Sales & Trading
Prepalyst has 21 equities interview questions with model answers, covering market impact, liquidity provision, borrow and event flow. Every question is graded on technical accuracy, completeness and interview communication. Practice is free.
Equity and index desks use this to test whether candidates can connect an individual stock move to a benchmark move.
An index has only two stocks: X is 80% of the index and rises 5%; Y is 20% and falls 10%. What is the index return, and why might this differ from the return of an equal-weighted index?
A foundational arithmetic check used before an interviewer moves to hedging or relative-value trades.
You buy 1,000 shares of Company A at $40 and short 1,000 shares of Company B at $60. One week later A is $44 and B is $66. What is the P&L on each leg and on the combined position before fees?
A first-round equities question that checks whether a candidate understands the basic choice a client makes before trading.
A stock is quoted at $49.90 bid and $50.10 offer. Explain the difference between a market order and a limit order. Which would you use to buy 5,000 shares now, and which would you use if you refuse to pay more than…
A practical execution calculation for an equities-sales-and-trading first round.
A client asks you to sell 30,000 shares versus VWAP. You execute 10,000 at $24.80, 12,000 at $24.70 and 8,000 at $24.60. The market VWAP is $24.68. What is your execution VWAP and did you outperform for a seller?
An accessible corporate-action question that tests whether a candidate separates a price change from a change in value.
A company trading at $120 per share announces a 3-for-1 stock split. Explain what happens to a shareholder with 50 shares, the share price, and the company's market capitalisation immediately after the split.
An equity-operations fundamental used to test whether a candidate understands that execution and settlement are separate events.
You sell 10,000 shares on Monday but your custodian cannot deliver the shares on settlement date. What has happened, what are the likely consequences, and what would you do first?
A relative-value case used to test whether a candidate can separate a stock view from unintended market exposure.
You are bullish on Retailer A and bearish on Retailer B. A has a beta of 1.2 and B has a beta of 0.8. If you buy $12m of A, how much of B should you short to make the trade approximately beta-neutral? What risks remain?
Common in execution services, and in any conversation about market structure.
A client needs to sell 2 million shares of a stock that trades 500,000 shares a day. Walk me through how you'd approach the execution and the trade-offs involved.
Central to any market-making interview at a prop firm or bank.
You're making a market in a stock. What determines the width of your bid-ask spread? A large institutional client asks for a two-way price in size. How does that change your quote?
You will be asked this in every trading interview. Have three ready.
Pitch me a trade. Include your thesis, the specific expression, sizing, catalysts, risks, and what would make you exit.
A desk case that tests how a candidate turns client flow into inventory, liquidity and hedging decisions.
A client wants to sell 2 million shares of a liquid $50 stock. Average daily volume is 10 million shares, and the stock is currently $49.95 / $50.05. What would you assess before quoting a block price, and how would you…
Asked in equity trading, prime brokerage and long/short fund interviews.
Walk me through the mechanics of a short sale. Why is shorting structurally harder than going long, and what is a short squeeze?
An international-equities case that tests whether a candidate can reconcile equivalent listings before calling a price discrepancy an arbitrage.
One ADR represents two ordinary shares. The ordinary shares trade at €30 each, EUR/USD is 1.10, and the ADR trades at $63.00. Is the ADR rich or cheap on a simple parity basis? What must you check before trading the…
A standard equities-sales-and-trading follow-up after a candidate says a company beat consensus.
A company reports quarterly EPS of $1.05 versus published consensus of $1.00, yet its stock falls 8% after the release. Give a structured explanation and say what you would check before trading it.
Event-driven and multi-strategy fund interviews.
Company A agrees to acquire Company B for $50/share in cash. B trades at $47. The deal is expected to close in 6 months. Construct the trade, calculate the return, and explain what determines whether you'd put it on.
An equities-trading case that separates a fundamental short thesis from the securities-finance and execution constraints needed to express it.
A portfolio manager wants to short $20m of a $40 stock ahead of earnings. The stock trades 3m shares per day, reported short interest is 25% of float, and securities finance quotes a 12% annual borrow fee with only…
An offer-ready equities-volatility case that tests event-risk arithmetic, distribution thinking and disciplined trade selection.
A $100 stock reports earnings tomorrow. The at-the-money straddle costs $8, implying an approximately 8% move, while the stock's last eight earnings moves were 3%, 4%, 5%, 6%, 7%, 9%, 12% and 15%. Would you buy or sell…
Asked at market makers and any desk touching ETF flow.
How does an ETF stay close to its net asset value? What happens when it doesn't?
A market-structure case for an equities trader responsible for risk when displayed liquidity vanishes during a fast market.
You are long 300,000 shares of a $30 stock after a client block. Mid-session, news hits and the stock falls 9% in seconds, triggering a volatility halt. Before the reopening auction, the indicative price is $26.40 with a…
A live-desk judgement case for candidates expected to reason about closing liquidity, client constraints and adverse selection.
At 3:55pm, a client must sell 500,000 shares at the close. The stock normally trades 2 million shares per day, but the auction imbalance is already 900,000 shares to sell and the indicative match price is 1.8% below the…
An offer-ready market-structure case for desks that execute index flow and closing-auction risk.
A stock is being added to a major market-cap-weighted index at the close. Passive funds tracking the index must buy an estimated 8% of average daily volume. How would you expect the stock and its liquidity to behave, and…
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Firm names indicate where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with the firms named.