Fixed-income interview help... does anybody have any suggestions/experience?
I am going in for a final round interview at a bank that focuses primarily on fixed-income. The recruiter told me to prepare for 100% technical questions regarding DCM and FI, however, it feels as though there is so much to cover. Does anyone have any suggestions, experience, or knowledge of specific questions that will be asked? I would love to go in and nail all their questions, so any advice is much appreciated.
I'll give you a set of questions I got as well as what I heard other candidates in my final round got:
What is duration? How is it calculated?
Term structures? Yield curves, their shapes and how do you make money on the various ones?
What's the present yield curve look like here (Canada) and there? (USA)
Tell me some of the different bonds you know about...what about their prices with respect to each other? (Plain vanilla/convertible/callable)
If interest rates go up/down...what would you do with a bond that is presently variable in coupon rate that has a convert option to a fixed coupon bond?
Show me how to do a DCF.
have a strong view on global fixed income market
does anyone know of any websites/books that can help with these questions that monkeybusiness threw out? I'm on a buyside trading desk and feel that my knowledge of the markets is definitely not up to par. For my particular job, it really does not have to be ( a monkey can do it) but obviously I plan on moving up, doing something different, possibly moving to sell side at some point, so I need to learn as much as I can. any suggestions?
just google, most of the info is easy to find.
I also want to break into DCM. Apart from applying and applying, I am also learning somthing every day still. Can you please give a tip on which spreasheets and to which moments in financial statement analysis I shoul pay more attention to be able to handle DCM role, origination or structuring in particular?
I'm going for an interview too, but if they ask questions like these... i'm screwed
...I trade US interest rate markets/FI...here is a list of books u should read if u want to further ur knowledge...
Fabozzi, US Treasury Securities and Derivatives Hull, Options, Futures and Other Derivatives Burghardt, The Treasury Bond Basis Burghardt, The Eurodollar Futures and Options Handbook
...once u get done with those re-post and i'll give u more...
Does anyone have any suggestions about treasury associate interview? Specific responsibilities will include: providing support for existing businesses and trading strategies; facilitating the implementation of new strategies; coordinating accounting, operations, compliance, tax, and infrastructure issues; data analysis; and development of systems specifications any help would be appreciate. thank you
Fixed Income - Interview Advice (Originally Posted: 08/14/2011)
Hey all,
So I have a final round coming up for a Fixed income analyst position at an investment management firm (think vanguard, fidelity like) and I was hoping for some interview question help.
My background: Semi-target state school grad, 3.6 GPA, Economics and Political Science. Internship: Did research for a boutique, primarily qualitative research for equities.
so how would you guys answer, why fixed income? I can say that fixed income products are more quantitative based so are less volatile. what else can i add.
I will be interviewing for emerging markets division another question is why emerging markets fixed income? I believe that the emerging markets have very positive outlook in the future due to their rapid economic growth. This provides a good investing opportunity.
Any other things helpful things that I might need to know?
any and all ideas are appreciated fellas I am just trying to be as prepared as possible.
I would think since your not finance they may want to see if you know the math behind fixed income like how to price a bond and how to find some key stats about them like duration. Just make sure you know the time value of money and basics about what happens to bond price when interest rates fall or drop.
what questions were you asked in your previous rounds?
I shall def. read up and review on bonds and their pricing. Anyone know a good source besides investopedia or vault guide?
and as for the first round it was a phone interview with similar question such as "why fixed income, why emerging markets". I said because they are more predictable, quantitative based with not as much volatility. and I said emerging markets have a good forecast in the future. something of the sort.
Now I expect to be asked the same question in my in person interview but I want a more detailed, in depth answer prepared.
-thanks
Say you worked in a part of finance that dealt with equities and you didn't enjoy it/thought you would be better suited for FI- quantitative, etc.
For a good FI source get the Fabozzi book.. I'm sure more people will recommend this book.
yes through my research I know that several people speak very highly of that book for fixed income. But my interview will be coming up sometime soon this week so I was wondering if there were any good online sources on the web (still looking for the fabozzi e-book online of course)
anyone have any particularly good reasons for picking emerging markets of have experience in that?
-thanks
Fabozzi's fixed income book is great, he lays everything out in an understandable manner. I have tuckman's as well, but I prefer Fabozzi's. What you would be helpful for this interview is how to price a bond, bond sensitivity (duration, convexity), different fixed income products (treasuries, mbs, swaps, cds, corporate debt). Brush up on some recent happenings in the bond markets. As long as you can show interest in fixed income and why you want to do it you should be fine. You could probably talk about emerging market cds, or relative performance of a countries debt. Have a trade idea, i doubt it has to be centered on emerging markets. You could make it a play off the S&P downgrade, or how single name CDS is going nuts right now with this volatility. Or the general structure of the tsy yield curve (pitch a steepener or flattener trade). Anything along those lines would probably impress the interviewer because most kids will just pitch equities. I would look into some of the countries you would cover, see what risks are involved for those countries and companies and how they would affect bond prices. I have a pretty solid bond primer that I could send you too.
thanks cpops16 I would appreciate the primer
We can give you reasons about why EM but why do YOU want to do EM? There has to be some exposure that has led you to EM.. talk about that and how it excites you, etc. This board is not here to give you answers to interview questions but more to help you out and guide you so that you are a better interviewer and hopefully, employee. Put some of your own answers down and people can give feedback on those..
