Sample interview questions: How do you assess the liquidity of fixed income securities?
Sample answer:
Assessing Fixed Income Securities Liquidity:
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Market Depth: Analyze the bid-ask spread and trade size of the security. A narrow spread and high volume indicate high liquidity.
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Trading Volume: Examine the daily or monthly trading volume of the security. Higher trading volume signifies greater liquidity.
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Secondary Market Activity: Evaluate the existence of an active secondary market where investors can transact without significant price impact.
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Issuer Profile and Credit Rating: Assess the issuer’s financial strength and credit rating. Well-established issuers with high ratings tend to have more liquid securities.
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Maturity Date: Consider the maturity of the security. Securities with shorter maturities generally have higher liquidity than longer-term bonds.
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Coupon Rates: Securities with higher coupon rates tend to be more liquid as they offer current income to investors.
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Size of Issuance: Larger bond is… Read full answer
Source: https://hireabo.com/job/1_2_25/Fixed%20Income%20Analyst