Mutual Fund Mastery interview preparation

Questions

100

Traced to a firm

32

Firms

19

Updated

September 2026

Asked at

All firmsVanguard5BLBlackRock3FTFranklin Templeton3Invesco3PIMCO3Fidelity Investments2J.P. Morgan2Morningstar2Neuberger Berman2SCSchroders2T. Rowe Price2Amundi1BMBNY Mellon1Goldman Sachs1Man Group1Northern Trust1SSState Street1Sycamore Partners1WMWellington Management1

Topic

All topicsFund structure and regulation7NAV and operations6Scheme categorisation4Equity schemes5Debt schemes7Risk, liquidity and disclosure7Index funds and ETFs6Hybrid and solution schemes3Costs, plans and commissions6SIP and investor mechanics5Performance measurement6Taxation5Distribution, compliance and NISM5Portfolio construction and advice5Estimation and numeracy5Markets and industry6Career and fit12

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseFitBrainteaserMarket view

1. 024What is yield to maturity?Debt schemesIntermediatetechnicalPIMCOFixed Income · Sydney · 2025

   Say this

   The single discount rate that makes the present value of all a bond's future cash flows equal its current market price. It is the internal rate of return you earn if you buy at that price, hold to maturity, collect every coupon, and reinvest each coupon at that same yield.

   Then walk it

   1. It solves price for yield. Price is observable, the cash flows are contractual, so YTM is what falls out — which is why you can compare a five-year and a ten-year bond on one number.
   2. Price and yield move inversely. If yields rise, the fixed coupons are worth less, so the price falls. How much it falls is duration.
   3. The three assumptions people skip: you hold to maturity, the issuer does not default, and every coupon is reinvested at the YTM. The reinvestment assumption is the one that breaks in the real world — a falling rate environment means you reinvest coupons at less than the YTM and realise less than it promised.
   4. In a mutual fund context, the portfolio YTM on a fact sheet is a weighted average of the holdings' yields, gross of the expense ratio. So the number you actually earn is roughly portfolio YTM minus TER, assuming nothing defaults and the manager does not trade.
   5. And a high portfolio YTM is not a good thing by itself. A debt fund quoting 9 percent when the equivalent gilt is at 7 is telling you it holds credit risk or long duration. Read the yield alongside the rating profile and the Macaulay duration or it is meaningless.
   6. For a callable or a puttable bond you would use yield to call or yield to worst instead, because maturity is no longer the binding date.

   Where candidates lose it

   Defining YTM as the coupon rate or as the current yield. Current yield is coupon over price and ignores capital gain to maturity. Also, the reinvestment assumption is the part that separates a memorised definition from an understood one — say it before you are asked.

   Expect next

   • What if the coupons cannot be reinvested at that rate?
   • A debt fund's fact sheet shows a 9 percent YTM. What do you check next?
   • How does YTM differ from current yield and from yield to call?

   Reported by candidates at PIMCO (Fixed Income, Sydney, 2025). Source: Wall Street Oasis.

2. 025How would you price a bond in today's market?Debt schemesIntermediatetechnicalJ.P. MorganGeneralist · Columbus · 2026

   Say this

   Discount every cash flow — the coupons and the principal — at a rate built from the risk-free curve for that maturity plus a credit spread for the issuer. Price is the sum of those present values. In practice you take the government security yield at the same tenor and add the spread the market is paying for that rating.

   Then walk it

   1. Mechanically: price equals the sum of coupon divided by one plus y to the power t, for each period, plus the face value discounted at the final period. A ten-year annual bond has eleven cash flows.
   2. The discount rate is the part that requires judgement. Start with the G-sec yield for the same tenor — in India, the ten-year benchmark. Add a spread: a few basis points for a AAA PSU, substantially more for a AA corporate, and far more for anything below.
   3. Rule of thumb for the intuition: if the coupon exceeds the market yield the bond trades above par, if it is below it trades at a discount, and at par the two are equal. State that and you have shown you understand the mechanism rather than the formula.
   4. Then the adjustments. Accrued interest, so quote clean or dirty price and say which. Embedded options, so use yield to call if it is callable. Liquidity, because an Indian corporate bond that trades twice a month carries a real illiquidity premium over its matrix price.
   5. For a mutual fund this is not a free choice. SEBI requires debt to be valued at the security-level prices published by CRISIL and ICRA, averaged, precisely so two AMCs cannot mark the same bond differently. Your own model is a cross-check, not the NAV.
   6. Sanity check the answer with duration. If the ten-year yield moves 50 basis points and a bond with modified duration of 7 does not move about 3.5 percent, you have made an arithmetic error.

   Where candidates lose it

   Reaching for the formula and skipping how you pick the discount rate. The whole question is the discount rate. In an AMC seat, add the point that regulated valuation overrides your model — that is the answer a fund accounting or risk interviewer is waiting for.

   Expect next

   • Where do you get the credit spread from?
   • Now tell me what happens to the price if rates move 50 basis points.
   • How would you price it if the bond has not traded in a month?

   Reported by candidates at J.P. Morgan (Generalist, Columbus, 2026). Source: Wall Street Oasis.

3. 028A corporate treasurer has 40 crore of surplus he will need in about 45 days. Overnight fund, liquid fund or money market fund?Debt schemesIntermediatecase studyCorporate treasury desksIndian AMCs

   Say this

   Liquid fund, for a 45-day horizon. Overnight gives up yield for liquidity he does not need, and a money market fund holds paper out to a year, so it carries mark-to-market risk over a window this short. Liquid caps residual maturity at 91 days, which roughly matches the horizon.

   Then walk it

   1. Overnight funds hold one-day paper, so there is effectively no rate risk and no credit risk, but the yield is the lowest of the three. That is the right answer for money he might need tomorrow, not in 45 days.
   2. Liquid funds hold paper up to 91 days residual maturity. Since the move to full mark to market the NAV does move, but with average maturity under about 60 days the sensitivity is small — a 25 basis point move costs a few basis points of NAV.
   3. Money market funds can hold up to one year. That extra duration earns maybe 20 to 40 basis points more in a normal curve, but over 45 days a rate spike can wipe out more than the extra carry.
   4. Watch the graded exit load on liquid funds for redemptions inside seven days, introduced after the 2019 stress. Redeeming on day 3 costs a small penalty; by day 45 it is irrelevant. Say this, because treasurers ask.
   5. Then the operational detail that actually matters to a treasurer: the 1:30 pm purchase cut-off and the realisation rule. Funding by RTGS in the morning gets him the previous day's NAV; a 2 pm transfer loses a day, which on 40 crore at 6 percent is about 66,000 rupees.
   6. One check before recommending: the scheme's top-10 investor concentration. A liquid fund where three corporates hold 60 percent of AUM is a fund where someone else's quarter-end redemption becomes his problem.

   Where candidates lose it

   Answering with the highest-yielding option. Treasury money is about certainty of principal on a known date, not yield. And if you do not mention the 1:30 pm cut-off and the seven-day exit load, an institutional sales interviewer will conclude you have never spoken to a treasurer.

   Expect next

   • Now he says he might need it on any day with 24 hours' notice. What changes?
   • What is the exit load structure on a liquid fund?
   • How would you check the fund's investor concentration?

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.