Equities or Fixed Income Question in Interview
I had this question come up in a S&T interview. One of the MD's who worked in fixed income asked me what would I prefer, Fixed income or Equities.
I answered that I'm open to both etc etc. Was this a bad answer?
The interview was for an Equity S&T summer analyst position.
Outside of derivatives, fixed income is typically more quantitative than equities.
So what he's really asking is whether you're quantitative or qualitative.
I really disagree with that statement. Unless you are running some sort of book with a heavy prop element equity trading is mostly about understanding liquidity and the market microstructure. Understanding market microstructure is something that is heavily quant oriented hence why computers are running these HFT stat arb programs based on order book changes. That being said doesnt meant you have to be a quant genius to understand when and how to find the liquidity. The math is simple stuff nothing past basic algebra.
Things like understanding risk and liquidity are sorta a gray area because they are conceptual and often times difficult to define quantitatively. That being said I know relatively speaking compared to fixed income they are more qualitative.
Disclosure: I work on an equity desk
Points taken. I've worked in both fixed income and equities. One thing I would point out is that fixed income pricing tends to involve a lot of statistical pricing models these days. Compared to fixed income, equities at the very least involves a lot less calculus, diffyqs, and stats (outside of equity derivatives).
Yes relatively speaking way less in depth math but really its an entirely different skill set. In derivatives tho there is always some form of hedge tho to offset risk not really the case in equities.
I would say the the single 2 biggest difference in equities vs fixed income (mostly speaking of the exotics) are the amount of advanced math and the pace. The fixed income guy knows the math side inside out but when placed in a situation where markets are quickly moving they would not be used to the rapid pace of things. Of course the equity guy wouldnt know where to begin with the math equations/pricing models. To say the least they are very different skill sets.
Interesting, I didn't realize calculus had to be used in fixed income...
As for Equity Sales, isn't the level of math pretty basic to say the least?
^^^ It's used for calculating certain measures of duration on optionable bonds. I didn't work in the most complicated areas of fixed income, but there was a reasonable amount of calculus where I worked.
I'd say its generally better to say which one you are interested in. They are entirely different and "I'm open to both..." is probably not the best answer to the question. That being said - if you were interviewing for an Analyst position, they probably don't expect you to know EXACTLY what you want to do and are more interesting in getting the best candidate.
yes as to the answer to the actual question im with steak on this one. Definitely helps define where someone stands on the division.
Interesting, I should have been stronger with saying I'm interested in Equities (after all it was an Equity position), nevertheless, I feel like you shouldn't limit yourself and so no I'm only interested in equities when in fact I'm interested in anything on the sell side.
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