Advice on preparing for fixed income s&t interviews

Hi all. Currently a second semester sophomore trying to get ready for the upcoming recruiting season. My concern is that right now, I don't have enough knowledge on the fixed income side of things. I have a basic understanding of things such as the yield curve, spreads, etc, but I feel as though I'm missing sides with regards to fixed income and some of the smaller intricacies. Any advice or suggestions on brushing up on this area would be much appreciated. I recently got Fabozzi's Fixed Income guide and have been working through that these past few weeks.

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Comments (11)

Jan 8, 2019

Finish that book and you will have no concerns at ANY interview. Go kill it!

Jan 9, 2019

Gonna try and finish the thing. are there any guides you suggest for s&t?

Jan 9, 2019

Never seen fabozzi but I imagine it's overkill

I imagine for something that entry level id make sure to get the basics right. You should understand yield to maturity and duration (modified duration and dollar durations). Relationship between yield and price, discounting cash flows etc. Also what carry is.
Google is good enough for these imo.

Jan 12, 2019

Don't know which Fabozzi book OP has, but the Handbook of Fixed Income Securities is something like 1700pgs going over just about everything.

Jan 9, 2019

I second junior2012. Fabozzi is an overkill for FI S&T interviews.

I feel that for FI S&T interviews, you have to know the basics of yield, duration, price, and carry as junior2012 mentioned. Know about the different types of bonds such as callable bonds as well, and how interest rates affect their prices.

In addition, you do have to be very up-to-date on global news.

For instance, in my interview, I was asked on the December FOMC meeting. What happened there? How did it affect yields? Did yields go up or down after the announcement- and why? How much is the Fed unloading each month? Very detailed questions about this, and the only way you can increase your knowledge is by reading the news closely.

I was also asked on my thoughts on the Asian bond market. The interviewer also dug deeper into Southeast Asian markets and North Asian markets- this obviously depends on where you're interviewing, but generally you should have a feel on which bonds are best to invest in current market conditions. The way you can increase your knowledge on this is by reading investment outlooks written by various research teams.

And of course, memorize the 2-year, 10-year yields, how they've moved in the past year. Include the Fed Funds Rate in there for good measure.

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Jan 10, 2019
CentralBanker:

I second junior2012. Fabozzi is an overkill for FI S&T interviews.

I feel that for FI S&T interviews, you have to know the basics of yield, duration, price, and carry as junior2012 mentioned. Know about the different types of bonds such as callable bonds as well, and how interest rates affect their prices.

In addition, you do have to be very up-to-date on global news.

Agree on this part (although I don't know about 'very' up-to-date; probably regular up-to-date is sufficient to have a conversation, which is what an interview is).

CentralBanker:

For instance, in my interview, I was asked on the December FOMC meeting. What happened there? How did it affect yields? Did yields go up or down after the announcement- and why? How much is the Fed unloading each month? Very detailed questions about this, and the only way you can increase your knowledge is by reading the news closely.

I was also asked on my thoughts on the Asian bond market. The interviewer also dug deeper into Southeast Asian markets and North Asian markets- this obviously depends on where you're interviewing, but generally you should have a feel on which bonds are best to invest in current market conditions. The way you can increase your knowledge on this is by reading investment outlooks written by various research teams.

Jesus who is asking a 20 year old this stuff? The purpose of an interview is to make sure they know the basics, are interested in the field, reasonably smart and hard working, and decent to have a conversation with.

Any place that would bother to grill a college junior on this level of specific product knowledge and then use that to make hiring decisions sounds like it's full of assholes.

CentralBanker:

And of course, memorize the 2-year, 10-year yields, how they've moved in the past year. Include the Fed Funds Rate in there for good measure.

Yeah this is funny, too. I remember one young lady I interviewed, in response to the question "how are the markets doing lately?" started rattling off the levels of the DJIA and SPX to two decimal places. Like... ok? I'm not looking for people who can memorize what they see on a Bloomberg (I don't have mine in the interview room so how would I even know if you're right?) Personally, if I were to ask a candidate what the 10 year was at, the best answer would be "like 2 and a half or so" so then we could talk about interest rates and the things that effect them, rather than establish whether or not this college junior had memorized a number or not. Since I don't think my employer would be well-served by making sure that all of the interns were people who took it upon themselves to memorize some tbond levels, I don't ask questions like this.

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Jan 11, 2019

Good thing someone like you jumped here I was looking at this thread earlier wondering what the hell everyone in here was talking about or if I had missed something or why I was so behind...

Jan 9, 2019

I guess the trader was trying to play bad cop- just to see how I would perform and react under pressure. Plus I did say that I followed the rates market very closely- so I believe these questions were kind of expected.

@OP I guess this is a lesson too- be careful on what you say since 9 out of 10 times they will follow up on it, and you never know how deep they'll go!

And yeah- levels of DJIA and SPX to two decimal places is just nuts. Totally agree with you that it's more important that the interviewee understands the concept behind what affects interest rates rather than the specific numbers.

Generally, I feel like knowing the general direction and your views about the future are useful (e.g. yields have gone up in 2018, because of xyz reasons, and I believe in 2019 yields will go up/down because of xyz reasons)

And also pzinkpanther- just curious here- what's your background?

Jan 11, 2019

hardest FI q I got asked was "how do you derive 5y5y fwd rate from 5y and 10y spot rates?"

this was asked after I said I took a math. finance class in school. if you don't tell the interviewer dumb things like I did, you shouldn't get anything close to that. Although it is an easy question.

Jan 12, 2019

have a few phone calls and meetings with analysts, get the low-down from them. the best information comes from the people who are already inside. fabozzi is good but it's a complex read esp for a sophomore. you wont appreciate fabozzi really until later on. but read away

and of course: bloomberg, wsj, etc know where the indices, rates, and fx are trading