Interview Questions Investments

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Interview Questions Investments
2011-03-07 15:28:52
Interview Questions Investments

For investment management interviews
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  1. At what level is the S&P 500?
  2. What was the return on the DOW and S&P 500 last year?
  3. What has performed better over the last five years, value or growth stocks?
  4. Where is the price of gold and oil?
  5. What factors have driven the market to increase or decrease of late?
  6. What was your most significant accomplishment to date?
    Help save Avery Dennison from a 750k annual loss by examining the profitability of new shipping routes. Used excel to analize shipping data
  7. Tell me about a recent professional experience when you had to convince someone to accept your idea.
    JCP Capital
  8. What was the most important thing you learned from your last job and why did you quit there?
    MTC. From school I learned a lot of the quantitative skills needed for the work field, as a teacher I was able to learn how to work with people. I feel that it will help me as I work with people, help them understand financial concepts, and help them feel comfortable with their investments. I quit because I wanted to get into something more finance related.
  9. Why are you interested in teh "buy-side" instead of the "sell-side?"
    I want to work closer with portfolio managers and have more input into the investment decisions. In addition I like that you have more interaction with clients. Specifically with private wealth, I like that you get to interact with ordinary people and when needed help them understand financial concepts.
  10. How do you go about valuing a company?
    Perhaps the two most common methods of valuation are comparable financial multiple analysis and discounted cash flow analysis. I believe that comp analysis is used more frequently becuase with DCF it is very hard to predict future cash flows. The valuation is only as good as the assumptions.

    Comp analysis involves comparing a company's valuation to the current stock market valuation. If analysts' valuation of the company is greater than the stock market value, then they would typically recommend its purchase. Typical multiples include P/E and EV/EBITDA, amongst companies in teh same industry. You can use comp analysis to determine which stock in an industry appears cheap or expensive, relative to each other.
  11. Tell me about a stock that you think would be a good investment today.
    Overview of the company and its competitive position.

    Industry analyis

    Analysis of the company's future prospects (new protucs, etc.)

    Investment risks--it is important to quantify the things that can go wrong when determining a proper value for the company

    Recent financial performance

    FInancial valuation of the company (relative to industry comps)

    • Summarize your investment recommendation
  12. What would be a good instrument to use to hedge a portfolio of preferred stock?
    long-maturity-risk-free instruments such as T-bonds
  13. If a client purchases a 6%, 1,000 dollar bond selling at a yield to maturity of 7 percent, what is the amount of the semiannual interest payment?
    $30 every six months
  14. How can you reduce the risk of a portfolio?
    Diversification. Do not correlate.
  15. What is a warrant? Do warrants affet a firm's financial ratios such as ROE?
    A warrant is a security similar to a call option on a stock, except a warrant usually has a longer life than a call. Warrants may often be attached to issues of preferred stock or bonds in order to make the issue more attractive to investors, because warrants offer the opportunity for some participation in stock appreciation. When the warrant is exercised, the owner pays the stated strike price in exchange for new shares of common stock. All other things equal, whenever a company's number of common shares outstanding increases, measures such as ROE and EPS shoudl decrease, becuase the shareholders' ownership is diluted.