# Investment Analyst Interview Questions

Investment analyst interview questions shared by candidates

## Top Interview Questions

### Investment Analyst at DC Energy was asked...

f(n) is a function counting all the ones that show up in 1, 2, 3, ..., n. so f(1)=1, f(10)=2, f(11)=4 etc. When is the first time f(n)=n. 7 AnswersWouldn't that merely occur @ n = 1? sorry, forgot to mention other than the trivial case at n=1. the answer should be around 20000 if i recall correctly (think its 19991 but need double check on that) f(0) = 0, if we are dealing with real numbers, zero counts Show More Responses In working it out in a very painful way, I got 199,991. f(9) = 1. f(99) = 1 * 10 + 10 = 20. f(999) = 20 * 10 + 100 = 300. (the 2-digit sequence occurs 10 times, and then you need to add 100 for all the numbers like "1xx") Then we can think about f(20) or f(200) since a lot of the 1's occur in the 100's) f(20) = 1 * 2 + 10 = 12 f(200) = 20 * 2 + 100 = 140 f(2000) = 300 * 2 + 1000 = 1600 f(20000) = 4000 * 2 + 10000 = 18000 f(200000) = 200000. f(199999) = 200000. f(199991) = 199992. n decreases faster than f(n), so I think 200000 is our answer. I think the above is very close but one tiny step away. f(199999)=200000. Correct. But from here, if n decrease by 1 each time, f(n) decreases by 1 as well until n hits 199991, which contains two 1s, f(199991)=199992. So, f(199990)=199990. Bingo! besmart is close. I cheated by coding it up and 199981 is the first one after the trivial case. |

### Adwords Associate at Google was asked...

How many gallons of paint would it take to paint 1/3 of the houses in the US? 5 AnswersIt is based on approximation Lets start with 1 wall. 1 Wall is approximately 15ft * 12ft = 180 Sq Ft Paint volume on 1 wall is approx 180 sql ft * 2 mm= 929 sq cm * .2 cm = 185 cubic cm 1 galon = 2.7 liters = 1000 cubic cm So you would need 92.9/1000 galons = 1.85 gallons for 1 wall Lets say average homes are 3 bed room houses with 1 living room and 3 baqths so number of walls is (3 *4) + (1*3) for ceiling + (bathroon is half of a room so 3 *.5) living room is almost twice the room = 2 + 1 ceiling + 1/2 the interior space ~ exterior wall space (1.85* 3 * 4 ) + (1.85 * 3 ) + (1.85*.5) + ((2 * 1.85 ) + 1.85)= 22.2+ 5.55+ 9.25 + 3.7 + 1.85= 42.55 for interior so 21.275 for exterior Around 63 gallons for 1 house. Lets say there are 150,000 houses in a city and there are 500 cities in a state. so 500* 150,000* 500 * 63 =2362500000000 There are 50 houses so approximately 50*2362500000000=118125000000000 gallons for entire US. Forgot to make 1/3 of the answer 118125000000000 /3=39375000000000 Also this question has not right or wrong answers. The interviewer is checking at your way of working through a problem. your both wrong. you'll bore them with this answer. the correct answer is "google it". Show More Responses Having asked this type of question many times, I can assure you that there are indeed wrong answers. The whole point of an exercise like this is to see how well the candidate makes approximations and deals with large numbers Let's take Ristesh's numbers for example: "Lets say there are 150,000 houses in a city and there are 500 cities in a state." Let's ignore for now the fact that Ritesh's arithmetic is incorrect, which is a red flag in an interview. If there are 150,000 houses in an average city, and there are 500 cities in an average state, and there are 50 states in the United States, then Ritesh's numbers add up to 3,750,000,000 houses in the United States. That's 3.75 billion homes for a nation with a population of 300 million people, or more than 10 homes for every person in the country. A reasonable candidate should see that that's absurd. That's why the question is asked, because most people are not very good at dealing with large numbers. First determine the number of houses. - Clarify, are we talking stand-alone residential housing only or including things such as high rises? Assuming it is stand-alone residential - Also clarify whether we are talking just exterior painting or interior painting; assume exterior for now - 300 M people in US - About 3 people per household, or 100 M households in US - Assume 40% live in condos/high-rises, leaving 60 M households living in stand-alone residential housing - Assume 1 household living in 1 house (simplifying assumption) - So we have total of 60 M houses in US; we need to paint a 1/3 of them or 20 M houses - Assume a house is 2000 sq ft on average (you can also make it more complicated by doing 25% being 1500 sq ft, 25% being 2000 sq, 25% being 2500, and 25% being 3000+) - Assume a gallon of paint covers 100 sq ft - Thus painting the outside will take 20 gallons on average Now do the math: 20 M houses X 20 gallons = 40 M gallons of paint |

