Interviewers will expect financial analyst candidates to be well-versed in financial markets, modeling, and analysis. Make sure you are comfortable with both micro and macroeconomics. In addition to highly technical questions, be ready to answer a few behavioral questions that will show off your communication and collaboration skills.
3. Stock A has a volatility of 20%, B has a volatility of 30%, and their correlation coefficient is 50%. They have the same expect returns. Suppose we can buy x share of A, and 1-x share of B. Then what the x should be for us to invest to make our portfolio has the minimum volatility?
The vols add in quadrature, with the caveat that the interference term has the correlation factor in there. So: sig(port)^2 = x^2*sig(A)^2+(1-x)^2*sig(B)^2+2*x*(1-x)*sig(A)*sig(B)*rho(AB) Take the partial with respect to x and set that equal to zero. Solve for x and get: x = 6/7