Guesstimates
BRAINTEASERS AND GUESSTIMATES
Vault Guide to Finance Interviews Brainteasers and Guesstimates
Stress Tests
Perhaps even more so than tough finance questions, brainteasers and guesstimates can unnerve the most icy-veined, well-prepared finance candidate. Even if you know the relationships between inflation, bond prices and interest rates like the back of a dollar bill, all your studying may not help you when your interviewer asks you how many ping pong balls fit in a 747. That is partly their purpose. Investment bankers and other finance professionals need to be able to work well under pressure, so many interviewers believe that throwing a brainteaser or guesstimate at a candidate is a good way to test an applicant’s battle-worthiness. But these questions serve another purpose, too – interviewers want you to showcase your ability to analyze a situation, and to form conclusions about this situation. It is not necessarily important that you come up with a correct answer, just that you display strong analytical ability
Acing Guesstimates
We’ll start by discussing guesstimates, for which candidates are asked to come up with a figure, usually the size of a market or the number of objects in an area. Although guesstimates are more commonly given in interviews for consulting positions, they do pop up in finance interviews as well. Practicing guesstimates is a good way to begin preparing for stress questions in finance interviews, as they force candidates to think aloud – precisely what interviewers want to see. The most important thing to remember about brainteasers, guesstimates, or even simple math questions that are designed to be stressful is to let your interviewer see how your mind works. The best approach for a guesstimate question is to think of a funnel. You begin by thinking broadly, then slowly narrowing down the situation towards the answer. Let’s look at this approach in context. Let’s go back to the question of how many ping pong balls fit in a
Vault Guide to Finance Interviews Brainteasers and Guesstimates
Stress Tests
Perhaps even more so than tough finance questions, brainteasers and guesstimates can unnerve the most icy-veined, well-prepared finance candidate. Even if you know the relationships between inflation, bond prices and interest rates like the back of a dollar bill, all your studying may not help you when your interviewer asks you how many ping pong balls fit in a 747. That is partly their purpose. Investment bankers and other finance professionals need to be able to work well under pressure, so many interviewers believe that throwing a brainteaser or guesstimate at a candidate is a good way to test an applicant’s battle-worthiness. But these questions serve another purpose, too – interviewers want you to showcase your ability to analyze a situation, and to form conclusions about this situation. It is not necessarily important that you come up with a correct answer, just that you display strong analytical ability
Acing Guesstimates
We’ll start by discussing guesstimates, for which candidates are asked to come up with a figure, usually the size of a market or the number of objects in an area. Although guesstimates are more commonly given in interviews for consulting positions, they do pop up in finance interviews as well. Practicing guesstimates is a good way to begin preparing for stress questions in finance interviews, as they force candidates to think aloud – precisely what interviewers want to see. The most important thing to remember about brainteasers, guesstimates, or even simple math questions that are designed to be stressful is to let your interviewer see how your mind works. The best approach for a guesstimate question is to think of a funnel. You begin by thinking broadly, then slowly narrowing down the situation towards the answer. Let’s look at this approach in context. Let’s go back to the question of how many ping pong balls fit in a