Well I initially just blurted out investment grade bonds in my phone interview because they never told me about any specific division. But then they called me back and said that because of my Political science degree I would make a better fit in EM so I said yes because I wanted the interview and EM is still very interesting.
My answer would go along the lines of: i find Em interesting because I believe that there is a vast growth opportunity in some of these nations. They are becoming more politcally stable and are running trade surpluses which is leading to better economic outlook. Thus, it is a very good market to try and tap into.
any additional input?
dude there's a lot more to talk about regarding EMs than just that... why don't you do some research and figure it out. I'll give you a hint: population. There are a lot of easy ways to pitch plays off of whole new consumer classes emerging.
Dude you need to stop looking at the interview like a fucking test and be honest. You want EM because it is fucking cool. You get to deal with a large variety of products and cover different countries. EM investments are becoming more popular BC they offer better yields, but at the same time there are a slew of risks that they possess that DM don't have--political, regional, ect.
You want advice for a fixed income interview, check out Gekko's interview guide part 2 (you might also want to check out part 1).
High Yield Fixed Income Interview (Originally Posted: 01/31/2015)
I have an interview for a SA position at an AM firm. I'd be working on their High Yield Fixed Income team. How would I prepare? Any suggestions? Thanks!
AM firms in my experience look for a strong demonstrated interest in the area you would be working in. Be able to speak not only about the world economy and some current issues, but also about the High Yield Fixed Income area.
There's some good white papers out there on this and publications that AM firms typically put out on their websites. So for HY FI, talk about what's been popular and what hasn't (i.e. Structured Products and High Yield Corporate/Bank Loans for example have benefitted tremendously from QE and low interest rates, whereas Junk Bonds have taken a hit as yields have declined, etc...). You get the idea. This shows you're keeping up with the market and have a general interest in it.
Also be prepared for Technicals about specific companies/industries, how you can interpret & manage financial statements, etc..
Even though I had limited knowledge in this area when I was interviewing, I was still asked these questions. One AM firm I interviewed with for FI, nearly 75% of the questions I was asked in multiple rounds were technicals. This doesn't always happen, especially for SA but it couldn't hurt to be prepared. Also, if you don't know something just preface your answer by saying "I'm not exactly sure, but let me walk you through my reasoning."
Any HY FI specific technicals? Thanks for the advice!
I'd recommend making a HY bond pitch.
Ok will do. Where would I be able to find out more? Any resources you'd recommend? Excuse my ignorance but I've never done a HY bond pitch. How does this differ from a stock pitch?
Just know basic credit metrics (EBITDA, FCF, Gross&Net Leverage, et al), how accounting statements flow, and basic HY trading (trading to next call, YTW) and finally probably good to know basic covenants (RPs, limit on debt & liens, carve-outs, financial/maintenance covs)
Fixed Income interview (Originally Posted: 11/26/2007)
I have final round interviews for the fixed income division which includes currencies and commodities. please advise on what i need to know.
thanks in advance
bump*
does anyone have brainteasers/puzzles to share?
i interviewed for a derivatives job..swaps
they asked the diff between Zero curve and yield curve... you should know how to explain bootstrapping... also know a little about FRA.
asked me about delta of options...if my option is at the money...how much of the underlying do i need to have to hedge..do i go long short? assuming im initailly long
what is my worst trade?
thats it.. be very political..i interview with 6 diff ppl in one day..you must remember that you need to adapt to EACH ONE!! they want to see if you fit...think about it constantly. You will meet the hotshot, the nerd, the bitch..adapt
thanks a lot. i appreciate the feedback
know a bit about the market...for brainteasers, well here's one.
I give you two envelopes, the one has twice the amount of money as the other. You pick one, and I give you the option to switch. do you switch or not?
That's not really a brainteaser as a math question though, right?
50% chance of 1/2x = 1/4x + 50% chance of 2x = x, so you get an expected value of 1.25x.
(x, of course, is the amount in your envelope)
so you'd switch?
and what if you'd picked the other envelope first?, and if you would switch, if i give you the opportunity to switch again what do you do?
and btw, most FI brainteasers are math based.
I believe I read this in Crack's book. You keep switching based on merkhet's EV calculation.
"You keep switching based on merkhet's EV calculation."
so you'd just sit there and continuously switch back and forth? does that make any sense at all?
If I'd picked the other envelope first, the calculation is the same since the envelope I picked in the first situation would then be unknown and would have the same percentages and payoffs tacked to it.
Since I would switch, if you gave me the opportunity to switch again... well, I'd know what was in both envelopes, so that'd depend on which envelope has more money in it. (Or perhaps I'm not understanding the second iteration of your question.)
Why would I keep switching back and forth?
Ahh... the exchange paradox. Reconsider the nature of your prior beliefs and the e(v) is actually zero. if you want to be smart, also mention that e(v) = e(utility) only when you are risk neutral.
