Assistant trader interview questions shared by candidates
A piece of land has a 30% chance of being located over an oil reserve, in which case it is going to be worth 100M. If there is no oil, the land is worth 30M. You are offered an option to buy the land at 40M after inspecting it and ascertaining if there is oil. How much are you willing to pay for this option?
This is a very basic options question, of course. Not being too familiar with options, I did not follow that until it was too late and the interviewer had corrected me. They mislead you slightly by first asking you for the fair value of the piece of land and by asking the question in a fairly convoluted way.
Expected value = 0.3(100m) + 0.7(30m) = 30m + 21m = 51m => option price = 51m - 40m = 11m No?
See Interview Questions for Similar Jobs
- Software Engineer
- Quantitative Analyst
- Junior Trader
- Quantitative Trader
- Quantitative Researcher
- Software Developer
- Financial Analyst
- Investment Banking Analyst
- Business Analyst
- Quantitative Research Analyst
- Research Analyst
- Summer Analyst
- Trading Assistant