In 2007, I interviewed for hedge fund and investment banking jobs and was asked some pretty interesting questions along the way. I am sharing these so you are prepared and are not thrown off guard in your interviews. Overall I found the hedge funds much more innovative in asking questions, while the banks ask the typical brainteasers that everybody who has prepared a little bit already knows (can you believe I was asked “why are manhole covers round?” by one banker??!!!).
Hedge fund interview questions
My favourite question at the hedge fund was:
- “I have to ask you… do you like money?”
I looked the guy straight in the eye and said
- “yes, of course I like money”.
He sighed in relief “oh, that’s good, because in the end this is all about making money, and if you care more about the details of the company than about the money, this is not the place. You look at a company, you buy, two weeks later you sell, you move on.”
The question was tricky because every vault guide says in ibanking interviews you should never admit to being interested in money – you are supposed to care more about client service, industry trends etc.. Luckily I went with my intuition and turned out to be right. I hesitated if I should tell the truth for a few seconds, but in the end going with my guts was the right decision (I got the job, by the way, in case you were wondering).
Another interesting question from the hedge fund interviews were
– “okay, I have seen your CV, tell me about yourself but without mentioning anything on your CV, tell me who you are beyond your CV”. This is a really tough one. Are you going to talk about your hobbies and other weird stories from your life? I think I opted for a really boring answer because I wanted it to be relevant for the job. I told him why I really wanted to work for a hedge fund so he understood my motivation and knew I was serious. I wouldn’t have liked the answer if I had been the interviewer, but it didn’t deter them from making an offer.
One brainteaser I got at the hedge fund that I liked was:
[quote]company A and company T both have oil fields, company T has one in Texas and company A has one under the arctic ocean. Both have a market capitalization of $1bn. Who has more barrels of oil in the field? Then: okay, where is the price of oil? Let’s assume tomorrow the price of oil doubles, whose market cap will rise more?[/quote]
At hedge funds, you also need to be prepared to answer off topic general knowledge questions. Hedge fund managers are successful by being very curious and asking lots of things about lots of different fields, so they might see something on your CV and want to learn more. For example, I had mentioned on my CV that I had played “Brennball” at university, which is a Swedish sport which I think is the pre-cursor or original version of baseball. They saw it and wanted to know what it was, how it worked, how many people played it and so forth (maybe the fact that a couple of the investors were Swedes and Norwegian had something to do with it!).
Also, after grilling me on finance, options and stock markets, the CEO of the fund’s London office started to chat on a more personal level, and suddenly asked “I see you took some psychology classes in your undergrad so you must have studied child development. You know, my son is 3 years old and growing up bilingually, he is still not saying much… Is this normal? Should I be worried?”
Luckily my mother happens to be a linguist and knowing that my future children would grow up trilingually (if not quadrilingually!), I had read up on the subject and was able to give him an intelligent answer. He might have known the answer any way, but I think it was his way of testing.
It reminded me of what a McKinsey director had once told me about what he liked to check in the final interview. He liked to grill people on their master’s or PhD thesis and see if he could challenge them in anything related or find a flaw in their answers. His argument was that if these people had spent 6 months or 3 years on a subject and couldn’t say anything intelligent on the subject, they were probably never going to be good at anything else, as they would never get as much time to spend on anything else. Makes sense, right?
The banking questions were more mainstream in a way but nevertheless there were quite challenging or at least interesting ones
– “Imagine you have a client who tells you he always only decides based on price. If you quote him the lowest price, he will do business with you, if not, he will take his business somewhere else. What would you do?” (this one was from Lehman Brothers, may they rest in peace!)
– “We have invited 15 of your classmates for the final round. Why should we take you and not your classmates?” (Deutsche Bank)
– “Tell me about a time in your work when you really felt the power of a team and what a team can achieve” (from Goldman Sachs – I thought this was a much nicer question than “tell me about a time when you worked in a team…” – it’s also a smart way to see if someone is actually enthusiastic about working with other people)
– “What do you think is the next big investment opportunity in the markets that can offer spectacular returns?” (Goldman Sachs)
All the other questions were pretty standard I believe –
– why do you want to do this?
– why do you want to leave consulting?
– draw me the US yield curve.
– How do you calculate forward rates?
– where do you think interest rates are going?
– where’s gold?
– what do you think determines the oil price?
– what’s happening in Venezuela?
and so on, just checking awareness of the markets