Tuesday, January 08, 2008

Interview questions to prepare for Sales&Trading

I have written up this list for the MBA2009s from my school but thought I might as well share it with others applying for summer internships in Markets. Writing it up, I realized there is a lot to prepare actually. Lots of questions are easy if you follow the markets and have been in the field before, but for career changers there is actually a lot to prepare! Here it goes:

Technical questions

  • How are bond prices and yields related?

  • How do you price a bond?

  • How do you calculate implied forward rates?

  • How do you price an option?

  • What is a Credit Default Swap? How does it work?

  • What is a CDO? How does it work?

  • What happens to bond prices when interest rates rise? What happens to equity markets? What happens to currencies?

  • What is an inverted yield curve and how do you interpret it?

  • What is a carry trade? How does it work?

Market awareness

  • Know the price of oil, gold, the level of the FTSE, S&P500, Nikkei, Dax, know FX rates USD/EUR, USD/Yen, EUR/GBP, what have these been doing over the last months?

  • Know central bank rates of US, Euro area, UK and Japan, what have they been doing over the last months, what does the term structure look like, why?

  • How would you invest $1million?

  • Have you ever invested money?

  • Tell me a trade idea?

  • What stocks do you like and why?

  • What do you think the Fed/Japanese Central bank etc. will do at their next meeting?
    (A really good source of commentary on rates and currency markets is Daily FX)

  • Where do you think interest rates are going?

  • What happened in the markets yesterday?

  • Draw me the US yield curve. Draw me the UK yield curve. Why is it inverted?
    (check Bloomberg rates for the graphs, much easier than looking up the yields in the Financial Times and drawing it yourself. Wow, the UK yield curve looks funky right now!)

  • What do you think about the current credit markets?

  • What's your view on the US economy?

  • What do you think is the next big investment opportunity in the markets that can offer spectacular returns?

  • etc. (all questions like that to check if you have an opinion and read the newspaper, answer can be short and concise, there is no right answer as long as it is logical and moderately well informed)

  • + questions that you provoke -i.e.
    If you say you are interested in emerging markets, they will ask you about which EM stock you like or what happened in Thailand last year,
    if you say you are interested in oil they might ask what's going on in Venezuela or Kazakhstan,
    if you say you come from financial engineering they might ask something more technical,
    if you say you want to do sales they might say “sell me something now” and so on


  • Why do you want to do this?

  • Why do you want to leave your previous job?

  • We have invited 15 of your classmates for the final round. Why should we take you and not your classmates?

  • How will you decide between different offers?

  • What do you like about Deutsche Bank/Lehman Brothers etc.?

  • Why Sales & Trading and not Investment Banking?

  • Tell me about a time in your work when you really felt the power of a team and what a team can achieve


Rahul said...

Thanks for these questions Angie. Many people have recommended Vault Guide to Finance interviews for preparation. I have gone through parts of it and have found it pretty good.

01 said...

Hey Angie
Thats a great post, especially for people trying to switch careers.
Great follow up to your earlier post: "Sales & Trading and Hedge Fund reading list".

Keep up the great job.

himpantsou said...

May I ask what score you got on your GMAT to get into the London Business School MBA? Also there are a lot of women on your course from that Santa Christmas party!

angie said...

himpantsou, I won't share my GMAT score but you should know it is not very important for the admissions decision, as long as it is above a certain threshold. The average is around 690 and the range from 620 to 800. But I know people with 750 who got rejected, and people with very low scores who got accepted, so it is not very important as long as it is above 670 or so, below that people need to have some outstanding experience to compensate.

babagannoush said...

Fascinating! Thank you. These are great for investing too.

Bipin said...

Hi Angie,

realy like ur blog posts. I do have some questions if thats ok
I just finished my MBA from Strathclyde and do want to get into hedge funds. This is a newb question but how do I go abt it. My work experience is all from India and am not sure how the recruiters might look at it. As of now, I have only seen jobs advt by recruiters and not many entry level at that. So if u cold give me some pointers that will be great. Also i see u r studying financial modelling with VBA, I thut excel was more common with spreadsheets, which is what I am trying to learn now. i am sorry the comment has ben so long I do have more questions for u if thats okay. Anyway good luck with your career.

Bipin said...

I say if thats ok too many times

:)aah but I do like to see myself in print
anyway peace :)