Maybe I am being dumb, but it sounds like the expected value is being overthought. I wouldn't think it would matter whether you switch or not since there are only 2 envelopes, so wouldn't the second event (the switch) be exactly the same as the first (the pick)? Or am I missing something with the EV?
Oh, I see. I looked up exchange paradox from Sherminator's post... I had understood that I got to look inside my envelopes.
Interesting paradox.
Also, isn't this essentially the same question as that one brainteaser with three doors in it? If you choose one door, does that affect the probabilities associated with the other two doors? (I can't remember the name of the other brainteaser.)
"Why would I keep switching back and forth?"
you're saying you'd switch in the first instance. but your reasoning applies again post switch. so you'd keep switching always expecting 5x/4 in the other envelope if you've never looked at the initial value.
Revsly gets the answer correct, and if you are interested in trying to come up with probability distributions for unbounded sets, you can do some more research yourself.
"Also, isn't this essentially the same question as that one brainteaser with three doors in it? If you choose one door, does that affect the probabilities associated with the other two doors? (I can't remember the name of the other brainteaser.)"
the monty hall problem? no, this is very different.
the doors is like this, from wikipedia
"Suppose you're on a game show, and you're given the choice of three doors: Behind one door is a car; behind the others, goats. You pick a door, say No. 1, and the host, who knows what's behind the doors, opens another door, say No. 3, which has a goat. He then says to you, "Do you want to pick door No. 2?" Is it to your advantage to switch your choice?"
What do you think?
"Oh, I see. I looked up exchange paradox from Sherminator's post... I had understood that I got to look inside my envelopes. "
Fine, you get the first envelope, and you look at its value. You are now given the option to switch, should you take it? and more relevant, what would you pay to switch?
Jimbo
As long as you have no idea which amount X and 2X... its the same situation, no? So even if you look and see $500, you wouldn't know whether that is the smaller (other has $1000) or the larger (other has $250). So its theoretically the same situation as not looking.
sure...so you look at see $500. The other has $250 or $1000 right? Do you switch then?
I would switch because the EV of the new choice is higher (0.5*(250+1000)) than the 500.
a brainteaser I've been asked numerous time "what the sum of numbers 0-100? and How did you get your answer"
that one is much too easy....100x50+50.
yes, but I've been asked it on more that 1 occasion so I thought I'd put it out there
fair enough. what others have you gotten?
I had a series of shot gun multiplication question such as 8x8x8 followed by 9x9x9...
-How much would you pay to roll a 6 sided die...I forgot the details it was an expected value question I got the correct answer though...
Did you happen to be interviewing for Citi or JPM?
I got the exact same questions (at both places)... although I was asked from 6^3 up to 9^3. Regarding the die; the question states that you get $1 for each unit value in the role... how much would you pay to play this game (anything less than $3.50).
Good point. It shouldn't matter whether you look in the envelope or not since originally, prior to picking either envelope, you should have a EV of 1.5X.
As for the Monty Hall problem, you do always switch. Since the guy always reveals a goat for you, either (1) you've picked the car and switching leaves you with a goat, (2) you've picked a goat and switching gives you a car, or (3) you've picked a goat and switching gives you a car. 66 2/3% chance.
The sum thing is rather easy because you just group 100s until you are left with an ungrouped 50.
I'm still somewhat bothered by the exchange paradox. I think the disparity comes from perspective. Comparing both envelopes simultaneously versus comparing one envelope using the other envelope as a baseline changes something. Though I've no idea what that could posibly change.
I just thought of something. If you've heard these problems before, what's the point of the brainteaser? Doesn't it go from being an aptitude test to being a memory test?
"I'm still somewhat bothered by the exchange paradox. I think the disparity comes from perspective. Comparing both envelopes simultaneously versus comparing one envelope using the other envelope as a baseline changes something. Though I've no idea what that could posibly change."
you cannot make any claim about the nature of the distribution of the money in the envelopes.
Ok I think I figured it out. If you knew beforehand that the Letter contained 500, the original EV would become EV= .5(500) + .25(1000) + .25(250)= 625. So it is the same expected value as if you were to switch. Does that make any sense?
I know this isn't the answer to the question, but...
.5(500) + .25(1000) + .25(250) != 625
might want to double check that.
"Ok I think I figured it out. If you knew beforehand that the Letter contained 500, the original EV would become EV= .5(500) + .25(1000) + .25(250)= 625. So it is the same expected value as if you were to switch. Does that make any sense?"
so you are saying the expected value of either envelope is 625, and if you are holding the $500, would you switch?
I think i need to get some envelopes and start doing this....
People are obviously over-complicating this problem. It makes no difference whether you switch. Don't look at it terms of what envelope you choose, look at it in terms of two envelopes sitting on the table. There is a 100% chance that one envelope has $X and a 100% chance that the other envelope has $2X. No matter which you choose, you have a 50% chance of getting $X and a 50% chance of getting $2X. Switching does not affect these probabilities.
If you want to put a dollar value on the problem, you can say that one envelope has $500. No matter what, the other envelope already has $250 or $1000 -- but they both can't be true. In this case, if you switch, you either have a 100% chance of losing $250 or a 100% chance of gaining $500 - not 50/50. But, you don't know which outcome will occur, so it makes no difference whether you switch.
Agree with b that switching doeesn't matter.
