Explain forward contracts and options
Overview
This question evaluates understanding of financial derivatives—specifically forwards and options—assessing competency in financial instruments, contractual rights and obligations, pricing concepts, and how these concepts inform data-driven modeling for a Data Scientist role.
Morgan Stanley
Oct 21, 2025, 12:00 AM
Data Scientist
Technical Screen
Software Engineering Fundamentals
0
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In a finance-focused technical interview, you are asked to explain two basic derivative instruments:
- What is a forward contract?
- What is an option?
Describe each instrument clearly, including:
- The parties' rights and obligations.
- The underlying asset and price.
- Typical use cases (e.g., hedging, speculation).
- Key differences between a forward contract and an option.
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