Here is the answer to the most difficult interview question I ever came across
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This is the hardest investment banking interview question I’ve come across in my career.
Luckily it wasn’t aimed at me.
I once overheard my boss at Goldman's laughing,
Almost gloating on how he had just put an applicant on the spot.
He asked the interviewee (LSE studying economics)
“What was the growth of the Asian economy in the mid 1800s?”
That is brutal! 😬
It would be very easy to panic - as the applicant did.
But remember interviewers are not after the final accuracy of the answer.
It's all about how you work it out.
Economic growth can be broken down into:
➕ Growth in capital
➕ Growth in labour
➕ Growth in productivity
If you can make assumptions such as:
This period was around the time of industrial revolution and so it’s safe to assume a 3-5% growth in productivity.
Another 4-5% growth in labour given families were much larger back then.
Asian economy was a powerhouse - so capital growth of 3 to 5% should be acceptable.
Total growth of c.10-12%.
The actual answer is much higher when I checked.
But the interviewer is focusing on how you put together the analytical building blocks.
Difficult questions like this are common in investment banking interviews.
Stay calm, and remember to focus on your analytical reasoning.