You know that your envelope contains either x or 2x, such that your expected return from switching is 1.25x (50%1/2x + 50%2x = 1.25x); however, regardless of whether you've been shown the amount of money in the envelope, you will not know the value of x (since $500 could represent x or 2x) and as such will have no incentive to switch.
I was trying to say you don't switch... or at least you are "switch neutral," meaning you don't care. I was using that EV calculation to show that using the original expected value it wouldn't matter whether you open the envelope or not, your Expected Values will always equal, meaning you are indifferent. There would be no reason to think switching would give you any advantage. Perhaps the way I said it before wasn't so clear; so to be clearer, I wouldn't be inclined to switch in either case. Yeah, perhaps breaking out some envelopes would have been helpful haha.
B -- I did interview for Citi but these questions were not from Citi....yup 3.50 was the correct answer....
Jimbo what do you trade????
I got asked bunch of options technical, literally got bombarded. Math teaser? Sqrt of 4000. I said near 64, actually 63.25.
Hahaha, you are right, I completely went downhill after deciding you shouldn't switch and I think my brain was desperately searching for justification and decided that was an answer. I need to sleep more and learn how to do division... I swear, its always the stupid errors that get me :)
girlytrader - interesting. I actually got the cubed questions at JPM (in the same shotgun format) and the die question at Citi. I'm going to have to assume that you were interviewed by "Marty" of JPM then. I don't imagine many other people who would shotgun cubed questions (unless this is a new Street trend). As there was only 1 female at my superday... I just want to verify (b/c this would be a crazy coincidence it it were true) - please tell me that you don't go to McGill University.
brick - how did you solve that? Is there a trick?
I would just think round numbers and then narrow down. So you know 4000 is between 60^2=3600 & 70^2=4900, then it is closer to 60 than 70... you could keep narrowing (like it needs to be less than 65 since 65^2=4225, probably closer to 65 than to 60, so guess a little over halfway, like 63 or 64) or just take a guess at that point. I'm sure there is a better way, but this seems to work for me
well you could do mental square roots. but i think brick just did a quick guess based on intuition.
http://www.homeschoolmath.net/teaching/sqr-algorithm-why-works.php
Nearly same approach as Revsly. Figured 4000=40*100. Take out the 100 which is 10^2. 40 is between 6^2 and 7^2 and should be more on left side of 6.5 than right. And then just guess and multiply with with 10.
Ummm.... SQRT 4000 = 20 * SQRT(10) = 20* ~3.2 = ~ 64
Why are people using 65^2 = 4225?!
sherm thats a very good way to solve it fast.
I did not interview at JPM .... I said I interviewed at Citi but that was for a SA position and I was not asked any brainteasers
I was asked all these questions at the BB that I was an SA at and will be a FT trader at next July...sorry
Jimbo,
the envelope question: if you peek at it, doesn't it become subjective whether it is high or not? and then that usually affects a person's willingness to switch (or not).
jimbo, are you in FI? can you explain to me the convexity adjustment for a CMS swap? (seriously, thanks for your help)
"jimbo, are you in FI? can you explain to me the convexity adjustment for a CMS swap? (seriously, thanks for your help)"
what it is, or why it exists, or the ramifications?
i still don't get the envelope question.
i agree that in jimpos original question with only two envelopes switching is not profitable.
however, when you have three envelopes and have one with $500 in your hand I would switch if I knew that in the other two envelopes are $250 or $1000. I mean you either loose $250 or win $500, chances for both are 50%....aren't they?
The brainteaser aspect of this question is its counterintuitive nature. Switching results in a return of 1.25x (x being the lower amount, and 2x being the higher amount). However, after looking in the envelope, while you will know the amount you are holding, you still don't know the value of x, so switching (or not switching) makes absolutely no difference.
i thought one knows that in the other two envelopes are $250 and $1000?
and why is x the lower amount and 2x the higher amount? wouldn't it have to be 1/2x(=250) and 2x(=1000)?
and if the return is 1.25x (=625) why wouldn't I switch?
Fixed Income first round (internship) (Originally Posted: 01/07/2014)
Hey guys, I have a first round interview next week for a fixed income (trading) internship, I'm not super familiar with fixed income trading as a whole, I have been doing some reading around here, and some Google searches, however nothing really as in-depth as I am looking for. Do any of you guys have any recommended reading?
Also, should I not really even expect technical questions, or more fit/behavioral questions?
Thanks,
H
Is this for Morgan Stanley or BlackRock?
Neither of those. This place only has ~1500 employees at their NY (headquarters) office.
Dont expect many technical questions, other than the typical basic bond pricing (even that might be unlikely), but know what is going on in the Bond Market
Be prepared for brain teasers, especially since it is a trading role. Focus on fit in addition to the brain teasers.
Why Fixed Income S&T? (Originally Posted: 10/18/2008)
Hey guys,
I have an upcoming S&T interview for fixed income trading. I've always been more oriented towards equities/equity derivatives and I have rock solid answers for Why Equities?
I'm having trouble with Why FI? From reading the posts here, I can see it's
-more quantitative -looking at things from a macroeconomic point of view rather than microeconomic (although same could be said for equities)
What else should I include to answer this question. I know the products - bonds, currencies, etc, just not sure how to answer this question best.
