Investment analyst interview questions shared by candidates
Explain your understanding of the 2007-08 financial crisis. What were the key factors at play and what do you think could have been done to avoid it?
I talked a bit about how mortgage defaults and ambiguities in the structuring of synthetic CDOs caused concern about the value of collateral used for repo transactions which led to higher haircuts and created a liquidity death spiral... I think he liked that I used the phrase liquidity death spiral. For the second part I kind of copped out and said something about hindsight bias and if the smartest people in the world didn't foresee a systemic meltdown of the financial industry there probably was no way to avoid it.
The case study consisted of an electronics store which was going out of business. The prices various hypothetical customers were willing to pay was given for an item. Competitor's prices were given as well as the cost you paid, the MSRP, and the disposal cost. You were asked to select the best price to set for the sale of the goods. This was then reiterated twice more, once with a different item and once with two items where some customers were only willing to pay for packages with two items.
Between 4 different potential factories, which would you invest in building? (given a sheet of data on each firm's daily output, profit per output unit, variable cost, and fixed cost of building)
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