Fixed income sales interview questions

Hi,
I recently had an interview with a managing director from fixed income sales division.
I am a senior year finance major and minoring math college student but I never take fixed income class.
Although I do not have any knowledge about fixed income, they somehow still sent me to the final interview which will be in next Friday.
The MD told me he likes my math background but last time I took math class was a year ago so I am really nerves for next interview.

Since they already knew I have almost zero knowledge of fixed income, I think they will ask some mathematical questions.
(The previous interview was all fundamental and no technical question. And the MD told me I will meet one of his mathematically smart guy in his team. So I assume there definitely some types of technical and mathematical question.)

So I am wondering, as for fixed income job interview, what kinds of mathematical (or technical) questions commonly asked during its interview?

Any advice to prepare for next interview?

Thank you,

 

I would assume that it will be a mix of seeing how much of the math you have supposedly taken youhave actually learnt. I have been in interveiws before where guys asked me about my physics classes in high school (and i hadnt touched physics in 3 years), the thinking being that if i learnt it I should be able to remember it (which I agree with tbh).

Then it will likely be some fixed income based questions where you need to think about hte problem on the spot and use the math you have supposedly learned, either way, as long as you know the math you have taken then you should be fine. However, what I would advise is to get at least somewaht comfortable with key fixed income products, just so you arent caught off guard by the basics (i.e. you dont want to be having to think about the convexity of a bond for example or something basic like that in the inteview

Tbh, how are you interviewing for a FI position and not know about fixed income. This might be me personally, but my biggest pet peeve when i interview people is when they say they havent taken any classes that cover that. If you are interested in a career in the field then how have you not read up on it in your own time? Drives me crazy.

 

Thank you for your advice.

Actually, I originally applied to Equity sales position. But somehow I was contacted from Fixed income. So technically, I didn't applied their position. However, I think this is still great opportunity for me so I really want this job. During the interview with MD, he asked me have you ever taken any FI class and I answered honestly "No." And he advised me to take specific classes in next semester. Of course, since I passed first interview, I've studied FI.

 

Know duration, convexity like the back of your hand. Know the formula to calculate changes in bond prices given spread changes. Know how many points a set spread is worth at given price levels. Know t, g, z, and oas spreads. Know the shape of the yield curve and what various term structures imply. Good luck

 

Thank you for your advice.

Now I briefly studied about duration, convexity, calculate bond price, idea of g, z, i, oas spreads, and yield curve.

However, I am still worry about math part. The MD asked me how many statistics class I've taken. I think it means I will use some sort of statistics knowledge in this job. What kinds of statistical knowledge I will need to know? I think this kinds of question will be my interview on Friday.

 

Generally speaking, Fabozzi's The Handbook of Fixed Income Securities and Handbook on Municipal Bonds are the only academic finance books I'd recommend when it comes to bonds (since most aren't even written by bankers). Those are good just to have tucked with you, but not necessarily books you can digest in a week.

In terms of preparatory materials when you are 3-5 days from your interview, I'd say the WSO technical interview guide on bonds is one of the better interview preparation materials out there (since most lean heavily to entirely on equity-side).

Also, I've never seen or heard of being asked heavy technical questions about duration for a FI analysts, more so expected familiarity with varying types of securities.

 

Thank you for your advice.

As you said, I haven't been asked any heavy technical questions on my interview. There were some mathematical questions but these were not so bad. "What is 98x102?" Some thing like this. Maybe I was just lucky.

I have almost 6 month till I start to work so I would like to prepare myself as much as I can. I will check the books you mentioned. Do you have any more advice?