Any advice would be appreciated. Thanks!
try to know a product in FI you like (bonds, rates, cdo, etc). more quantitative analysis sure, more intellectual, deeper analysis. interest in derivative products (ie for bonds you understand cds lcds etc as well as equities)
Fixed income entry level interview (Originally Posted: 03/14/2013)
So I worked in equity over the summer and didn't like it that much. I am getting more interested in FICC and trying to break in.
I would love all of your advices about how to break into Fixed Income, how to prepare for interviews. Esp for entry levels, do they ask extremely tough quant modelling questions? Since also there are many diff products in FICC, are we supposed to just know the basics of everything or know one or two really well? Is there such thing as Ficc pitch as in equity interviews? In short, what are the anyways you guys go about preparing for these types of interviews?
Thank you all so much. :D
Here are some things that comes to mind: Learn about duration, convexity, basic bond mathematics, and different types of fixed income products (Treasuries, Agencies, Muni's, Corporate Bonds, MBS, ABS, CDO, Interest Rate Swaps, etc) And understand monetary policies of easing and tightening of money supply and how that affects the interest rates and bond prices.
Hey I_feel_capital, thank you so much! I appreciate it alot. When you say learn about duration, convexity and basic bond math - I am just expected to at least know the definition and equation right? Like they wouldn't expect me to know much fancier than that?
So besides this, I get the idea that I should keep up with monetary policies news, macro news. Does any one know anything about FI pitches?
Thanks alot,
An interview question might be: "give me a concise argument for why I should short rates in the near future. And also why I should long rates."
As for duration and convexity, you should know the definition/equations and the dynamics of the price yield curve. Also know how the maturity levels affect the duration and perhaps how options(puts and calls) affect the convexity as well(negative convexity). I really don't think they will ask you about multifactor interest rate modelling questions for intro FICC positions or anything too quant.
Fixed income is a pretty math intensive subject so a good place to start is the CFA level1 section on fixed income. You can get a full review in investopedia if you don't have access to the CFA review books.
Good luck
Fixed income technical interview--how to prepare? (Originally Posted: 11/25/2011)
Hi guys:
I'm wondering if you can give me some tips on how to prepare for fixed income technical interviews? I'm from a liberal arts background, so I'm not sure if the way i prepared for it is comprehensive enough. So far, I've read the tutorials about bond on Investopedia, and i've also been trying to keep up with the markets through Financial Times and Seeking Alpha. Are there any other good resources I can use to prepare myself? I have an interview next week.
Thank you!
btw if there are any formula that I should specifically memorize, please let me know! thank you!
Acquaint yourself with the major types of bonds, Ginnies, Fannies, Freddies, Corporates, Munis, Steps, Callable/ Non Callable. Understand the basic relationship between yield and price, difference between average life and average maturity. Understand what duration is. You could read some of Bill Gross's most recent letters to help you stay informed of what's going on in the market. Basically this has been a bond year for the ages with the 10 year under 2, and the 30 year under 3. Familiarize yourself yourself with BondEdge software if you have a chance to look at it. Also if you can get your hands on it, look at the CFA Level II Fixed Income section, it does a pretty good job breaking it down.
As for formulas, you could learn binomial trees for pricing callables/ non callables, also calculating OAS. As far as formulas, Bond Edge does most of the calcs, just know that as rates go up bond prices go down. And the total return you'll get on bonds is coupon + price appreciation.
I don't think a liberal arts background needs to build bionmials from scratch with assumptions he doesnt have. Maybe have the theory / inverse price/yield relationship / different bonds and their properties CFA LII material will be too much? I dont think you can pick it up in a week. Thats just my opinion. However its prob best to know more than less.
yeah go through the CFA material (level 1 might be helpful too, idk how much you really learned from investopedia so far) and that should allow you to understand what's going on in the market right now. there's so much going on with bonds right now which is good in a sense since you have a lot to read up on but make sure you're able to deal with any sort of hypothetical situations that will probably be brought up. make sure you have a solid and concise explanation of what's going on in europe right now
Fixed Income S&T SA interview, what to expect? (Originally Posted: 01/11/2015)
I have a S&T SA interview for fixed income division. Any one knows how to best prepare for this kind of interview? Thanks
Know terms and calculations (yields, pricing, dv01 etc..). Know current market info like IG and HY outlook.
I'd read Liars Poker if you have the time too....
Read liar's poker if you get the gig. Before the interview you need to have a very solid understanding of what's going on in the markets as well as basics of bonds math (like mentioned above). You WILL get asked "what do you think is going on in the markets right now?" at least in some form and that's probably the most important question to nail.
