Equity research analyst Interview Questions in United States
Equity research analysts offer information and analysis to clients to help them make decisions about investments. In an equity research analyst interview, employers might ask specialized questions about stocks to ensure you can predict trends and analyze data to offer reliable recommendations.
Top Equity Research Analyst Interview Questions & How To Answer
Here are three top equity research analyst questions and how to answer them:
Question #1: What is the difference between enterprise value and equity value?
How to answer: This question tests your understanding of a basic investment concept. Explain that enterprise value captures a stock's current value to shareholders, while equity value is the market value and net debt. An ideal answer might also explain how these two values are found and how they could help you and your clients make decisions.
Question #2: Describe an equity research report.
How to answer: Equity research reports are a commonly used tool. Aim to show the interviewer that you are skilled in creating these reports. Explain that this is a report delivered to a client where you recommend that they buy, hold, or sell a stock and justify each recommendation. Detail all of the information included in the report, including the industry overview, company financials and ratio, valuations and projections, management overview, and finally, the recommendation.
Question #3: Pitch me a stock.
How to answer: With your answer, showcase your sales skills. Speak to the interviewer the way you would speak to a client. Choose a company, and reference the information you would include on an equity research report. Prove that you stay updated on the latest news in stocks.
100 pennies in a jar. 1 penny has 'heads' on both sides. You pick a penny out of the jar and give it to your friend (without looking at the penny). Your friend flips the penny in the air and gets 7 heads in a row. Which penny do you have? Why?3 Answers
Chance of 1 Heads = .5 Chance of 7 heads in a row = (.5)^7 to do this in your head think of fractions... (1/2)^7 = (1/2*1/2=1/4, * 1/2=1/8, * 1/2 = 1/16....if you do it seven times you get 1/128. so you have a better chance to pick out the penny with two heads (1/100) than to get 7 heads in a row (1/128) Less
99 times out of 100 you take the normal penny. prob that normal penny give 7 heads in a row is 1/128. so, prob that he has special penny is 1/100 / (1/100 + 0.99*1/128) = 56.2% Less
~56.4% that you have the 2-headed penny.
Pitch a stock with your following rationale3 Answers
If margins remain the same, earnings should come in closer to last year's .26 vs estimates of .20. Less
NSSC is the little stock that should and will at some point. It has produced a double digit earnings surprise in each of the last 4 quarters. It will in the coming quarter as well, as management assures that they will produce flat revenues for the coming quarter of Less
NSSC is the little stock that should and will at some point. It has produced a double digit earnings surprise in each of the last 4 quarters. It will in the xoming quarter Less
You have a fair penny. It takes a dollar to play and to win, you must flip 4 heads in a row for 10 dollars. Should you play?3 Answers
Expected Payoff: ((1/2)^4)*10 = 0.625 Cost = 1 ==> No
I will consider 2 cases. First case: we pay a buck to flip the coin 4 times and if we don't get 4 heads, we again pay a dollar to flip the coin 4 times and the results of the first round do not count (i.e getting THHH for the first round and HTTT for the second won't do).So here we pay 1 dollar for 4 flips. In this case we would expect HHHH to happen once in 16 rounds (since the probability of having HHHH is 1/16). Then expected value of this game = -16 (the cost of playing 16 rounds) + 10 = -6. Hence, we shouldn't play. Second case: we pay a dollar to flip the coin 4 times and if we do not get 4 heads we pay another buck for ONE more flip until we get 4 heads in a row. Let us work out the expected number of flips to get 4 heads in a row. Let Ei = expected number of flips to get i heads in a row. Then E4 = 0.5 * E3 + 0.5 * E4 + 1 (since if we get a head then the problem is reduced to finding the expected number of flips to get 3 heads in a row (ie E3), if we get a tail, then we start from scratch (ie E4)). Similarly, E3 = 0.5 * E2 + 0.5 * E4 + 1; E2 = 0.5 * E1 + 0.5 * E4 + 1; E1 = 0.5 * E0 + 0.5 * E4 + 1; E0 = 0 since the expected number of flips required to get 0 heads is simply zero. Solving these equations, we get that E4 = 30, ie we expect to flip the coin 30 times until we get 4 heads in a row. Remember that the first 4 flips cost us a dollar and EACH subsequent flip is an extra dollar. So the cost of this game would be 1 + 26 = 27. So the epected value of this game = - 27 + 10 = - 17. Therefore, we shouldn't play this game. Less
EV is -3/8
Tell me about yourself? What is share market? Do you have any idea about investment?and after that they will ask some very easy mathematical questions. And then they will ask you for joining..2 Answers
A stock market, equity market or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms. Investment in the stock market is most often done via stockbrokerages and electronic trading platforms. Investment is usually made with an investment strategy in mind. Less
Investment is the action or process of investing money for profit. Investment can be defined as an asset, which is purchased with the expectation that it will create income, or value will increase in the future. Gain from the investment gives a better life. Less
If you have 8 marbles and one is lighter than the rest, using a scale how would you figure out which one it is in two steps?2 Answers
Step 1: Select any 6 marbles. Place 3 marbles on each side of the scale. If one side goes up, go to Step 3. If they balance go to Step 2. Step 2: Place the two remaining marbles on the scale. The marble that goes up is the light marble. vStep 3: Using the 3 marbles that went up in Step 1, select any 2 marbles. Place one marble on each side. If one side goes up, that is the light marble. If they balance the other marble is the light marble Less
pick 6 at random and measure 3x3. If both groups eqaul, then lighter marble is one of the two remaining. Measure those to get your lightest. If 3x3 are unequal, take the lighter group, withdraw one at random, and measure the remaining two. If they equal, then the wothdrawn one is the lightest, if not, the lighter one will be on the scale Less