hedge fund job interview questions

If you are seeking a job as a trader in a hedge fund firm, you’ll be asked in-depth questions about market fundamentals, such as interest rates, the direction of the markets, what type of securities you invest in personally, and what you like and why.

Expect some behavioral questions, designed to reveal your character, judgment and how well you’ll fit in with the culture of their firm. These can range from:

-Tell me about a time when your boss was wrong in his assessment of a situation. How did you handle it?
-Tell me about a time when you worked on a team and one team member wasn’t contributing his or her fair share? How did you handle that?
-What happened when you faced more work than you could handle, how did you respond?
-What are your biggest strengths … and your biggest weaknesses?
-Have you ever broken the rules? Why?
-What are the easiest decisions for you? The hardest?
-What would your colleagues from your school or previous job say about you?

Finally, remember to prepare some questions to ask the interviewer about his firm, to show your research and interest. And finish the interview enthusiastically, repeating your interest in the firm and be sure to follow up with thank you notes or emails.

It might also be a good idea to purchase a comprehensive guide to hedge fund jobs and interviewing which contains a list of potential interview questions along with more details on the answers than we have room for here.

References:

Schwab, Claude. Hedge Me: The Insider’s Guide: U.S. Hedge Fund Careers. Lynx Media.

Davare, Aditi A and Goodrich, Holly S., Vault Career Guide to Hedge Funds

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In the course of a 30-minute hedge fund job interview, you may only get a chance to answer a dozen questions. But developing a larger list of potential questions in advance, and practicing your responses, will make your answers seem that much more clear, natural and convincing.

Naturally you need to prepare answers to the basic questions about yourself, and be able to quickly introduce yourself, what you’re doing now, and walk the interviewer through the highlights on your resume. You’ll also need to answer questions such as:

-Why do you want to work in hedge funds?
-Why do you want to work for our firm in particular?
-What would you say are our firm’s strengths and weaknesses?
-What skills do you bring to our firm?
-Why do you think you’ll be successful as a hedge fund manager?

Anyone involved in hedge funds will likely have a passion or deep interest in investing and the markets. So you can expect a bunch of questions that explore your interest level and opinions, such as:

-What do you invest in?
-Do you own any stocks or do any non-work-related investing?
-What do you think of the markets in general right now?
-If you could invest in anything, anywhere in the world right now, what would that be?

You should have a thorough understanding of hedge fund investing strategies and terminology, so that you can answer technical questions such as “What is convertible arbitrage?” or “What is global macro?” Or “what is short selling?” You may also be quizzed on technical aspects of the industry, such as what is a prime broker? What role does it play? What is a 10-K report?

You may be asked a brain teaser or mathematical question in the course of the interview, to see how you respond. One classic example is known as The King’s Conundrum.

A king demands a tax of 1,000 gold sovereigns from each of 10 regions of his nation. The tax collectors for each region bring him the requested bag of gold coins at year end. An informant tells the king that one tax collector is cheating and giving coins that are consistently 10% lighter than they should be, but he does not know which collector is cheating. The king knows that each coin should weigh exactly one ounce. How can the king identify the cheat by using a weighing device exactly once?

Answer: The king should take one coin from bag one, two coins from bag two, three coins from bag three, and so on, finishing with ten coins from bag ten. Place this collection on the weighing device, and look for the discrepancy from 1+2+3+…+10 ounces. If the actual weight is .40 ounces short, for example then bag four is light, and collector four is the cheat.

(Special thanks for this interview question to Timothy Crack, author of Heard on the Street: Quantitative Questions from Wall Street Job Interviews.)

Next time, we’ll look at some other hedge fund job interview questions, especially if you’re looking for a job as a trader. Along with the best way to finish a job interview.

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