I have an interview for credit risk summer analyst opportunity soon. What kinds of questions should I prepare?
Last year, I wrote a research paper on the soverign debt ratings and their factors (much like what Moody’s, S&P, and Fitch do). I guess it’s not really related to credit risk department in an investment bank, right? Is it a bad idea if I bring the paper to the interview?
What kind of credit risk? You mentioned an investment bank? Are you sure it isn’t for the commercial bank?
Counterparty credit risk?
It is for an investment bank. Looks like they do things like structured products credit risk and counterparty risk, for example.
Looks like they do structured products credit risk and counterparty risk, for example.
Ah, makes sense. I’d just know the relevant rules around trading and collateral. Glassdoor that position for several companies and you’ll find all the questions you need to prepare for
It’s a common operational function at any financial institution. I don’t know what the questions will be like - but I guess you should know about credit… and counterparties…
General understanding of ISDA agreements, security such as letters of credit (standby and commercial) and some basic financial statement analysis.
Maybe brush up on the products (swaps, forward vs futures), different markets, settlement types, margin, clearing houses etc.
The paper wont’ hurt to bring but if it’s more CP related than less useful - but it does demonstrate a level of knowledge on a key consideration in credit risk, even if it’s sovereigns.
Also have a quick read of some material on Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD).