Interview Q - If you were given a grant of $xyz, how would you spend it?

BigBang's picture
Rank: Senior Chimp | 19

Hey everyone,

I was hoping I could get your thoughts on the best way to answer this question. I've tried many many searches for related posts in the past but have not found anything relevant, so I apologize if this has been answered before.

Would it be best to answer the question from an investing standpoint - what to invest in to generate the highest return? Or is there a better or more creative way to go about answering this?

Thanks, really appreciate the help.

BigBang

Comments (27)

Nov 27, 2010

dump it all in a penny stock and keep your fingers crossed.

Nov 27, 2010

You is someone supposed to answer for you? They want to know what you would do with the money, not what a stranger on the internet told you to do.

Why don't you post some of your ideas so people will contribute meaningfully instead of telling you to buy a $25k bj.

Regards

Nov 27, 2010

Take it down to atlantic city.

No but seriously work through some investment options. Such as stocks bonds REITS funds etc and why you would choose such thing.

Nov 27, 2010

attend grad univesity classes, and ask around for people that are good for doing this project or that project. If you are in IT, say you are new here, are working on some shellcoding projects but kind of hate to do everything alone.
Get hooked up with some people , talk the talk and then say you invest in an idea. Basically any brilliant guy in any department has some kind of stuff going on, so say you would start up in some strange business area, and untill it works you would surf couches so you don't waste the money on rent.

Or ask them if they want to drop some chips and start poker with you .^^

"Make 'Nanas, not war! "

Nov 27, 2010

I was asked this question last month. It all depends on what industry you are interviewing for though. I was interviewing at a commercial bank so I tied the answer back to normal investing. If you are interviewing at a, say, f500 oil company, say you would invest in biofuels or something related to the company.

Always have information about a specific market (know trends, major players, the past of the industries involved, know future prospects, blah blah), have a specific company or type security in mind. Know the ceo, his past, etc.

I actually type a one page prospectus for an investment beforehand. I give it to the interviewer just in case the question is asked.

I am not cocky, I am confident, and when you tell me I am the best it is a compliment.
-Styles P

Nov 27, 2010

25k isn't enough to do very much worthwhile in terms of building a company or generating excess returns without taking on enormous amounts of risk. Best bet is to do a diversified Asian ETF and some bonds maybe 70-30 or something like that depending on your risk premium and time to retirement.

Nov 27, 2010

I have a policy of when people ask me something like this to assume that they should not be doing anything with investing and just put it into a diversified pre-made portfolio, probably fixed income with an equity cut that way I don't have to hear bitching when the stock market crashes.

Nov 27, 2010

Keep it in cash. I already have income, investments, and less time than needed for properly evaluating a potential business investment target (and dumping money into a business i haven't taken time to research just seems stupid to me).
What I don't have is liquidity and freedom to explore new avenues, at least not until some of the current projects go from active to completed or building to maintaining stage.

More is good, all is better

Nov 28, 2010

Would you necessarily have to answer this question with some kind of investment idea? probably the wisest choice in terms of returns, but i feel like that's a really boring answer.

Nov 28, 2010

Would you necessarily have to answer this question with some kind of investment idea? probably the wisest choice in terms of returns, but i feel like that's a really boring answer.

Nov 28, 2010

this question is not a make or break interview question and is quite easy to answer. you can easily prepare for this with 2 or 3 investment ideas (they can relate to each other or be completely independent), they don't even have to be original, they simply need a thesis and 2-3 supports for the thesis.

example: i would invest in commodities right now.(thesis) there is a lot of uncertainty in the currency markets(support 1), and the us dollar is likely to continue to depreciate(support 2) because of QE2 (sub-support 1) and inflationary fears (sub-support 2). Specifically i would invest in oil and industrial metals(sub thesis) because emerging markets will be continue to grow in the next few years(support 1) and will be dependent on these materials(support 2)....etc.

essentially, you can use this question to show that you are up to date on current macro events, current deals/industry trends and/or to illustrate your thought process. your answer doesn't necessarily have to be true. just make a logical argument (doesn't matter if it's about a specific product (debt, equity), specific sector, specific region, specific company, etc.) with reasonable supports.

Nov 28, 2010

Opi - that's exactly what I'm trying to ask. Investment idea would seem relevant, but boring and unoriginal. But it seems like this option would be the best way to go about things.

Do you think just 2-3 good investment ideas will do the trick? Or are they also looking at your overall investment strategy i.e. utilizing modern portfolio theory to decrease risk, or investing 50% in bonds and 50% stocks, etc?

Thanks for the responses guys, this has been helpful.

Nov 28, 2010

Just play it safe? 90% SP100 Global Index Fund, 10% cash. Still probably overweight on US equities though.

There's probably a better index than SP100 Global but thats the first thing that came to mind.

Nov 28, 2010

If the wording were as you put it "if you had 25k how would you spend it" I think everyone here has missed the boat. They did not ask how you would invest it they asked how you would spend it. This question could be a bs trap question to see if you take the bait and use it to talk about investments.

