, certificate of deposit (CD), municipal bond or preferred stock, that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount borrowed), interest rate, and maturity and renewal date. It also includes collateralized securities, such as collateralized debt obligations (CDOs), collateralized mortgage obligations (CMOs), mortgage-backed securities issued by the Government National Mortgage Association (GNMAs) and zero-coupon securities.

Currency is a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade.

A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.

Debt financing occurs when a firm raises money for working capital or capital expenditures by selling bonds, bills or notes to individuals and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise the principal and interest on the debt will be repaid. The other way to raise capital in the debt markets is to issue shares of stock in a public offering; this is called equity financing.

Debt security refers to a debt instrument, such as a government bond, corporate bond, certificate of deposit (CD), municipal bond or preferred stock, that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount borrowed), interest rate, and maturity and renewal date. It also includes collateralized securities, such as collateralized debt obligations (CDOs), collateralized mortgage obligations (CMOs), mortgage-backed securities issued by the Government National Mortgage Association (GNMAs) and zero-coupon securities.

It is only logical that a credit analyst should be proficient with financial analysis. As a result, some credit analyst interview questions and answers will revolve around your financial capabilities. You be expected to have a working knowledge of cash flow, market shares, income growth, calculating debt to income ratios and more. Brush up on these skills before your interview appointment to make sure you are adequately prepared for this question.

This is when you need to bring up your specific skills in credit analysis, risk and valuation. A quantitative background is a great thing to have. Show that you also have a strong understanding of VAR, CVaR, PFE and portfolio analysis tools.

Free cash is equal to cash from operation less capital expenditures.

This question will allow your interviewer to discover the ways in which you will perform the tasks at hand. Although you can feel free to relay information about your best qualities, you should always include some information about your analytical skills in your answer. After all, it will be your duty to study your clients and customers as well as the market in order to determine whether the extension of credit is feasible. “I feel that analytical skills, the ability to communicate effectively and solid decision-making skills are all very important to be a successful credit analyst” is a great answer. Be sure to elaborate a little on each characteristic.

Every work environment has a unique culture. Furthermore, each financial company will have its own way of completing important tasks. If you want to be immediately effective in your prospective position, it helps to understand what you are jumping into. As such, the hiring manager wants to gauge your background knowledge. Whether you gathered your own information or had the help of a recruiter, now is the time to give a snapshot of what you already know.

The most common methods are DCF valuation / financial modeling and relative valuation methods using comparable public companies (“Comps”) and precedent transactions (“Precedents”).

A market index is an aggregate value produced by combining several stocks or other investment vehicles together and expressing their total values against a base value from a specific date. Market indexes are intended to represent an entire stock market and thus track the market's changes over time.

Risk analysis is the study of the underlying uncertainty of a given course of action. Risk analysis refers to the uncertainty of forecasted future cash flows streams, variance of portfolio/stock returns, statistical analysis to determine the probability of a project's success or failure, and possible future economic states. Risk analysts often work in tandem with forecasting professionals to minimize future negative unforseen effects.

This question will give the hiring manger insight into how you might handle certain job responsibilities. If you think organization and computer knowledge is most important, the interviewer now understands that you are particularly dedicated to maintaining an organized work space and improving your programming knowledge. If this aligns with the company’s practices and methods, you have just made yourself a more appealing candidate.

Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or relative to the same ratio from a previous period indicates that the company is doing well.

A tax bracket refers to a range of incomes that are subject to a certain income tax rate. In most income tax systems, low incomes fall into tax brackets with relatively low income tax rates, while higher earnings fall into brackets with higher rates. Tax brackets help create progressive income tax schedules.

Interpersonal communication is crucial to realizing your full potential as a credit analyst. A credit analyst communicates regularly with internal and external business representatives regarding credit information. He/she also meets clients in person to answer queries, solve problems, respond to complaints, etc.

Credit analysts should have modeling skills. It pays to be proficient in MATLAB, SAS, C++, Moody’s KMV, VB/VBA, and SQL. Individuals with systems development expertise are sure to get snatched up.