Capital Market (Dealers) Module (CMDM) (Intermediate) Interview Questions

The NSE’s Capital Market (Dealers) Module (CMDM) (Intermediate) is a very valuable examination. The NCFM Capital Market (Dealers) Module (CMDM) (Intermediate) is particularly useful for anyone involved in stock market operations. It provides its candidates with the necessary knowledge and operational skillsets for equity market dealers. Candidates should, however, ensure that they have a thorough understanding of the corporate world, particularly as it relates to stock market operations.

The Capital Market interview questions and answers provided here will assist you in making the right decision. It provides you with all of the information you need about your qualifications, the availability of various certificate courses, and the job opportunities available in the capital market. Make the most of this opportunity to pursue a rewarding career.

1. What exactly is the “Over the Counter Market”?

The over-the-counter market is a decentralized market with no physical location in which market traders or participants trade with one another via various communication modes such as phone, e-mail, and proprietary electronic trading systems.

2. Mention what the trading levels are.

Trader Senior
Junior Trader
Intermediate Trader

3. What do you mean by “private equity transactions”?

A private equity transaction occurs when private equity firms make investments in specific target companies. A target company is one that has the potential to perform well in a short period of time.

4. What are the two types of orders that issuers may issue in equity trading?

In equity trading, there are two basic types of orders issued by issuers.

Purchase Orders
Orders to Sell

5. Define equity funding.

Equity funding is the payment for an insurance policy by a mutual fund. The value of the mutual fund shares pays the insurance policy premiums, allowing individual investors to reap the benefits of a traditional mutual fund investment.

6. What is the weighted average rating factor?

The weighted average rating factor is a method of calculating, analyzing, and communicating the overall risk of an investment portfolio.

7. How can you tell if a stock is expensive just by looking at its price?

The stock price cannot be judged solely by its price; a $200 stock can be cheap if the company’s earnings prospects are high enough, whereas a $10 stock can be expensive if earning potential is low. The P/E ratio is an accurate indicator of a stock’s valuation.

8. What exactly is a call option?

A call option is a shareholder’s right, not an obligation, to purchase a share at a specified price and on a specified date in the future.

9. What fees must be paid when purchasing a stock?

The fees that must be paid when purchasing a stock are as follows:

Commission on Stock Brokers
The stock’s stamp duty cost

10. What are the specific measures for which you must be prepared for equity trading?

Even if your equity account is managed by a broker, it is critical to devote time to research and learning about trading. It necessitates knowledge, discipline, and time.
If you are not willing to lose money and are not willing to take risks, then equity trading is not for you.
If you’re losing a lot of money or the market isn’t performing as expected, cut your losses and call it a day.
Don’t be so naive as to turn profits into losses. Consider selling a portion of your stocks rather than all of them.

11. What exactly is options trading?

Options trading is a contract between a seller and a buyer to buy or sell single or multiple lots of underlying assets at a fixed price on or before the contract’s expiration date.

12. Explain how options differ from stocks.

Firstly, Option values are derivatives, which means they are derived from the value of an underlying investment.
Secondly, Institutional investors, professional traders, individual investors, and securities market places all trade options.
Option trading can reduce an investor’s risk by providing buyers with a known risk.
Next, Option buyers cannot lose more than the option’s price.
Option, like regular equities, does not have physical certificates.
Last but not least, Owning an option does not entitle you to any of a company’s shares or dividends unless and until the option is exercised.

13. Define cash equity.

The total amount of cash or net worth of all the cash that could be gained from the investments and securities mentioned in the portfolio is referred to as cash equity. Cash equity monitoring is a better way to know whether your current investment mix is working, and it also helps to determine what to hold and what to sell.

14. What is a short sell in equity trading?

The technique of profiting from a falling stock price by borrowing shares of the stock, selling them at the market price, and then repurchasing them at a lower price to return them to the original lender is known as short selling in equity trading. If you put it in a simple phrase, “buy low, sell high.”

15. What is capital loss?

Capital loss refers to the negative difference between the stock’s purchase and sale prices.

16. What does the term “double bottom” mean?

The term “double bottom” refers to a stock that is in a downtrend, hits a support level twice, and then reverses to continue in an uptrend.

17. What is MF, or Minimum Fill Order?

Minimum Fill Order, or MF, is an order attribute that requires a minimum number of shares to be available in order to trigger an order.

18. What is the debt-to-equity ratio?

The equity ratio, which is used to finance various aspects of a company’s operations, is used to measure debt against the proportion of equity. It is used as a standard for assessing a company’s financial stability.

19. Define bridge equity.

Bridge equity is a financing technique that allows potential acquirers of companies or assets to commit to A debenture is a type of debt that is not backed by tangible assets or collateral. Acquisition before raising the necessary equity.

20. Explain the term debenture.

A debenture is a type of debt that is not backed by tangible assets or collateral. It is granted on the basis of the issuer’s overall creditworthiness and reputation.

21. What are derivatives?

A derivative is a specialized contract for buying or selling the underlying assets at a predetermined price in the future.

22. What are the various kinds of equity markets?

Preferential Allotment
Public Issue
Right Issue
Private Placements

23. Explain dividend.

Dividend refers to the company’s profit share after tax that is distribute to its shareholders based on their class and the total number of shares held.

24. Can you name a few mutual fund schemes?

Maturity Period: Open-ended and Closed-ended Schemes
Investment Goals: Growth Schemes, Balanced Schemes, and Income Schemes
Other schemes include a liquid fund, a sector fund, and a tax-saving fund.

25. What is the distinction between a convertible and a non-convertible debenture?

Convertible debenture: A convertible debenture can be convert into equity shares of the issuing company after a set period of time. Their interest rates are lower.
Non-convertible debenture: These debentures have a higher interest rate and are not convertible into equity shares.

26. What exactly is ROE?

ROE, or Return On Equity, is a profitability metric that calculates how much profit a company generates with each shareholder’s equity.

To compute ROE,

ROE equals Net Income divided by Shareholder Equity.

27. What is the distinction between equity financing and debt financing?

The process of issuing additional shares of common stock to an investor is known as equity financing. Debt financing, on the other hand, is borrowing money without relinquishing ownership.

28. What exactly is Net Asset Value (NAV)?

NAV, or Net Asset Value, is the value of one unit of a fund. It is calculate by adding the current market values of all securities held by the fund, subtracting liabilities and expenses, and dividing the result by the number of units outstanding.

29. What is an equity share?

The net-asset value backing up each share of the company’s stock is represented by an equity share. The growth of equity shares determines whether a company is increasing shareholder wealth over time.

30. Why are convertible securities more appealing to investors?

If the common equity fails to perform, the convertible provides the facility of a prior claim. If the stock rises in value, the convertible may benefit from the company’s success.

Conclusion for Capital Market (Dealers) Module (CMDM) (Intermediate) Interview Questions

If you find the right footing, a career in the capital market is a promising one that can guarantee constant growth. You are ready to go if you have a good understanding of the stock market and technical knowledge of dealing with shares, bonds, and investments.

So, if you want to ace the capital market interview, show your interviewer your capital market knowledge with a capital market certification. This, like these capital market interview questions, will be an invaluable resource.