Sample interview questions: Can you discuss the impact of geopolitical events on derivatives markets?
Sample answer:
- Increased volatility: Geopolitical events can create uncertainty and volatility in the financial markets. This can lead to increased volatility in derivatives markets, as investors and traders adjust their positions to reflect the new information.
- Changes in correlations: Geopolitical events can also change the correlations between different asset classes. For example, a geopolitical event that affects the global economy may cause the correlation between stocks and bonds to increase. This can make it more difficult to hedge risk using traditional diversification strategies.
- Disruptions to supply chains: Geopolitical events can disrupt supply chains, which can lead to shortages of goods and services. This can cause prices to rise, which can have a negative impact on businesses and consumers.
- Changes in government policies: Geopolitical events can also lead to changes in government policies, which can have a direct impact on derivatives mar… Read full answer