Sales & Trading Interview Question: There are 3 types of investments: The first, it doubles your money every 2 years. My experience is no, probably not – at least if you’re applying for traditional sales and trading roles rather than IT/engineering jobs. For example, showing that you understand the fundamental role of a trader is to provide liquidity for clients and manage their book of risk is highly impressive. The main categories of sales and trading interview questions are: The initial HireVue interview focuses on generic fit / behavioral questions, but a few simple market-based questions could also come up. What’s the S&P 500 / Dow Jones / FTSE 100 / DAX / other index at? Emphasize teamwork behavioral examples and focus on your openness to diversity of backgrounds. So, for example, if you are interested in a more fast-paced environment, enjoy talking to interesting people, like the structure of fixed income products, and have a more social disposition than you should say something like rates sales or mortgage-backed securities (MBS) sales. Learn about interview questions and interview process for 620 companies. However, a senior trader is unlikely to ask you to solve a coding exercise on the spot in an interview because traders at banks aren’t necessarily programming experts. But, in case there are rates traders around here, how would you answer it? 37 trading ~1~null~1~ interview questions. What I ended up creating spans hundreds of pages with hundreds of real-world interview questions and answers. A: A derivative is a security whose value is based on the price of another security (the underlying). 52 trading ~1~null~1~ interview questions. For this entire category, please refer to our equity trading and fixed income trading articles and the book recommendations there and at the end of this article. After the first round, interviewers will usually start by asking for your story, but they’ll quickly move into the other categories above. If interested, here is a brief research report looking at how this relationship has both held true to historical norms and occasionally diverged for periods of time: Like the first two questions, the answer to this question can seem deceptively simple. While this is a kind of question anyone could get, if you brought up during your interview that you’re interested in the trading or sales side of mortgage-backed securities then this would be a likely follow-up. Everything you need to know about breaking into the world of S&T. Delta moves from 0 to 1 as the option goes from out-of-the-money (stock price is below the strike price) to in-the-money (the opposite), and it’s 0.5 when the option is at-the-money (stock price = strike price). Includes explanations and what to look for in a good answer. Q.1 What is Bear Spread in a Futures and Options Trading Market? Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Sales and trading interview questions can be notoriously unpredictable. Why do you want to become a trader/salesperson? So, it’s 10 for a 10-year, zero-coupon bond and some number less than 10 for a 10-year bond with a positive coupon rate. With brainteasers, the best tip is to get a good book and go through as many practice examples as possible. Traits to Mention in a Trading Interview: Entrepreneurial / Merit Based - Fast advancement for high performers. We’ve covered hedge fund stock pitches extensively before, and you can follow the outlines and examples there. We guarantee 100% privacy. With a MBS as interest rates fluctuate you will end up receiving more or less payments than you expected. For example, if interest rates are currently very low or negative, a traditional 60/40 stock/bond allocation may not make sense, especially if the person’s main concern is income generation in retirement. And 90 is slightly closer to 81 than 100. The two pieces of regulations you should brush up on are Dodd-Frank, which contains the Volcker Rule previously mentioned, and Basel III. If you had $10 million to invest, what would you do with it? To prepare for these interviews, you should practice by recording yourself under similar conditions: It will be uncomfortable to watch yourself, but you’ll need to do it if you want to improve. belief that there are loads of proprietary trading desks where folks sit around debating which securities are likely to go up in value (and thus which ones are best to buy). A: Delta is the first derivative of the option’s value with respect to the underlying security’s price, i.e., it tells you how quickly the option’s value changes as the stock price changes. This variance in the kinds of people who will be interviewing you and what they deem to be most important in interviewees can lead many to think it’s impossible to really prepare for interviews. The process took 2 weeks. In terms of facts and figures, you should have a good idea of the following, both recently and over the past 6-12 months (check Bloomberg and markit.com): These questions depend heavily on the roles that you say you’re interested in. A: The Black-Scholes formula values options based on the underlying security’s price, its dividend yield, the option’s time to expiration, the strike price, the risk-free rate, the implied volatility, and a cumulative density function. For example: The themes are thinking quickly, mitigating risk, performing well under pressure, and generating profits. In this file, you can ref interview materials for trading such as, trading situational interview, trading behavioral interview, trading phone interview, tradin… Here are a few sample questions and answers in different categories: Q: What is a derivative security, and how is it used? Put