Fixed income is VERY broad, no way to be perfectly prepared. in terms of prep id do the following:
1) read up a bit on every product (credit and CDS, rates, commodities, currencies, mortgages). Focus on the basics, try to find some introductory PDFs on basic terms etc. You should be able to asnwer questions like: -given a CDS spread and recovery rate, calculate cumulative probability of default -understand what influences duration of a bond -know how to calculate pnl on a CDS give a change in spread and on a bond -know why there can be a difference between a bond Z spread and a CDS spread (called CDS basis), have an opinion on where it should trade normally, and where it should trade in the times of stress -know what the yield curves look like for major markets (US, GB, DE, JP) and swaps rates (EUR, USD, GBP) and how they have evolved over the past couple of years -know what covered interest parity is -know how prepayments affect mortgage products -know where the various commodities trade and what their forward curves look like
2) Know where stuff is trading and have an opinion, doesnt need to be hugely complex, just be able to give a 2 minute pitch on what you would do on any of the following (this includes knowing what they have done over the past couple of years). You arent expected to be able to have an amazing trade idea on everything, but just be able to hold a conversation/argument. -Major currencies, major commodities, yield curves, credit indices
3) Pick one area that really interests you and learn that in depth. If you need advice on a book let me know.
derivstrading is there a guide to any of that stuff? I'm looking to get into fixed income but haven't heard of half those things you mentioned.
Fixed Income fund interview tomorrow - need advice! (Originally Posted: 05/23/2013)
Hey guys, interviewing tomorrow for a sort of mixed MO/FO position at a fixed income fund (long/short credit, interest rate hedging, etc.)
what sort of questions can i expect? I've only ever had ib interviews before so I'm a novice here. Thanks!
Well MO/FO are very much different.
Regardless, I'm sure you should know duration, convexity, current yield, YTM, etc. Where money flows are going. Prepayment risk, interest rate risk, reinvestment risk....
Fixed Income SA Interview (Originally Posted: 03/15/2012)
Hey Guys, I have a SA interview with a large fixed income fund (not PIMCO) coming up. All of my experience is in equities (accounting interview questions, valuations, etc.) and so I'm not sure what sorts of questions to expect for a fixed income position (other than bond price and yield). Does anyone have experience interviewing with top fixed income funds and have any suggestions on what to go over in preparation?
Thanks!
Bond pricing and yields (as you mentioned), plus convexity, duration... it might get really technical.
Hopefully this can help you out:
http://www.wallstreetoasis.com/forums/fixed-income-interview http://www.interviewquestions.in/fixed-income-interview-questions.html
That is a great help, thanks. Does anyone have any book recommendations on bonds? I have a math background so it can be somewhat quant heavy. Thoughts?
Fixed Income Interview Guide (Originally Posted: 04/09/2013)
Hey guys, I know this first response is too search for this, but I've had difficulty finding more than a few bits and pieces. I have a couple final rounds for fixed income in investment management and was wondering if people could point me in the right direction for material/questions/topics to study. Thanks a lot.
Read Fabiozzi
Vault guide. CFA level 1 and 2 fixed income sections are good, find some old schweser notes on a torrent or something.
Just know about the asset classes in which you're interested. Nothing shines brighter than genuine interest. However, it will all be for naught if you can't present well - this means knowing the standard bond math and other technicals, understanding what's happening in major markets, and speaking well.
Dude-literally read the first 10 chapters of fabozzie and follow markets. thats all. i killed all FI interviews with that.
Fixed Income Technical Question (Originally Posted: 05/01/2014)
Apple Places $12B In Largest Bond Deal Since Verizon. The papers about this deal have some abbreviations - could you please help me to understand them?
three-year floating-rate notes at L+7 = LIBOR + ? 1.05% three-year fixed-rate notes at T+18 = ? five-year floating-rate notes at L+30 = Libor + ?
the numbers are probably basis points and the T might be treasuries.
The fixed rate would be take a 3-year maturity T-note and add 18 basis points (0.18%) to it, it's fixed rate so that won't change. The floating-rate notes you'd have to get a better article but I'm guessing it's 30 day LIBOR + .07%, it depends on how often the rate resets on the floating-rate notes but I am guessing it's monthly.
It's normally 3M LIBOR, rather that 30 day LIBOR. The payments and resets on the FRNs are normally quarterly as well.
Fixed Income Derivative Swaps Interview (Originally Posted: 03/21/2007)
A buddy of mine has a final round interview soon for an internship on the fixed income derivative swaps desk at a BB. What do you guys think he should prepare for...swaps market in general, current market conditions in the derivative/swaps markets, etc?
How is a BB still doing interviews? We finished up almost two months ago.
how about this "what is an interest rate swap". how would you price one? why do companies use them? why do hedge funds use them?
@bankerspi: I'm honestly not sure. I solidified mine about six weeks ago. He was unsuccessful after his final round at this bank, but he recently was cold called about this desk specifically and they're flying him up this week for a final round. My guess is someone reneged because of personal reasons or something.
@Jimbo: Yeah, that's what I told him to study. I guess I should have asked you guys more about whats the current swap market looking like. I'm doing IBD so I don't know a whole lot about the derivative markets at all...
it's looking pretty flat.
Fixed Income Question - Good target for fixed income? (Originally Posted: 01/25/2008)
What makes a company a good target for fixed income investment?
Also, what are things that you want to avoid when looking for a company to invest in on the fixed income side?
debt coverage, lbo risk
free cash flow- want to see this so they can pay down debt reduce overall leverage, also like to see an equity cushion, and coverage (in terms of EBITDA and reserves when looking at commodity type businesses)
avoid companies with lots of leverage, lots of secured debt ahead of you (if you want to buy unsecured)
these relate more to high yield
Thank you for your help. Does anyone know where I can find more/detalied information about this?
