When looking for an entry-level job in finance, one of the biggest hurdles to clear is the interview. Finance is a fast-paced, stress-inducing industry, and an interviewer may want to test if you can handle the heat in an interview. Knowing how to respond to the different types of questions in advance can be a huge advantage.

Obvious questions, such as "Where do you see yourself in five years?" and "What's your biggest weakness?" can be a part of just about any interview and have already been covered in-depth in many places.

Instead, this article will focus on some simple tips for answering the tough finance-specific questions that an entry-level candidate can expect to face.

1. Be Prepared to Discuss Current Events in the Markets 

There is a saying, "Don't sweat the small stuff." But in a finance interview, the small stuff is a big deal. Entry-level candidates do not necessarily have a track record of having a true passion for finance. This may seem silly, but interviewers want to know that candidates actually have a devotion to and true interest in the industry. One way of testing this is to ask questions about current financial market conditions, recent big company news, current interest rates, etc.

The best way to be prepared for this is to regularly read financial news from places like The Wall Street Journal and Financial Times, or watch CNBC, Bloomberg, or Cheddar's daily coverage of the markets. An interviewer may ask what financial news you read or watch and ask you to talk about a recent news story that interested you.

Know what's going on in general financial news and specifically any news impacting the area where you are interviewing. Be prepared for questions about the current interest rates on the benchmark treasuries, where the federal funds target rate is and what the Federal Reserve did at their last policy meeting, not to mention the current levels of the major stock market indexes, such as the Dow Jones Industrial Average. 

Also, be prepared for the more theoretical questions that relate to your desired position. If you are interviewing for a job in fixed-income investing, an interviewer can ask you to explain the concepts behind duration. What will inflation do to bond prices and/or stock prices? Make sure that you know the major concepts and models in finance and that you can explain them coherently and intelligently.

2. Find the Answer to Brain Teasers by Simplifying the Terms

Another type of question used by finance interviewers is the brain teaser. These are questions that may catch you off-guard as they often have absolutely nothing to do with finance. However, finance is an extremely analytical profession, and these questions are good tests of analytical ability. There are various questions you could be asked, so don't study answers for brain teasers. Learning how to approach them is the real key.

Let's look at a couple of examples:

An interviewer might say,

"Look at the clock. If the time were 3:15, what would the angle be between the minute hand and the hour hand?"

These types of questions will most likely need to be considered carefully. Take your time, and don't feel that you need to give an answer in one second. The first instinct of many is to say the answer to this would be zero since it seems that both the hour and minute hand would be on the three. This is incorrect. The hour hand moves one-quarter of the way from three to four, as the minute hand moves one-quarter of the way around the clock from 12 to three.

All it takes is a few simple calculations to arrive at the right answer. There are 360 degrees on the face of the clock, and 12 numbers, so there are 30 degrees between any two numbers on the clock. Since the minute hand is on the three, the hour hand has moved 1/4 x 30 degrees away, which is 7.5 degrees.

Another possibility is a challenging math question. An interviewer could ask something like,

"What is 99 squared?"

A question like this may seem like a difficult one, even using a pen and pad to work through. But if you get a question like this, try to put it in simpler terms. Trying to calculate 99 squared in your head is somewhat difficult and might take a while.

However, an easier way to calculate it is to alter the question a bit. 99 x 99 is the same as (100 x 99) – 99. 100 multiplied by 99 is 9,900; take away 99, and you arrive at the answer: 9,801. With this method, 99 squared becomes a question you can do in your head in a few seconds. You can apply a method like this to many math questions. Just think things through, and put the question in simpler terms.

3. For 'Guesstimate' Questions, Focus on the Method

Guesstimates are another style of question that interviewers use to try to unnerve you and test your analytical abilities. These questions are complete oddballs. As with brain teasers, the possibilities for different types of questions are pretty endless, so being able to approach them correctly is the main hurdle.

Let's look at an example:

An interviewer could ask,

"How many refrigerators are in the United States?"

The first key to questions like these is to realize you are not expected to give a correct answer, but instead display the way you analyze situations. And the worst thing you could do is spit back "200 million" immediately as a complete guess since these questions are testing how your mind works.

Start with the fact that there are around 300 million people in the United States. From there, make assumptions about the average size of a family and how many refrigerators an average family might have (maybe 1.5, since some families have more than one).

You may also want to assume the number of people living alone that will likely have just one fridge. Ask if the interviewer includes commercial refrigerators for businesses, and if so, incorporate this into your assumptions.

Use numbers that will be round and easy to calculate. The assumptions will be crude and inaccurate but will demonstrate that you can take many factors into account when performing analysis.

Take your time, write down these assumptions and calculations, and come up with an answer. Remember: the answer is not nearly as important as the method you use to get to the answer. Being able to work through questions like these with a pen and pad while outlining your steps to the interviewer will be impressive and get you one step closer to the job.

The Bottom Line

Some interviewers may try to stress you out during the interview process, but try to go into the discussion calmly and with a clear head. Remember to prepare well, be up to date on financial news, and know the cornerstones of finance. Show off your analytical skills — a rapid-fire response probably will not cut it. Take time to think about your answers, and give the interviewer a chance to observe how you think. Highlighting your analytical skills and ability to think things through can help set you apart in the interview, which will improve your chances of getting the job.