more simply, with a bond when interest rates fluctuate the yield on the bond changes, but the amount of coupons you receive and when you receive them doesn’t. This is largely because sales and trading is wholly distinct from other areas of high-finance like investment banking where the role is very similar regardless of what coverage group you’re in. I have an interview coming up next week, so it was beneficial. For sales, you can take a similar approach, but you should focus on developing client relationships rather than learning all the technical details of a product. How should I better prepare for that round? Interview Experience. Search for: Educative.io. A typical interview question to determine what you are looking for your in next job, and whether you would be a good fit for the position being hired for, is "What challenges are you looking for in a position?" How to Answer the 7 Most Important Sales & Trading Interview Questions 1. However, a good answer will provide a few different, but related desks, and then speak to how you think these fit your personality and skillset. Quant Trading Interview Questions. For example, if the second number’s second digit is bigger than the first number’s second digit, round up: Multiplying a 2- or 3-digit number by a 1-digit number is straightforward because you just separate them into smaller groupings: For 2×2 multiplication, put the number with the larger second digit first and then group them into smaller units once again: This formula is the trick for squaring 2-digit numbers: And then you set Y such that either (X + Y) or (X – Y) ends with “0.” Examples: There are fewer “tricks” with square roots because no matter what you do, the answer will usually have decimal places. But if you can give a reasonably articulate answer here then you would win some serious points. You want to trade or sell [Product A], you want to be judged based on your results, and you want to [learn the technical product/trading details or build client relationships in that area]. Interview. Remember that the nature of the work doesn’t necessarily change much as you advance in sales & trading, so you can’t be too creative with your responses here. These questions also depend heavily on your degree and work experience; expect far more detailed questions if you’ve had direct experience with a certain product. I recognize you from your site’s videos.” If you mention sovereign or corporate bonds, expect questions about bond math. 17 Hudson River Trading Software Engineer interview questions and 17 interview reviews. This website and our partners set cookies on your computer to improve our site and the ads you see. Your best bet for the markets-based questions is to read one of the recommended books here and learn as much as possible quickly. Rather, you should expect questions that get to the heart of what defines the products traded on various desks. Note: Due to how important desk knowledge is, and how limited the information out there is on what specific trading desks do, I put together nine desk-specific sales and trading guides to help get you up to speed on the basics quickly. Learn about interview questions and interview process for 10 companies. Which is the best investment? I wouldn’t recommend spending much time on case preparation if you’re in North America because most interviewers will still ask the standard questions. Give yourself 30 seconds to prepare an answer for each one. The third, it quadruples your money every 4 years. Interview Question: Why Sales and Trading Not Investment Banking? But being able to show that you have thought seriously and deliberately about what desks exist and where you think you want to be will leave a very positive impression on your interviewer. If trading is not your first love, then start from this place. For this question, you can use the same outline recommended in our investment banking story template: The Beginning, Your Finance “Spark,” Growing Interest, and Why You’re Here Today and You’re Future. Preparing for interviews can be a challenge. As a trader, you have to react quickly on your feet. You can skew your stories a bit more toward leadership and communication skills for sales and more toward profit generation and risk mitigation for trading, but that’s about it. If the common share price of a company stays below a certain level (the strike price), then the convertible bond is just a debt instrument, however if it reaches said strike price the owner of the bond will exchange it into common shares. Sales and trading interview questions, prep tips, and more. Round: Test Experience: 3 coding questions and some aptitude question. With a traditional bond you have a defined maturity date, defined coupon rate, and defined schedule for when you receive those coupons (almost invariably semi-annually). The YTM is the internal rate of return (IRR) on a bond if you purchase the bond at its current market value, collect all the interest payments, and then receive the bond’s face value back upon maturity. I don't have any finance background, so I'm not sure how much in the way of technical questions I'm going to be getting. Learn about interview questions and interview process for 354 companies. There isn’t a big difference between sales and trading in this first question category. Required fields are marked *. Ultimately, the reason why I write on sales and trading is that I think it is one of the best possible careers to pursue. For other fit / behavioral questions, you can use the same approach recommended in the investment banking fit question article: prepare a “success” story, a “failure” story, and a leadership story, and