Puzzles Finance Interviews

Brainteasers and puzzles are a common feature in finance interviews, particularly for roles in quantitative finance, trading, investment banking, and consulting. While seemingly unrelated to finance, they serve a purpose: assessing your problem-solving skills, logical reasoning, and ability to think under pressure.

Why Puzzles?

Financial institutions value candidates who can quickly analyze complex situations, identify patterns, and arrive at logical conclusions. Puzzles, often without readily available solutions, force you to break down problems into smaller, manageable parts. Interviewers are less interested in the "right" answer and more focused on your approach. They want to see how you structure your thoughts, handle ambiguity, and communicate your reasoning clearly. Do you ask clarifying questions? Do you explore different angles? Can you articulate your assumptions and the rationale behind your steps?

Common Puzzle Types:

• Logic Puzzles: These involve deductive reasoning, often presented as scenarios with specific rules. Examples include the classic "weighing balls" problem or river crossing scenarios.
• Probability Puzzles: These require understanding of probability theory and statistics. You might be asked about the probability of certain events occurring or expected values in games of chance.
• Estimation Puzzles (Fermi Problems): These challenge you to estimate a quantity for which precise data is unavailable. Examples include estimating the number of piano tuners in a city or the total weight of all cars in the US.
• Market Sizing Puzzles: Similar to estimation, these require you to estimate the size of a particular market, for example, the annual revenue of a specific product.

How to Approach Puzzles:

1. Listen Carefully: Ensure you fully understand the puzzle and its constraints. Don't be afraid to ask clarifying questions.
2. State Assumptions: Clearly articulate any assumptions you are making. This demonstrates awareness and helps narrow down the problem.
3. Break It Down: Decompose the problem into smaller, more manageable steps. This makes it easier to analyze and reduces the risk of getting overwhelmed.
4. Think Out Loud: Verbalize your thought process. Explain your reasoning and how you are approaching the problem. This allows the interviewer to understand your logic.
5. Be Comfortable with Uncertainty: Not all puzzles have definitive answers. It's okay to say "I'm not sure, but here's my thought process..." Demonstrate your ability to think logically even without a perfect solution.
6. Practice: Familiarize yourself with common puzzle types. There are numerous resources available online and in books.

Beyond the Puzzle:

Remember that puzzles are just one part of the interview process. They are meant to complement, not replace, your financial knowledge and experience. Be prepared to discuss your understanding of financial markets, valuation techniques, and relevant industry trends. Strong technical skills, coupled with the ability to think critically and solve problems effectively, will make you a strong candidate.