Wealth managers are those individuals or group of individual or company that assists you in managing your funds or money or wealth that you own. Furthermore, they provide you with the safest way of investing or holding money so that you can multiply and increase your wealth. Here are some of the wealth manager interview questions.
Furthermore, the wealth manager assists you in providing tax planning and other purposes that are essential in one company. Similarly, wealth managers are those persons who have very good analytical and mathematical skills. They are skilled and good with numbers and have the ability to make calculations. Furthermore, a good wealth manager should possess the ability to present the actual data. They should be good at reading and presenting financials and have amazing communication talents. Practice hard there wealth manager interview questions.
Wealth manager interview questions video
What is shareholder wealth maximization?
Answer: If we talk about the wealth manager interview questions. Here is the best one. Shareholder’s wealth maximization is the most accepted goal of a firm. According to this goal, managers should take decisions that maximize shareholder wealth. Shareholder wealth is maximized when a decision generates a net present value. Furthermore, this is the most important wealth manager interview questions.
A decision that has a positive net present value creates wealth for
shareholders. Similarly, A decision that has a negative net present value
destroys the wealth of shareholders.
Based on this logic, share price maximization is considered equivalent to shareholder wealth maximization as the goal of a company.
It is because the market price of a firm’s stock takes into account present and expected earnings per share and other factors that bear on the market price of the stock.
In the Stock Exchange, the shares of different sector enterprises are listed and being traded. They include the shares of banks and financial institutions, insurance companies. Manufacturing and processing companies, hotels, trade, and other sectors.
Of the shares listed, not all companies have active trading of securities in the stock exchange. Banks and financial institutions are dominating. Stock market both in terms of a number of transactions and depth of transactions.
Does the increase in the results of the increasing stock price?
Answers: Also, it is discovering the satisfactory price that other listed companies though some manufacturing sector organizations.
However, their market is relatively inactive than those of banks and financial institutions. Besides, the majority of hydropower companies have an active market in the stock exchange. This is the most asked wealth manager interview questions.
It has attained a significant price rise over the year though they are less in numbers as compared to banks and financial institutions. Nepalese stock market is characterized by the active trading of shares of banks and financial institutions.
Among banks and financial institutions, the shares of joint venture banks are traded more actively with significant command over market capitalization.
The share price of joint venture banks such as that of Standard Chartered Bank has commanded over 40 fold price rise over the years in the market. This example illustrates how the joint venture banks are maximizing shareholder’s wealth than other listed firms in the stock exchange.
What do you mean by the organization of finance function?
Answers: The organization of finance function refers to the authority and responsibility relationship among persons involved in finance functions in an organization. Similarly, It is the division of work among the persons who carry out finance functions.
Therefore, Proper organization of finance function helps to avoid confusion on the roles and responsibilities of employees, the duplication, and overlap of the activities.
What are the responsibilities of a wealth manager?
Answers: The responsibility that a wealth manager has while holding his/her position is as follows:
- He/she should deal with all the portfolio data in a systematic and keep the back up of all the data.
- A wealth manager should study the strength and weaknesses of the investment. Furthermore, he should only make investments after making all the analyses of financial and non-financial aspects.
- Furthermore, the ability to lead a team and delegate the works to the other staff as per the capabilities, skills, and position.
- Advice the company or the client about the proper investment schemes and how the finances are managed.
- Proper allocation of all the assets and the liabilities of the company.
- Proper reporting time to time along with this discussing and solving the issues on a prompt basis.
What are the differences between the accounting profit and the cash flows:
Answers: Profit maximization emphasizes maximizing accounting profits to the firm. The accounting profit has multiple meanings. It can be earnings per share or total profit earnings before interest and taxes or earnings after taxes.
Maximizing earnings per share is not equivalent to maximizing total profit. Similarly, maximizing earnings before interest and taxes are not equivalent to maximizing earnings after taxes.
On the other hand, stock price maximization is based on the estimate and use of cash flows from a course of action. The term cash flow has consistent meaning to all. It refers to the difference between cash inflow and cash outflow from a course of action.
How will you recognize the time value of money in case of stock price maximization and profit maximization:
Answers: Stock price maximization recognizes the concept of the time value of money. Under stock price maximization decision criteria all future cash flows from an investment are discounted back. To present value at a required rate of return. All investment decisions are based on the present value of future cash flows.
However, profit maximization does not recognize the concept of the time value of money. It treats a rupee amount of profit today equivalent to the rupee amount of profit in one year.
How risks are recognized in the way of profit maximization?
Answers: Shareholder’s wealth maximization is based on the consideration of risk involved in financial decisions. The level of risk associated with cash flow streams is reflected by selecting the appropriate required rate of return to determine the present value.
Generally, for risky cash flow, a higher discount rate is used to determine the present value under the shareholder’s wealth maximization goal.
What is the importance of financial statements?
Answers: The basic importance of financial statements are as follows:
- Financial statements can be used for the purpose of reporting to shareholders, creditors, managers, and other stakeholders about the financial affairs of the firm.
- Owners and managers use financial statements to make important business decisions. Financial analysis is performed on these statements to provide a detailed understanding of the financial performance to facilitate decision making.
- The Pro-forma financial statements can be prepared to provide a future forecast of revenues, expenses, investment, and financing needs of the firm.
- Financial statements, such as the statement of cash flow, are prepared to know about the comparative cash flow position of a firm between two periods.
- Financial statements are important to various users. For example, investors use financial statements to assess the profitability of investing in a firm’s shares, financial institutions like banks, finance companies use financial statements to ascertain the accuracy of taxes declared and paid by a firm and supplier.
Summing it up,
These were some of the questions that will help you to get through wealth manager interview questions. Read well before your interview.
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