use the STAR (Situation, Task, Action, Result) structure in your answers. For example, if you express an interest in rates trading, then you should be able to demonstrate knowledge about how a rates desk is structured, what futures are, etc. The simplest derivatives are call options and put options on stocks, which give you the right, but not the obligation, to buy or sell a stock at a strike price within a certain period. I’m always happy to help when I can. You should never speak as though you are absolutely certain about what desk you want to be on. The second, it triples your money every 3 years. If you’ve been poking around online you’ve likely heard people talk about sales and trading “dying”. Interview Questions. For example, let’s say they ask you the square root of 90: You’ve probably seen articles and stories about how “everything” in sales & trading is becoming more tech and programming-oriented – especially in areas like cash equities. In order to answer this question you should do two separate things. While there are certain desks I would avoid (you can always feel free to ask me about these), overall S&T provides unparalleled work / life balance, compensation potential, and exit opportunities. In this article we’ll first go over the three things you need to do to prepare for a sales and trading interview, then we will get into providing in-depth answers to six real-world interview questions (including one question that crops up in nearly every interview). Client Interaction - Relationship manager and problem solver for clients. Please refer to our full. However, in a sales and trading interview you will potentially be interviewed by people with wildly different backgrounds, roles within the firm, and beliefs in what makes a good summer or full-time analyst. Convertible bonds are obviously debt-instruments, however the convertible bond desk is often close to the equity derivatives trading desk. In order to be apart of the stock selling or trading the foremost condition is the person should have a demat account. Then once I got on the trading floor it was a bit overwhelming trying to figure out where I should target and ultimately end up. Trader interviews are filled with quantitative questions that you are expected to solve under time pressure: mental math, probability, estimation and logic questions (e.g. This is another great question. If you are impressing your interviewer they will most certainly toss some your way. Here are a few resources on these: For the past five decades much of modern portfolio theory has been undergirded by the notion that bonds (primarily government bonds) and equities have an inverse relationship. It also measures interest-rate risk because the longer the duration, the more the bond’s price will change as interest rates change. Essentially, it’s the last two sections of your story above: explain how you started in Field X, moved to Field Y, which was closer to sales & trading, and how you now you want to move directly into S&T at a large bank. Now let’s get into some interview questions…. It sums up the expected value (value * probability) at each possible price “under the curve” to determine the option’s value. Based on that, you might wonder if you’ll get coding exercises or programming tests, as you would at a quant fund, prop trading firm, or tech company. No one expects you to know the nuances of volatility smiles or what cross-currency basis swaps are. However, I DO NOT have any background in trading/finance. Second, you should talk about the broader sales and trading landscape. So grab an opportunity to work as Field Sales Manager, Executive, Management Analyst and so on by looking into Stock Market job interview question and answers given. Emphasize why you can become a great trader anyway. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. For example, on a recent project…". In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron. 30 IMC Trading Graduate Developer interview questions and 29 interview reviews. What contextual understanding really does it shows your interviewer that you have done your homework and are understand what sales and trading is (and perhaps more importantly what it is not). Do you have any general suggestions for asking questions from him? A reasonable example outline might look like this: The expectation is that most students will enter sales & trading after completing previous finance internships – so, this question should not be difficult to answer. We respect your privacy. In Futures and Options Trading Market, Bear Spread refers to selling the nearby contract month and buying the deferred contract to profit from a change in the price relationship. But if you can provide a thoughtful, nuanced answer you will definitely score marks. Your email address will not be published. So, if there was a glaring issue in your process, such as a poor connection or an interviewer who was not paying attention and had to leave midway through, sure, go ahead. Intuitively, duration tells you how long it will take for a bond to be repaid with its internal cash flows. You can also think about your strengths and weaknesses, but they’re less important in S&T interviews because the skill set is more specialized. This is a more technical question. And if you say you’re interested in sales, expect questions about how you work with clients and recommend products. Or perhaps you realize you like talking to clients and trading isn’t quite right for you, so you’d rather be on the sales side of things. But you can usually approximate the answer by thinking in terms of square numbers. Thank the interviewer for their time, bring up something