 
Best Response

1) Get a technical overview, skim through Fabozzi as mentioned above. No need to get overly technical with it

2) Read the FT (if in Europe) or WSJ (if in US) daily, try to read at least 50% of the articles in full, and 100% of the articles at least first couple sentences. Trust me its worth it, you will start to pick up a general database of knowledge. This is something that cant be crammed either, but after a couple weeks/months you will be able to connect the dots much much better, and it will be easier to think holistically about the financial markets and the world. This is actually something that many people dont do in the industry, people will generally read a couple news articles everyday but they will focus on their little niche area. It takes some perserverance, and sometimes you dont think an articel is immediately applicable, but its more about being well read in general, which is somethign that I think is crucial for any markets position. Also as you read each article, always be asking yourself "how could i make money off this?", it doesnt have to be overly sophisticated, but it gets you into the habit of thinking in that next dimension, and not just reading news. The best guys in this industry I have met read an article and instantly think "what deal could i structure around this that could make money?/what trade can i put on?/what is the next bounce of the balls after this news?". First order effects (i.e. the direct effect of news) is pretty much untradeable, but the second and third order effects often are.

3) Once evrey 2 weeks, try to come up with a trade idea, and then condense it into a 20-30 second pitch and practice delivering it.

 

Well said. Right now OP should be thinking about what happens when the Fed raises rates. Think about the trade that can be put on in fixed income. The market is already reacting in anticipation of a rate hike. Also, there is a reason many banks mix fixed income with forex and commodities. There are trades to put on in those areas too as rates go up.

 

Wow,

Thank you so much for such a great advice. There is so many thing I have to learn to catch up but I don't have much time. But I will do what you told me and try to survive in this industry.

Thank you so much.

 

Tell them that you have been sent over by IBD. Say your interest lies in IBD but they thought you were a better fit in S&T. This statement has 2 consequences; they will immediately probe your supposed fit and they will drop most technical questions. Basically, you are changing the face of your interview. Be prepared for some of the usual IBD questions thrown in to test your technical aptitude in your chosen field.

 

Brainteasers: review some Crack "Heard on the Street", but sales traders arent really into brainteasers, thats more traders who see themselves as geniuses.

Have a couple IN DEPTH trade ideas, developing these will help you learn about current events as well.

Know what key markets have done over past 12 months and more importantly have an opinion that you can back up on where you think they are heading.

Gloss over some technical stuff so you dont come across as a noob. Fabozz is good but too much, just pick up an interview guide or have a solid 2 hour wikipedia session.

 

Thanks DurbanDiMangus and Derivstradin, the trading ideas will be a bit difficult as the desk deals in distressed bonds. As far as I have found online there isnt alot of information about the deals going on in the distressed market. Would it be more advisable to get really familiar with the distressed debt market and then project an idea of how the company could gain business if say company X went bankruptcy protection and the debt had to be reogranized?

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 
heister:
Would it be more advisable to get really familiar with the distressed debt market and then project an idea of how the company could gain business if say company X went bankruptcy protection and the debt had to be reogranized?

On the surface make sure to check out all resources on distressed debt, chapter 11, chapter 7, plan of reorg, and yes check out the blog Derivs referenced for ideas -the blog author literally does all the homework for you... Make sure to review basic high yield credit analysis also, to know the basics - leverage, fcf, ebitda, comps analysis, etc. Unsure of what free newsletters there are, everything is pretty much on a paid basis, but check out WSJ bankruptcy section to keep up on filings, companies emerging, and other distressed topics.

Are you sure this isn't for a desk analyst position? Be very sure, because if u are at all involved with analysis and not sales and/or market making the knowledge threshold might be a bit higher

Best of luck sir

 

Talk about Sbarro bonds or something lol. Pretty sure the Rating Agencies publish a credit newsletter every week. Also look up distressed debt investing (the blog). They had a pretty good emailing/post about an issue by a hotel or convention center in Denver last week. Even if you don't have a specific trade beforehand, you can pitch elements of a successful trade based on themes you're observing (would not recommend except as a last resort).

"Dude, not trying to be a dick here, but your shop looks like a frontrunner for the cover of Better Boilerrooms & Chophouses or Bucketshop Quarterly." -Uncle Eddie
 

Thanks FinancePun, hopefully they wont ding me too much as I was just contacted by them this AM about interviewing with them on thursday AM. I am planning on trying to come up with at least on good investment pitch, as well as brush up on my distressed debt knowledge.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 

Where is the interview?

********************************* “The American father is never seen in London. He passes his life entirely in Wall Street and communicates with his family once a month by means of a telegram in cipher.” - Oscar Wilde
 

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