Why is the "volatility smile" observed in the market?

The interviewer wants to hear your thought process.

Quant interviews aren't just about knowing the right answer; they are about demonstrating how you think under pressure. To help you prepare, we’ve compiled the 150 most frequently asked questions, categorized by the core pillars of quantitative finance. 1. Probability and Combinatorics (The Foundation)

Most people fail on simple probability, not complex ML.

You have two ropes that burn in 60 minutes but at inconsistent rates. How do you measure 45 minutes?

You flip a coin until you get two heads in a row. What is the expected number of flips?

Define it and explain how it affects model selection.

Probability is the "bread and butter" of quant trading. Expect questions that test your ability to calculate odds on the fly.

Given a positive test result for a rare disease, what is the actual probability the patient has it?