https://news.efinancialcareers.

com/uk-en/18412/equity-derivatives-interview-
questions-from-goldman-sachs

https://quantnet.com/threads/equity-derivatives-interview-questions-from-goldman-
sachs.5285/

Know a little bit about the Greeks, skew, Black-Scholes etc. Be able to talk about
other equity derivatives such as dividend swaps, volatility/variance swaps... how
they have traded recently, how they are structured, etc.

Here are a few pointers that I gather from my interviews:

1) Have an opinion on what you think the market is going to do. While there isn't
one "right" answer, but you need to be able to support how you came to your
viewpoint. I think in this day and age, you need to be able to explain a bit of a
global viewpoint.

2) Be prepared to articulate why you want to get into equity derivative sales. That
involves being able to answer three questions: a) why S&T?, b) why equity
derivatives?, and c) why sales?

3) Do not attempt to overstate your understanding of derivatives. When asked, how

much do you know about derivatives, I would answer with "Not enough". Then if you
can explain what an option is and what the 6 factors that determine its price are,
decent odds they won't quiz you any more on that. Some people try to get fancy to
displaying their understanding of derivatives without ever covering the basics.

4) Be able to tell them clearly and concisely why they should hire you rather than
the dozen or so smart people who are being interviewed for the same position.

5) Be highly motivated in your interview. Enthusiasm could be the difference

between getting an offer or not.

know what swaps are and that should be fine. which has more volatility, a 5x10
libor cap floor straddle or a 5y5y swaption straddle?

Cross currency swap question:

You are paying JPY on a 10y JPY-NZD cross currency swap (notionals exchanged).

Is the trade positive or negative carry?

Who has greater credit exposure at trade date, you or the counterparty? (assuming
both you and the counterparty have identical credit quality)
Who has greater expected credit exposure at time t=5y?
[
---i believe its a nagative carry. Assuming no variation in FX on both sides (at
T=10), we can cancel out the notional.
You borrow yen, then you swap the YEN for NZD. You pay for the NZD in NZD dollar
rates, and recieve the same yen rate you initailly borrowd at ..right?

If im wrong can you help me visualize or conceptualize it...

i mean i know how carry works, have done it myself on an FX platform...but i know
these days you implement carry through swaps. That kinda slows me down...

---Right idea but you have the currencies around the wrong way - in the swap you
described you're paying NZD.

Also, it's dangerous to think about 'just canceling out the notionals'. It's not
like a single currency swap - here the second notional exchange is off market. This
is where the answer to the last question comes from. (think about interest rate
parity, and how the value of the swap to both parties evolves over time)]

I got fascinated with equity derivs years ago. The ability to not only hedge
against risk using them and/or be able to use them for speculative reasons i.e.
buy/sell them with a relatively small amount of capital. However, the returns using
them can be exponential.

I also like them because you can bet on events such as use straddles if an event is
pending like the results of a lawsuit, earnings release etc. You can control 100
shares of stock with one put/call without investing but a relatively small amount
in the premium of the option.

Don't want to sound redundant, but Barron's is a must-read before interviewing in

equities or something dealing with equity markets. Skim Bloomberg articles. Have a
good macro view as well.

I would research the company. Know why that company in addition to why eq. derivs.
Also, demonstrate a love for the equity markets in general. For me, my interest was
peaked when I started following the stock market back in high school. I bought my
first stock then. Tell your story.

Preparation:
-Read about stock options and the greeks from Naternberg
-Do brainteasers
-Keep up to date with current events using FT
-Prepare a stock pitch (?)
how do you hedge volatility (gamma)?

brainteasers and greeks, they will ask you various forms of "how much would you pay
to play this game". I would also ensure you have an understanding about probability
and risk.

the only technical question i got during superday was:

"you have a bunch of real estate investments in Florida, you wnt to buy insurance
on it in case there is hurricane, how should the insurance be priced?" a.k.a how to
replicate the payoff of the insurance?

the correct answer was: "buy orange juice futures, as FL is one of the largest
orange growing states in US".

then i found out this exact question is in "when genius failed".