Debt Capital Markets interview preparation

Bond mechanics, duration, credit spreads, ratings, primary issuance, syndicated loans, structured credit, covenants and liability management, plus the Indian debt market. Every question is either traced to a named firm from a public candidate report, or tagged at desk level when we could not trace it.

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Question bank

100 questions, mapped to the firms that asked them

Questions: 100
Traced to a firm: 45
Firms: 26
Updated: September 2026

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003What is yield to maturity, and how is it different from current yield?Bond mechanicsCoretechnicalPIMCOFixed Income · Sydney · 2025
Say this
Yield to maturity is the single discount rate that sets the present value of all remaining cash flows equal to the current price. Current yield is just the annual coupon divided by the price, so it ignores the capital gain or loss you get by holding to par.
Then walk it
1. Current yield on a 6 percent coupon bond trading at 90 is 6.67 percent. That is the cash income only.
2. Yield to maturity on the same bond is higher, maybe 8 percent, because you also collect the 10 points of pull to par over the remaining life. For a discount bond, YTM is above current yield; for a premium bond, below.
3. YTM is an internal rate of return, so it embeds an assumption people forget: that every coupon is reinvested at the YTM itself. If reinvestment rates are lower, your realised return is lower than the quoted yield.
4. It also assumes you hold to maturity and the issuer does not default or call. Yield to call on a callable bond is the same calculation run to the first call date, and you quote yield to worst, the lower of the two.
5. Current yield is still used because it answers a real question for an income investor: what does this pay me per year. It is just not a return measure.
6. The clean summary: current yield is income, YTM is total return under a strong reinvestment assumption, and yield to worst is what a desk actually quotes.
Where candidates lose it
Defining YTM correctly and never naming the reinvestment assumption. That assumption is the entire weakness of the measure, and stating it unprompted is what separates someone who has used the number from someone who has read about it.
Expect next
- So when is YTM a misleading measure of return?
- What is yield to worst?
- How would you compute realised return instead?
Reported by candidates at PIMCO (Fixed Income, Sydney, 2025). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.

100 questions, mapped to the firms that asked them

Say this

Then walk it

Where candidates lose it

Expect next