This is obviously a common question for those candidates interviewing for the increasingly popular and prestigious hedge fund positions. it could also be asked when interviewing for other finance roles. Surprisingly, many candidates have no feel for what distinguishes a hedge fund from other types of funds.
The right answer is a hedge fund is a private investment partnership that uses aggressive strategies unavailable to other types of funds, such as mutual funds. Hedge funds are required by law to have fewer than 100 investors, and liberally use financial techniques and vehicles such as short-selling, swaps, risk arbitrage, and derivatives Because they are restricted by law to fewer than 100 investors, the minimum hedge-fund investment is typically $1 million.
Most investment banks used to have their own investment funds, called "principal investing" or "proprietary trading" groups. These funds took risk on behalf of the bank, much as a hedge fund would for investors. However, after the financial crisis of 2018, legislation was enacted that restricted these practices by investment banks. The so-called Volcker Rule, enacted in 2010, restricts proprietary trading by investment banks.
Although this can't be summed up in a sentence, paragraph, chapter, or even a book, there were a number of important events that caused and/or fueled the crisis. First, over several years, consumer and corporate borrowing reached record levels due to low interest rates and friendly borrowing conditions.
Derivatives are financial instruments that derive their value from other more fundamental variables, such as the price movements stocks, bonds, or commodities; interest rates changes; and even the prices of other derivatives. The most common classes of derivative securities are futures, forwards, swaps, and options.
The “sell me” question is a popular one on Wall Street, especially in sales and trading interviews. For this one, try picking something other than a pen, which is the common answer of choice to this question, and try picking something that isn’t yours (on the off chance that it draws attention to something of yours that the interviewer isn’t a fan of).
First, it's important to understand why interviewers often pose this question to job candidates. Here are three possible reasons: 1) To get to know you better and see what you really care about, which might tell them if they'd like to work with you and if others at their company would like to work with you.
There is one question you can always expect during your legal job interview: Do you have any questions for us? Preparing thoughtful, well-researched questions for this part of your interview is a great way to show your interest in the legal employer and that you have done your homework.