Stock markets around the globe have always been a very crucial part of any economy.
Whether it is the money of corporates or individual investors at stake, many companies earn their bread and butter by working around the stock markets.
Also, it has been one of the largest contributors to the financial world in terms of employment.
Today in this article I’m going to tell you how to sneak your way through to equity research as an intern.
What Is Equity Research?
Let me start by explaining what equity research is.
And honestly it is exactly what it sounds like.
Equity research is a discipline that tracks and analyzes stocks, stock markets, its movements and its participants.
Equity research analysts predict the performance of stocks, companies and even industries, and present their forecasts of stock valuations and company performances.
It is done on both buy side, and sell side firms but the level of depth and analysis might vary.
What Do Equity Research Interns Do?
The tasks of an equity research intern can be divided into three broad categories:
1. Collecting data and information
This is the primary task of any equity research intern, and this is where most of the opportunities lie when it comes to internships.
Firms hire interns to do the primary and secondary data collection on various companies.
The information required is usually available in the financial results reported by the company.
Interns have to collect this data in a synthesized format for further analysis.
2. Analyzing the data
This is the most crucial task of any equity research professional.
The data collected in the first phase has to be analyzed using various tools and techniques.
You need to know the basics of financial modeling to be able to find internship in this profile.
You would either be using an existing model or in some cases you might need to create your own model from scratch.
In either case, it is utmost essential for you to know financial modeling.
For more details on financial modeling, please refer to my earlier article How to learn financial modeling in Excel and Financial Modeling using Excel and VBA.
3. Creating reports and presentations
Usually this is a task that will take least of your time in equity research.
However, it is equally important as the rest of the tasks.
It involves writing reports in either word format or in power point presentation.
In most cases the report is generated automatically using software, but still there are some manual edits and changes that need to be made for the report to get published or sent to the client.
Equity Research Internship Questions
Now that I have given you an outline of what to expect in an internship, let’s get down to business and talk about what to expect in your interview and how to prepare for it.
According to me, the questions that are usually asked in equity research internship interviews can be divided into the following categories:
1. Personal questions
This sect of questions is common across all internship interviews.
There will be questions related to your interests, strengths, goals, ambitions and career path.
But one of the most common and dreaded questions to answer is “Why should we hire you?”.
This is dreaded to answer because of two reasons – one – there is no correct answer for this question.
And two, most of the times your selection and rejection depends on this answer, especially for an internship.
My suggestion here would be highlighting your interest in finance, backed up with knowledge and willingness to learn and prosper.
Try not to make up stories and be as honest as possible.
2. Technical know-how
There will be a lot of questions testing your finance knowledge.
Prepare well, and revise your concepts before the interview.
If you do not know the answers to a few questions, it is not a problem.
You are not expected to know everything at this phase of your career.
But try and direct the interview in the direction of your strength areas.
For example you are not so good at interpreting balance sheets, and the interviewer asks you a question related to that.
You should in this case tell honestly that I do not know how to interpret this, but I know how to interpret P&L accounts.
Well this is just an example, the point here is that if you don’t know the answer to a specific question, tell the interviewer what you know and invite more questions on your forte.
3. Industry awareness
Gone are the days where in people were hired only on the basis of their core functional knowledge.
All companies these days want people who are dynamic and exposed to the outer world.
Industry awareness questions will typically test your knowledge of the companies, macro socio-economic factors, global trends and regulatory policies among other things.
I would suggest that start your preparation of the interview by reading financial & business newspapers at least a month in advance of your interview.
Also, take subscription of weekly and fortnightly business magazines for improving your knowledge.
I recommend you to always read editorials in newspapers and cover stories in magazines.
It will help you in gaining a better understanding of the corporate world and economy as a whole.
4. Hypothetical questions
These are the trickiest questions in any interview.
The interviewer will present a hypothetical situation in front of you and would want to take your opinion or plan of action.
Again, there is no correct answer for such questions, as there will be so many factors determining a solution in a real life situation.
But that is what the interviewer wants to check – your ability to respond to situations.
Please do not be hasty in answering such questions, and think for a minute before you give your answer.
Also, differentiate between facts and opinions.
Your answer is a mere opinion of yours, so do not use extreme words like “must” and “always”.
Try to stay firm and confident but not arrogant. And a smile always helps!
I hope this article gave you clarity on equity research internships and the questions asked in the interviews.
Please write back in case you have any questions.
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