Equity research analyst Interview Questions
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 specialised questions about stocks to ensure that you can predict trends and analyse data to offer reliable recommendations.
Top Equity Research Analyst Interview Questions & How To Answer
Here are three top equity research analyst questions and tips on how to answer them:
Question No. 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 whereas 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 No. 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 No. 3: Pitch me a stock.
How to answer: With your answer, showcase your sales skills. Speak to the interviewer just as 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 up to date with the latest news in stocks.
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
please do a stock pitch2 Answers
I don’t know if you’ll see this but what else were you asked? and when was this interview? Also, was it really technical or more behavioral ? Less
It happened in Oct 2020. Some other questions are pretty basic such as 'tell me something about your work experience','why would you like to work in equity research' . 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