Anyone?
Seeking interview help for value-oriented fixed income AM (Originally Posted: 07/05/2013)
This is an interview for fixed income portfolio construction and management. I plan to brush up on all market related events and forecasts related to fixed income. Will macro related events be sufficient? I also plan to brush up on my programming/tech knowledge. I will also be making sure that I formulate my story correctly.
is there anything I should really be aware of?
I've never had an interview at a FI AM shop. It has about $15B AUM and asset allocation consists of corporates, RMBS, Alternatives, CLO, CML, CMBS, etc. What are some good questions to ask? Any advice on how to do well? I come from a slightly different background and this is a break that I've been hoping for so any advice would be greatly appreciated.
any help please?
Interview Help! Fixed Income (Originally Posted: 06/09/2010)
Hi,
I'd like to speak to anyone working in Fixed Income on the Buyside. For part of my interview, I'm given a set of data in Excel and am told to do some modeling (very vague). I just wanted to speak to different people in the industry and see what types of data are useful for them when they are analyzing bonds...(yield, duration, etc)...can anyone please PM me? Thanks.
Bump
I'd make sure you can explain duration & convexity backwards and forwards, know all the different structures (step-up notes, floaters, linked, etc), and the different types of yield curves and their meaning and implications. Basically all the fixed income stuff they test you on for CFA lvl 1. I'd try to find a CFA book or similar college textbook. I'd read through the glossary section of investinginbonds.com as well.
Fixed income question - Which has higher convexity? (Originally Posted: 02/26/2011)
Was asked this in a interview, not sure if I got it right...
Which has a higher convexity, a 20-year zero coupon or an equal-duration combination of 10-year and 30-year zeros?
....
Edit: the below poster is right. the 10 year/30 year portfolio will have higher convexity, as it increases as a square of maturity.
you can't find the formulas for convexity/duration/price online? you can't type them into an excel spreadsheet and were so clueless that you absolutely had to ask for help here?
This, altho I dont agree with how its phrased, I do agree with the general principle. Find the equations, fire up the E* and find the convexity of these bonds. It will be a lot more effort, but in terms of knowledge gained it will be far better.
*No source needed I hope
This is bullet vs barbell. The barbell (combination of 10 and 30) has more convexity
Interview with fixed income team - Analyzing Bonds (Originally Posted: 07/21/2013)
Hi all,
long time lurker here, but could use some expert help here! If anyone in the AM or HF business could give a few tips to what they would like to see in a thorough analysis of both corporate and govt bonds? I have access to broker research but I cant find any thorough analysis on a fundamental level of corp bonds (most of it is top down concerning spreads and CDS recommendations) so if anyone has one please share!
So far a few points I have made on relevant data are
Govt 1 debt/gdp 2 foreign holders 3 (relative) issuance in foreign currency 4 trade balance 5 CA balance 6 depressed/overheated economy 7 yield, rating and cds spreads 8 inflation and inflation expectations
Corp 1 coverage ratios and liquidity ratios 2 earnings and fundamental outlook 3 ratings 4 spread and cds spread 5 currency exposure of debt
Any help appreciated!
Read some of the CRA sovereigns reports
Fixed Income Trading Interview (Originally Posted: 09/17/2007)
I have already been interviwed by an MD here in TO (Toronto), but hes trying to flip me over into another office (NY, Chicago , London). We already talked about the markets, about my persoanlity and other stuff like that. He determined my personality is more suited to Fixed Income (sell side). He made i clear to me that he was thrilled with my candidacy, and keeps asking me wether i have various work permits and etc..in order to work in another country.
What i was wondering is that lets say he sends me over to another office, will i need to interview with that specific office's MD, or will they just trust this guy in his pick (me)?
Can he just call his collegue in London, and say
I got this kid here in MTL whos smart, blablabla, can you pick him up?
Another question...if i do end up interviewing again for this position, what are the fixed-income specific questions they ask you??
thanks
p.s: i met this MD informally (tennis match), so i manged to get through the whole interview process bullshit ...that might help explain this story
I play tennis. Did you play him in a league match or something?
for chris$% sake!
your response really made me laugh..but its so damn impertinent.
On a regular court at 6pm...his partner didnt show up, mine didnt, and there was only one court...so we hit balls...
hope this answers your question
why fixed income (Originally Posted: 02/27/2008)
what would be a good response for saying why you are interested in fixed income (such as bonds) instead of equities...specifically for a risk management type of position?? ASAP answer would be much appreciated.
i like to study interest rates and credit risks.
Fixed income is typically a bit more quantitative than equity, so you may want to play that angle if you're a math stud
i said i am an engineer and like heavy quantitative stuff and FI is much more quantitative than equity research. i also said it involves a lot less guesswork than ER...
I said fixed income is a much bigger market as compared to equities.
Also fixed income comprises of a lot more products, not just bonds. (FX, Interest rate, Credit)
You can also say that despite its name, fixed income isn't quite fixed, volatility is common especially in the current climate, which makes it exciting to be in fixed income.
I got this question in my interview last week. Hope it helps and I would like to hear the comments from others as well.