that you discussed, and if you did not know the answer to an interview question, remind them of the question and include the answer. It’s been a lot of fun to put this all together and it’s been more rewarding that I could have possibly imagined to see people getting offers as a result of what I’ve created. The firm has told me that there will be a final-round with the CEO. These questions are not “difficult,” but you’ll need to read sources like the Financial Times (FT) or Wall Street Journal (WSJ) regularly because the answers change each day. In particular in sales and trading where everything is so opaque prior to beginning. You came up with a contrarian strategy in a stock investing competition and placed well as a result. There is no better way to start an interview than to say something comparable to this:”Hi Mr. Bellafiore. Had an initial phone interview after submitting resume online with some simple brain teasers and "behavioral" questions gauging interest in the job and in the field (i.e. What about oil and gold prices? For this reason, a convertible bond is somewhere in the middle, but since what drives the convertible bond’s value is actually the share price of the company one could make a sound argument it is more like equity than debt. What separated the ones who succeeded from the ones who did not?”, “What do you now know that you wish you had known at the start of your career, and how would it have impacted your choices along the way?”, “Which other divisions or desks have you worked in, and why did you eventually switch to this one?”. Unfortunately, I have not really found any complete tutorials online for how to prepare for quant trading interviews. Focus on the person’s specific experiences rather than something generic: After the interview, you should send a thank-you email within 24 hours. 1,321 trading interview questions. For bonus points, when answering this question you can say that in the capital structure of a company convertible bonds rest just above equity and are the lowest form of “debt” in the capital structure (by level of seniority). Learn in-demand Tech Skills for Software Developers. For the CEO interview, Google him and look up as much as possible about his background to ask better questions. Q: What does the “convexity” of options mean? Well there you have it. But if you feel you were not judged fairly or that the interview was conducted under poor conditions, you could go back and argue for another chance. Q: What are the duration and convexity of a bond, and how do you use them? These aren’t too complicated, but if you know these things you are setting yourself up for success. what my interest is in trading, whether I am applying to other positions, etc.) In reality, if you frame your answer correctly then you can really impress your interviewer. What contextual understanding really means is being able to demonstrate that you understand what desks exist on a trading floor, know the distinctions between those desks, know what traders and sales people actually do, and know how the bank actually makes money. Discover How To Break Into Investment Banking, Hedge Funds or Private Equity. Competitive Nature - Love taking risks and having a "score board" each day. Gamma is highest when the option is at-the-money (ATM) because delta is the most sensitive to changes in the underlying price there; it decreases as an option moves further out-of-the-money (OTM) or in-the-money (ITM). I often get made fun of for continually harping on how important it is for candidates to demonstrate their contextual understanding of sales and trading. What your interviewers will fundamentally evaluate you on is three distinct things and thus your preparation should surround internalizing these. As you can probably tell, I really enjoy talking about sales and trading and helping shed light on how to break in. The current value of the shares that the convertible bond can be converted into is known as the parity or conversion value. The second thing you should do is pick a few desks and give examples of how their client mix is different. Learn more, Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Learn about interview questions and interview process for 33 companies. The relationship can be linear, convex, concave, or a mix of both. Pure brainteasers are a bit less likely in sales & trading interviews at large banks and tend to be more common in prop trading and quant fund interviews. For example, with a call option, the only risk is that you pay money for the option, and the company’s stock price does not reach the strike price before expiration, so you cannot buy the underlying stock. And convexity gives you the rate of change of the duration as the YTM changes. If you’re already at MIT, you should be used to cramming and learning a lot of new information very quickly. If you don’t win an offer, you could say thanks, ask for feedback, and move on. Often, you are deciding whether or not to make a trade … All of this is spread out over 13 different guides to make it easier to digest. For probability questions, take a look at one of the recommended guides to probability/statistics questions here. However, because they are quite a well known type of security with interesting properties, you may face a basic question about them. At worst, you lose that small initial sum; at best, you might be able to earn a huge amount if the stock moves far beyond that strike price. Thanks for the thorough analysis. You were under pressure to turn around a student club before it ran out of funds in a matter of weeks, and you came up with a creative solution that saved everyone. For each trade idea, make sure you have a profit target, a stop loss, a time frame for the trade, and the top 2-3 risks. A: Duration is the first derivative of the bond’s price with respect to the YTM (or “prevailing yields on similar bonds”), and convexity is the second derivative of the bond’s price with respect to the YTM. So, worry about these questions only if you’re interviewing for trading roles. Do coding for coding round Duration: 3 hours Total Questions: 3 Round: Technical Interview Experience: In panel 3 interviewers were present. 