Interview Questions Flashcards
Tell me about yourself.
Answer.
Describe the public finance industry.
Answer
Why do you want to be here?
Answer.
Why should we hire you?
Answer.
What impact do interest rates have on bond prices?
Inverse correlation.
What is the market rate for municipal bonds?
Bond Buyer Municipal Bond Index (40 long term bond prices) - 346
Bond Buyer Revenue Bond Index - 257
Bond Buyer GO Index (20 bonds) - 212
GO Index (11 bond higher grade) - 165
Do you think a major city should provide its own sanitation services, or should they be privatized? What are the tradeoffs?
For the sanitation services example, you might argue that’s since many local governments are facing budget shortfalls and declining revenue, it makes sense to contract out the services; privatization might also improve their efficiency and result in better quality of service due to the competition between providers. Meanwhile, someone else might argue that these services should remain public because the added expense of managing contractors outweighs any cost savings, and because it’s too hard to ensure quality and consistency with different providers.
What impact do bond prices have on yields?
Inverse relationship.
What is tax exempt yield and how do you calculate it?
It’s the yield you get for a muni bond based on your personal tax rate. Allows you to compare bonds of similar risk even if one is corporate and one is municipal.
Tax exempt yield = (tax free yield ) / (1- tax rate)
What is a Build America Bond?
Taxable municipal bonds that featured tax credits or subsidies for bond holders or state and local government bond issuers. The program expired 2010.
What is your past?
Answer.
Why would you be good at Public Finance?
Answer.
Are you smart?
Give example.
Are you driven?
Give example.
Are you disciplined?
Give example.
Why did 2020 have high muni volumes?
Lots of advance refunding and issuers raising cash to have liquidity.
What is the state of the general economy?
The US has a huge current account deficit and rates at 25 bps. The American economy contracted in Q1 and Q2, but expanded Q3 and 4. It was announced in recession but the announcement for when it left recession has not been made.
Where are interest rates?
0.25 % discount and fed funds. Repo is around 4.5 %
What do you think will happen to interest rates in the next six months?
Answer.
Will the Fed tighten or expand monetary policy in the next few months?
Probably neither. They’ve signaled rates will remain low.
What are the rates overseas?
Answer.
