What are the most common interview questions for banking / finance jobs?

By Investopedia | April 20, 2015 — 7:11 AM EDT

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A:

Interviews for banking and finance positions are notoriously tough. Interviewees can expect all the questions from a normal job interview, along with the potential for extremely difficult questions, relating specifically to both financial services and to hypothetical scenarios.

Interview Question Examples

Two listed option contracts have identical features, except one has a longer maturity. Which option has a higher gamma? This question probably won’t be asked of bank tellers or clerks, but those applying to work as derivatives traders, analysts or portfolio managers should be prepared to answer detailed questions about products traded in the markets they cover.

Is it possible to incur more risk through the use of a hedging strategy? How? This is another question commonly asked of those applying to work as traders, analysts or portfolio managers.

Two players, X and Y, each have a red marble and a blue marble. Each shows a single marble to the other. If both show red, player X wins $3. If both show blue, player X wins $1. If the colors are different, player Y wins $2. Is it better to be player X or player Y; does it matter? This question, and questions like it, involving games, is commonly asked to candidates for any banking or finance position.

If you could choose anyone, which three people would you choose to go on a cross-country car trip with? Why? This question is commonly asked by interviewers for many positions in banking and finance. Interviewers are interested in learning about candidates’ world views and public figures they admire.

What is the most challenging situation you have ever been in? How did you manage it? The purpose of questions like this is quite straightforward. This question is commonly asked in many job interviews, including interviews for finance positions.

What aspects of your current job are you happy with? Be prepared for the interviewer to ask, “Why are you leaving?”

In which aspects of your current job do you see room for improvement? Pointing out areas that could truly use improvement in a positive and constructive manner is what interviewers are looking for.

Why are you considering leaving your current employer? This question is asked almost universally. Those applying for financial and banking positions face especially close scrutiny.

What are some of the pros and cons of raising capital through equity or debt offerings? Questions such as this are generally directed at candidates applying for analyst or trader positions, but almost every applicant to a bank or financial services firm could be asked a question like this. Even for those employed in technical fields, having a basic knowledge of a company’s business improves chances for success when applying for jobs.

Other questions that are commonly asked include: How does the yield of a bond differ from its return? What are Beta and Alpha? Is this position your dream career? If, in 18 months, a competitor makes an offer with a higher salary as a portfolio manager, are you going to turn it down because this is your dream career? What is your worst trait? Why should I hire you? What differentiates you from other applicants?