Fixed Income?? (Originally Posted: 04/20/2007)
Hey guys, one opportunity i am interviewing is in a large FI firm, one of the larkets 10 or so.
How might this compare to, say, working in equity research as an associate/younger analyst at a BB?
Any thoughts?
Have I stumbled over a goldmine or is this nothing special.....thanks guys, FI is REALLY not my area of expertise!
Wow. That was not good typing on my part!
Let's try that again:
Hey guys, one opportunity I am interviewing for is with a large FI firm, one of the largets 10 or so.
How might this compare to, say, working in equity research as an associate/younger analyst at a BB?
Any thoughts?
Have I stumbled over a goldmine or is this nothing special.....thanks guys, FI is REALLY not my area of expertise!
They are 2 different animals- what would you be doing at the FI shop?
Heh. I know they are. For one thing, one is buy side, one sell side!
In ER I would be doing energy, chemical, and alt energy research.
At the FI firm I would also be doing some research, and also interfacing with their HF division, performing statistical analyses, and actually doing some trading. They claim the position will be about 60% equity research, 40% HF analyst work.
Does that make more sense now?
Anyone else? Sorry guys, I am trying to research quickly here, it is amazing how fast this process goes once it gets rolling!
Anyone else? Sorry guys, I am trying to research quickly here, it is amazing how fast this process goes once it gets rolling!
I was a buy side bond trader - and FI is boring. That my two cents - tons of statistical jargon to get caught up in, and success is measured in basis points - not sexy at all. But things depend on what you want to do afterwards. Credit reaseach is more universally applied to other positions in my mind, and I would want HF exposure over ER any day of the week. Thats me though.
Hey Bucs, I PM'ed you!
I would definitely go for the credit exposure. I think that the energy field is "hot" right now, and while that will continue to be the case with massive hirings in the short term a few years down the line that industry specific knowledge may not be that useful. Credit knowledge is always useful.
Then again you have the scientific background that maybe you can work in energy an dmaybe take yourself somewhere.
BB Fixed Income Research (Originally Posted: 11/13/2012)
Hey guys, I have an opportunity to interview for a HY fixed income research role. I'm sorta interested, and currently doing work that is directly applicable. I need more info to determine if this is something I'd be interested in.
Can anyone out there please tell me a little more about the daily work/routine as an industry-specific FI associate/analyst? I'm currently imaging equity research + fixed income RV. Is this more or less accurate?
Additionally, interview-wise do these guys expect credit or FI pitches? Equity pitches? I cannot find any datapoints.
Finally, is FI research even safe these days at BBs? I know FICC business is getting crushed - wouldnt that render research useless? I understand that the credit markets are white-hot right now, but the regulatory changes scare me a bit.
Thanks for any answers to the above!
Fixed income/credit research vastly differs from equity research as a role. Equity research is it's own separate thing and is strictly client facing. Equity Research typically sits in their own bullpen not on the trading floor and is it's own bubble at the bank pretty much. Equity research reports are made for S&T clients. Traders may read them, but they are not the target audience.
On the FICC side, credit analysts sit on the trading floor and rather than publish pretty notes they chat with the traders on bloomberg and keep them updated on what's happening with the companys you're covering. Also credit research is not always a dedicated role. At MS FID they start every first year off in credit research for a year before allowing them to become traders or sales people and a lot of the more senior credit research people have at one point been traders or sales people. The role is a lot more fluid and less defined. While clients may have access to some notes you put out, 90% of what you do is to help your own bank's traders make money.
Thanks. I did not get that out of the job description at all. Do you mind if I PM you the link to the job to confirm the above-stated?
Why Fixed Income vs Equity? (Originally Posted: 02/04/2008)
I have a fixed income S/T interview coming up at a BB, and I am pretty sure I would get asked this.
To be honest I applied to both FI and Equity but only got interviews from FI (I prefer Equity), and I am wondering how to answer the question
"Why fixed income?"
say that you prefer something more technical and quantitative.
Whatever you do dont say you like equity better because you want to work less hours and have more fun.
he is applying to fixed income
you must be quant type
BB Fixed Income interview (strats/sellside) (Originally Posted: 09/02/2016)
I have an interview with a BB fixed income. I'll be meeting w both the strats group (quant guys making models, etc) and the more sell sidey people who run the models and talk to clients. I know that these are very different but what information would you need to know going in? I'll take info on either group.
I know the strats group will be mainly math based (programming skills a plus). Is anyone familiar with this type of math?
What specific questions/knowledge would someone on the other team (sell-side, client based) require? Apparently they just hired someone with a psych degree and "doesn't know what a bond/excel is, etc." That is a real quote, I obviously don't think said person knows nothing but it has got me thinking. It also makes me want to blow this interview out of the water.
ANY HELP is appreciated!!!!
bump
that sounds like sales...sales people don't need any technical skills coming in...what they need to know the bank can easily teach...but "personality" cannot be taught.
The strats groups hire 2 types 1-phd rocket scientists 2-excel/programming gurus
Sales however hires primarily on fit and personality.
Won't the sales people need to know their stuff and the markets though? besides the math/programming I feel that they can't just hire a dummy who can shmooze people.
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