I would first pay off what little student loan debt i have. It has a 6.7% interest rate (5k)
I would put 10k into starting an emergency slush fund
I would use the remaining 10k to improve my standard of living but no big ticket items in particular.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Nov 28, 2010
trade4size:

If the wording were as you put it "if you had 25k how would you spend it" I think everyone here has missed the boat. They did not ask how you would invest it they asked how you would spend it. This question could be a bs trap question to see if you take the bait and use it to talk about investments.

I would first pay off what little student loan debt i have. It has a 6.7% interest rate (5k)
I would put 10k into starting an emergency slush fund
I would use the remaining 10k to improve my standard of living but no big ticket items in particular.

It's like those bs tests where if you don't sit at the head of the table you must be a "follower". The question is uninteresting unless we rule out straight investments anyway. Maybe have a question like in "Brewster's millions"

"If you had to spend 25k and you couldn't have any material assets afterwards what would you spend it on? This caveat includes paying down existing debt."

Nov 28, 2010

I honestly don't know my ass from a pumpkin seen how I'm just a "prospective monkey" still toiling away in God's military but this honestly just sounds like a "fit" type of interview question. They want to see how your mind works when presented with trivial matters---this would be my guess at least.

Perhaps they are just sizing you up as an individual and seeing how you'd fit in with your potential co-workers. Based on the responses from several of the individuals above you can see that the common response is to display your finance savvy: show them that you understand the Markowitz-style risk-reward trade-off and which asset classes fall into which category. These responses not only reveal what the individual understands in terms of investing products but also what type of risk their palette desires--aggressive, moderate, low, etc.

If you're looking for an aggressive fast-burner to join your team do you want a hardcore spread-bet sort of guy or do you want an easy-does-it US Series I type of guy? Probably the former. I suppose the same line of reasoning except in reverse would apply if you desired a quiet, diligent sort of person to sit around putting together pitch-books all day or whatever some of you IBD guys/gals do on a regular basis.

Aside from investing responses there is definitely the spending response and/or the budgeting response. Like the multi-dimensional aspect of the investing response, spending/budgeting reveals information about you as an individual and can go in several directions.

Personally, my answer would most likely depend on the culture of firm, the type of job I'm interviewing for, and most importantly the personality of my interviewer(s). You could wind up with a laid back person who might appreciate some sort of humor or even a good story about a time when you did have some cash to spend. What if you get a guy who'd get a kick out hearing something stupid about how you got mugged at an ATM in Philadelphia and the mugger, in the spirit of brotherly love, still felt the need to give you a reassuring 'brother-hug' right after robbing you blind. (True story about a friend btw)

Point is I honestly don't think this is a question where one right answer applies like "How does Goodwill affect Net Income" or something retarded like that. I think this is most likely a fit question so try to be a chameleon of some sort but still take the opportunity to stand-out and show some character.

That's my opinion, but like I said, comparatively I'm a "newb" so you'd probably be better off taking advice from someone more experienced with these matters... I still think my advice is good though.

Nov 28, 2010

I've got a tough investment banking interview question:

"My friend bought a company and recently sold it for the same price. He claimed to have made a killing.. how is this possible?"

Can anyone provide insight on how they would respond?

Nov 28, 2010
krnguy228:

I've got a tough investment banking interview question:

"My friend bought a company and recently sold it for the same price. He claimed to have made a killing.. how is this possible?"

Can anyone provide insight on how they would respond?

He held a large and successful HFT firm for 9 months and pocketed 60 percent of the revenue.
Done in one.

Nov 28, 2010
monkeysama:
krnguy228:

I've got a tough investment banking interview question:

"My friend bought a company and recently sold it for the same price. He claimed to have made a killing.. how is this possible?"

Can anyone provide insight on how they would respond?

He held a large and successful HFT firm for 9 months and pocketed 60 percent of the revenue.
Done in one.

I don't think he'd accept that

Nov 29, 2010

shorting california debt

Nov 29, 2010
blastoise:

shorting california debt

its time to buy CDS.

Nov 29, 2010
ubiomni:
blastoise:

shorting california debt

its time to buy CDS.

i have tried but apparently have to have big money to buy em

Nov 29, 2010

What if the money was given to you on a grant? Does this become more of a behavioral question?

Dec 2, 2010
BigBang:

What if the money was given to you on a grant? Does this become more of a behavioral question?

Is this for Barcap? =D

Nov 29, 2010

Back to the original question - it depends who's asking. I got the question twice (both times XYZ = $1 million). One time was from an investment management company, for which I had to quickly scrap for some investment ideas, because that's what they were looking for. I quickly made a simple allocation of 30% into treasurys, 20% into large cap stocks, etc. Nothing fancy, and the answer (while not a home run) seemed to satisfy.

The other time I got asked the question from an IBD dept. I answered it more practically - pay down my student loans, invest in real estate, and keep a small allocation for personal investment experience. Got a high brow from the interviewer who actually expected an "asset allocation" answer, but I told him that as an IBD analyst I won't have the time to properly analyze companies and play with my money like that, and so having a roof over my head in the best RE investing environment seemed like the best way to go. He liked my answer in the end.

Dec 1, 2010
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"Make 'Nanas, not war! "

Nov 21, 2012