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YOUR KILLER EQUITIES INTERVIEW QUESTIONS: There are 10 seconds to go in a basketball game, you trail by 2 points, what do you do?

Here’s the latest question sent in by site visitors who have attended equities interviews at investment banks. This was allegedly asked in an equities index arbitrage trading interview at Credit Suisse. If you disagree with the answer at any point, please express your opinion in the comments box below.

THE QUESTION: There are 10 seconds to go in a basketball game, you trail by 2 points, what do you do?

THE ANSWER

The answer to this question depends on your basketball abilities. Personally. I’m pretty good at basketball, so I fancied my chances. I said I’d make some space and shoot for the 3 points.

However, the interviewer said I should go to the basket, make my two points and take the game into overtime.

This way I’d extend the life of the game (option) and can then win in over time (i.e. you increase your chances of the option being in the money). He was trying to relay the message of the time value of money in optionality basically, but my argument was from a more practical perspective, i.e. you could still lose in overtime so why not go for broke?

In hindsight, he was obviously looking for some sense of sound risk management strategy, i.e. assigning probabilities to the outcomes, my chances of making 2 points are 1/2, my chances of making the 3 are 1/3, my chances of winning in overtime are… whatever, but I got a little caught up in the basketball part :-)).

Although I think if he had of phrased the question differently, it could have been an excellent question, for example: ‘If a basketball game is the equivalent to a binary option, with a payout if you win and nothing if you lose and there is 10 seconds to go in a game, in which you trail by 2 points, what do you do?’

Comments (9)

Comments
  1. personally i would have had a shower and got drunk

  2. I like this question: it’s so open ended. So assume you have a 75% chance of a 2, and 50% chance of a 3, and a 50% chance of winning in overtime. So the answer is obvious. But mess with those numbers a bit and you get a different answer.

    Wildcard 1: it’s 10 seconds, so when you make your basket the other team will likely get another shot, even a timeout/tip-in opportunity.

    WIldcard 2: you could get a rebound. So if you miss your 3, what’s the chance you will recover for a 2?

    Wildcard 3: you’re assuming that you’re playing simply to win the game. But players know that the risk to your reputation of either being a hero or the goat might not be symmetrical.

  3. Personally I would have told him, that as a quintessential English gentleman, I do not play such barbaric colonial games.

  4. You gotta love the comments posted.. Professionals @ work alright!

  5. Take any remaining time out..go back to the drawing board..get the point guards intot he opponent’s two point zone and get those two points to go into an overtime..Just do it!

  6. i’d bounce it at the referees head then drive home with the ladeez

  7. too Easy!! wish i got that question.

    drive to the hoop, double pump, draw the foul, behind the back shot of the backboard for an easy 2.

    In the money option. step up to the free throw line. All of nothing shot and for the game. More like the money shot. bounce the ball twice. Close your eyes and do a michael jordan free throw. even if you miss. You still have all to play for in OT.

  8. Boy plunger.. i agree would have loved that question.
    To your narrative i would add: when taking the easy two point shot, select the profile the player from whom you are trying to draw the foul. Like no player with already five or four fouls because they’ve probably been playing watching their hands, but rather a guy that just came out from the bench with 200% energy and thought he could win the game playing some tuff defense in the money time.

  9. ridiculous question by a mediocre, self-absorbed interiewer. What does it prove? You need people whom can relate to clients in the real world and are capable of mastering a specialised area, not geeky dreamers with witty responses to moribund scenarios. Why not ask how many blades of grass there are on Twickenham or how many piano tuners there are in London. About as useful in the scheme of things. Mere HR puffery.

    keep it real plebs Reply
     

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