334 + 567 = (300 + 567) + 34 = 867 + 30 + 4 = 897 + 4 = 901, 845 – 388 = 845 – 400 + 12 = 445 + 12 = 457, 47 x 5 = (40 x 5) + (7 x 5) = 200 + 35 = 235, 397 x 4 = (300 x 4) + (90 x 4) + (7 x 4) = 1200 + 360 + 28 = 1588, 42 x 37 = 37 x 42 = (37 x 40) + (37 x 2) = (30 x 40) + (7 x 40) + (37 x 2) = 1200 + 280 + 74 = 1554, 49^2 = (49 + 1) * (49 – 1) + 1^2 = 50 * 48 + 1 = 2500 – (50 * 2) + 1 = 2401, 56^2 = (56 + 4) * (56 – 4) + 4^2 = 60 * 52 + 16 = 60 * 50 + 60 * 2 + 16 = 3000 + 120 + 16 = 3136. A Guide to Preparing for Sales & Trading Interviews In general, an S&T interview will have 5 unique components: 1) Behavioural questions (40-60%) 2) Market-based questions (20-30%) 3) Investment questions (10-20%) 4) Technical questions (0-10%) 5) Brainteasers (0-5%) Behavioural Questions Behavioural questions in an S&T interview are similar to that of investment banking. No one will expect you to get them fully right, or even have a great answer to them, so if you can answer them well then you can lock in an offer with relative certainty. If you mention equity derivatives, expect questions about the Greeks and hedging the risk of each one. You analyzed a client’s portfolio and came up with new strategies that earned him above-market returns – even though he thought it was too risky at first. They’re easier because there’s less to memorize, but they’re harder because you cannot prepare or practice in quite the same way. (Originally Posted: 11/08/2007) I'm interviewing for Jane Street Capital tomorrow on campus and was wondering if anybody knew what goes into a prop trading interview. What this kind of answer does it demonstrate that you broadly understand the kind of clients served by the bank, but at the same time understand that the client mix is variable depending on what product the desk trades. Q: What is delta, and how does it change with the underlying’s price, volatility, and the passage of time? Proprietary Trading Firms - Interview Questions and Preparation Tips. If you want to practice the market, math, and product questions, you should find older students who have won offers and ask them for a few mock interviews. But if you say you’re interested in corporate bond sales, you’ll get a completely different set of questions. There is no definitive reason for why this is. Again, you should get a good book that explains all the tricks, but here are a few examples: The trick here is to break up “ugly” numbers into round ones: Subtraction questions are similar, but you need to decide when to round up. Always think out-loud and explain your assumptions, and if you get stuck, state what you’re thinking so far and what you need to continue. The recruiting process has become far more impersonal because of HireVue and other pre-recorded interview technology. Increased volatility increases gamma for ITM and OTM options but reduces gamma for ATM options, and increasing the time to maturity has the same effect. You were losing a debate competition, but you thought on your feet and found a way to spin your opponent’s argument that allowed you to come back from behind and win. While this strategy can work, the risk is that most undergrad-level candidates are not great at determining whether the interview process was “fair.”. Sales and Trading Interview Questions, Part 2: Market Questions. For case study tips, see the rates trading desk article. Interview Questions; Trades and Services Interview Questions. Pay special attention to the front page and “Markets” sections of both. On the other hand, a VP in rates sales may think it’s better to drill down into behavioral questions and try to figure out who the candidate is, what their motivation for applying to sales and trading is, and how they think about the future of the industry and their place in it. You should be prepared to talk intelligently about how the regulatory landscape has changed post-crisis. As an example, here’s a little post on real-world rates trading questions: So as you prepare for a sales and trading interview, you should be continually asking yourself if you have contextual understanding, have a few desks you are interested in, and if you know the technical attributes of those desks. Trading has always been a reach-goal for a lot of aspiring CS and Math majors in college. After prefacing your answer, you should then give a few related desks that are of interest to you and explain why. Lastly, there will be an interview involving a deck of cards, but I do not know what game will be played. You evaluated the risk of a new business and hedged your risk by testing it in small increments while maintaining a part-time job on the side. For a call option, it estimates the probability of the underlying stock reaching various prices, including the strike price, according to a lognormal distribution.
Joyner 250 Buggy, How Many Syllables In Trees, Lanterns Of Skyrim, Daisy On Laramie, Cowper's Gland Radiology, Higher Or Lower Rules, Frozen Tears Stardew, Foldable Mattress Philippines, Laços De Família, Klx 110 Fast Ace Front End Kit, Pastry 1 Creme Brulee Mix, Institut Esthederm Aha Peel How To Use, Amazon Liquidation Store Locations,