What is the Sharpe ratio and what are its limitations?
CoreMEDIUMStatistical ArbitrageTECHNICAL
How would you implement a simple pairs trading strategy? Walk me through the steps.
Common Questions
Frequently asked in interviews
CommonHARDInformation Theory / Logic PuzzleBRAINTEASER
You have 12 balls, one is heavier or lighter. You have a balance scale and 3 weighings. Find the odd ball and determine if it is heavier or lighter.
CommonHARDGame Theory - Symmetry StrategyBRAINTEASER
Two people play a game. They alternate placing pennies on a circular table. The person who cannot place a penny (table is full) loses. The first player has a winning strategy. What is it?
You have a jar with 10 red balls and 10 blue balls. You draw balls one at a time without replacement. What is the expected number of draws until you get a red ball?
CommonMEDIUMMonte Carlo MethodsTECHNICAL
How would you estimate the value of pi using a Monte Carlo simulation?
CommonHARDStochastic Processes in FinanceTECHNICAL
What is a martingale and how does it relate to financial markets?
Three friends share a hotel room that costs $30. They each pay $10. The manager realizes it should be $25, gives $5 to the bellboy to return. The bellboy keeps $2 and returns $1 each. Each person paid $9 (total $27). The bellboy has $2. That is $29. Where is the missing dollar?
CommonHARDCoupon Collector ProblemBRAINTEASER
What is the expected number of rolls of a fair die to see all six faces?
CommonHARDProbability and Harmonic NumbersBRAINTEASER
You have 100 noodles in a bowl. You randomly pick two ends and tie them together. You repeat until no free ends remain. How many loops do you expect?
CommonHARDMarket MicrostructureTECHNICAL
Explain market microstructure and why it matters for trading.
CommonMEDIUMConditional ProbabilityBRAINTEASER
What is the Monty Hall problem and what is the correct strategy?
CommonHARDRandom Walk / Gambler's RuinBRAINTEASER
What is the Gambler's Ruin problem? If you start with $10 and your opponent has $20, and you play a fair game where each round you win or lose $1, what is the probability you go bankrupt?
CommonMEDIUMMultiplicative vs Additive ReturnsBRAINTEASER
A stock is trading at $100. It can go up 10% or down 10% each day. What is the expected value after 2 days? What about the expected stock price?
CommonMEDIUMStatistical Foundations for TradingTECHNICAL
What is the law of large numbers and how does it apply to trading?
CommonHARDStochastic ProcessesTECHNICAL
Explain what a Poisson process is and give a finance example.
CommonHARDTwo Envelope ParadoxBRAINTEASER
You have two envelopes. One contains twice the money of the other. You pick one and see $100. Should you switch?
CommonMEDIUMTime Series AnalysisTECHNICAL
Explain the concept of stationarity in time series. Why does it matter for trading strategies?
CommonHARDOptimal Position SizingTECHNICAL
What is the Kelly criterion and how is it used in trading?
CommonMEDIUMStatistical EstimationTECHNICAL
What is maximum likelihood estimation? How would you estimate the parameters of a normal distribution?
CommonMEDIUMMachine Learning for Quant FinanceTECHNICAL
What is the difference between L1 and L2 regularization? When would you use each in a quantitative model?
CommonMEDIUMStochastic ProcessesTECHNICAL
Explain what a Markov chain is and give an example relevant to finance.
CommonMEDIUMGeometric Series / Sequential ProbabilityBRAINTEASER
You and a friend each flip a coin until one of you gets heads. The first to get heads wins. You go first. What is the probability you win?
CommonMEDIUMAlgorithmsTECHNICAL
You are given an array of integers. Find the contiguous subarray with the maximum sum. What is the time complexity?
CommonMEDIUMTime Series AnalysisTECHNICAL
Explain the concept of autocorrelation in time series data. Why does it matter for trading?
CommonMEDIUMStatistical EstimationTECHNICAL
You have an unfair coin with unknown bias p. How would you estimate p and construct a confidence interval?
CommonMEDIUMLogic PuzzleBRAINTEASER
There are 3 boxes: one has 2 gold coins, one has 2 silver coins, one has 1 gold and 1 silver. Labels are all wrong. You can draw one coin from one box. How do you determine the contents of all boxes?
CommonMEDIUMMachine LearningTECHNICAL
Explain what regularization is and why it helps prevent overfitting in machine learning models.
CommonMEDIUMStochastic ProcessesTECHNICAL
What is the difference between a random walk and a mean-reverting process? How would you test for each?
CommonHARDGeometric ProbabilityBRAINTEASER
A stick is broken at two uniformly random points. What is the probability the three pieces form a triangle?
CommonMEDIUMConditional ProbabilityBRAINTEASER
You are playing Russian roulette with a 6-chamber revolver. Two bullets are loaded in adjacent chambers. You spin, pull the trigger, and survive. Should you spin again or pull the trigger?
CommonEASYModel ValidationTECHNICAL
What is cross-validation and why is it important in quantitative modeling?
CommonEASYStatisticsTECHNICAL
What is the difference between a parametric and non-parametric statistical test? Give examples of each.
CommonHARDMarket MakingTECHNICAL
How would you design a market-making strategy for a liquid equity?
CommonMEDIUMProbabilityBRAINTEASER
What is the expected number of people you need to ask to find two with the same birthday?
CommonHARDFactor InvestingTECHNICAL
How would you go about building a factor model for equity returns?
CommonMEDIUMComputational MethodsTECHNICAL
What are Monte Carlo methods and how are they used in quantitative finance?
Occasional Questions
Asked for specific roles or levels
OccasionalHARDOptimal Stopping TheoryBRAINTEASER
You are playing a game where you draw cards from a standard deck. You win $1 for every red card and lose $1 for every black card. You can stop at any time. What is the optimal strategy and expected value?
OccasionalMEDIUMPigeonhole PrincipleBRAINTEASER
There are 100 people in a room. What is the minimum number of handshakes needed so that at least two people have shaken the same number of hands?
You have a deck of 52 cards. You flip cards one at a time. You can stop at any point and bet that the next card is red. What is the optimal strategy?
OccasionalMEDIUMData Cleaning for Quant StrategiesTECHNICAL
How would you detect and handle outliers in financial time series data?
OccasionalHARDLogic PuzzleBRAINTEASER
A king tells 100 prisoners they will each be placed in a room with a light switch. They can communicate a plan beforehand but not after. The king will call prisoners randomly (with repeats). A prisoner can at any time claim all 100 have been called. If correct, they go free. If wrong, they all die. What is the strategy?
OccasionalHARDProbabilistic ModelsTECHNICAL
Explain what a Hidden Markov Model is and how it could be applied to trading.
OccasionalHARDSignal ProcessingTECHNICAL
Explain what a Kalman filter is and give an application in trading.
OccasionalMEDIUMMathematical FinanceTECHNICAL
What is Jensen's inequality and can you give an example relevant to finance?