equity research Interview questions in London

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Scotiabank
Equity Research Associate was asked...19 August 2020

Pitch a stock with your following rationale

3 Answers

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

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 xoming quarter Less

Susquehanna International Group (SIG)

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

Reval Analytics

Relation of cement sector companies profitability with the fall of INR.

2 Answers

Import of coal ...fuel...cost more.

depends on exim policy as well

Evalueserve

Questions related to ratio analysis. Financial statements.

2 Answers

what kind of interview will be there with client?

Hi can you tell the what questions for the tests were?

Credit Suisse

please do a stock pitch

2 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

Susquehanna International Group (SIG)

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

Susquehanna International Group (SIG)

Four kids in a room of different height. What are the chances they will be in equal order?

2 Answers

There's one way of ordering the people in ascending height. And there's a total of 4! ways of ordering the people. So 1/4! = 1/24. Less

They could be in decreasing order

UBS

How would you invest $10 million today?

2 Answers

It depends with your level of risk vs payoff

buy oil

Baird

what valuation strategy would you use for companies in early-stage development of pharmaceuticals?

2 Answers

one of few technical questions - most were "why do you want to be an analyst", "what would make you a good analyst", etc Less

Residual Income valuation?

HDFC Securities

they ask have you completed your NCFM capital and derivative exam

2 Answers

yes

Yes

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