Why do you add minority interest to enterprise value? 3 AnswersTo find the complete value of the company. Even though the income has an already adjusted amount (adjusted to the percentage of the majority interest) you must still see the complete value. There are three ways to account for an investment in a company. The first (if less than 20% ownership I think) is a a straight investment and gets recorded as an asset in short term investments on the balance sheet. The second (20-50%) is the equity method meaning the company includes just their share of earnings (essentially their equity) in the P&L. The final (50+% ownership) is the consolidation method meaning the company controls the subsidiary and so needs to consolidate its earnings. However, if it doesn't own 100%, then they cant claim 100% of earnings. This is accounted for by subtracting out minority interest on the P&L. That takes care of earnings but enterprise value is not based on earnings, its based on balance sheet metrics. So since the company doesnt own the entire company but has consolidated the entire sub on its balance sheet, minority interest needs to be removed from the value of the company. Sorry, confused my answer a little. You add back the minority interest just like you add back preferred shares because it is essentially a form of equity financing and since its consolidated, the owner of the company in question will have to compensate the minority interest for their equity investment. |

If someone offered you $1000 today or paid out at $100 a month over the next ten months, which would you take? 4 AnswersThe quantitative way to answer this is the perpetuity growth formula. You would take the monthly payments. Don't really know why, that is what the interviewer told me. The answer should be the $1000...$1000 today is worth more than $1000 ten months from now or $100 every month for 10 months due to the time value of money. Money loses value over time... Show More Responses I think it depends largely on the market. 1000 dollars a couple years ago if put into the right fund would be nice now. With how long the market has been expanding It would be a tough choice now. Additionally, they might be checking personality on this. Do you want your money now, or do you like something steady even if the value depreciates over time? |

Why didn't you get an MBA? 2 AnswersAn MBA was optional for the position, but many investment professionals have the degree. An MBA is not necessarily the golden standard of business minds anymore. The NPV of many MBA degrees and the benefits that they yield both in furthering education and in increasing earning power is far lower than it used to be. I decided not to get an MBA because it simply was not the most efficient or statistically correct choice. |

What is 23 times 40 2 Answers920 what base is it in? |

Tons of behavioral questions encountered in the whole process- What would you do if there was a problem within your team etc.. 2 AnswersI answered as practiced earlier. Added a relevant example about how I have handled a similar issue in the past. They like to see concrete evidence of the sort. Can you please provide some more questions asked and if there were any technical questions asked too? |

square root 100000 3 AnswersUse your calculator.. Think of it like this: 100 = 10 * 10 10,000 = 100*100 When you Square 10, the product has the combined number of zeros. For 100,000, the number has an odd number of zeros (5). Therefore, you should think of it as something between 300 and 400, since 300 squared is 90,000 and 400 squared is 160,000. I would give them a range - probably around 300-315. For 100,000, just think what is the square root of 10 and then times 100, the range is between 3-3.5, so the final answer should be 300 to 350. |

What if FCF's are negative in your terminal year? 2 AnswersFirm is probably not stable yet - DCF assumes a stable company so if FCF's are negative, DCF is probably not best approach. You would probably want to wait and extend your planning period until your free cash flow levels out - a terminal value multiple is no good if it is not based on a stable or somewhat stable cash flow. Remember that applying a terminal value multiple, or even a growth rate to your FCF is best at these scenarios: 1. Your company comes out of a business cycle 2. Your company realizes whatever investments they've undertaken 3. Your earnings stabilize (either from a peak or trough) |

### Investment Analyst at DC Energy was asked...

how many zeros are at the end of 100! 3 Answers2 24. Count all multiples of 5, so 100/5=20, and multiples of 25(give you an additional 0) 100/25=4. This means 24 zeros. All other explanations are basically complicated ways of this fact. An elaboration of the above: You are looking to build ten's since each time ten is multiplied by ten, the number of zero's increases by one. The prime factorization of ten is 5*2. In 100!, the determining factor in the number of ten's you can build is the number of fives (since two's are plentiful)...hence you are counting the number of fives in the prime factorization of 100! |

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