Equity Research interview preparation

Questions

100

Traced to a firm

72

Firms

45

Updated

September 2026

Asked at

All firmsMorningstar12Man Group6Balyasny Asset Management5BLBlackRock5FTFranklin Templeton5MSCI5Jefferies4CSCredit Suisse3Fidelity Investments3Moody's3Perella Weinberg Partners3Point723S&P Global3The Vanguard Group3WMWellington Management3Advent International2Apollo Global Management2Bank of America2Carlyle Group2DED.E. Shaw2Houlihan Lokey2HSBC2Piper Sandler2Sequoia Capital2SSState Street2Viking Global Investors2WBWilliam Blair2ACAQR Capital Management1BGBaupost Group1BMBNY Mellon1Centerview Partners1Coatue Management1Goldman Sachs1GSGuggenheim Securities1HWHarris Williams1Insight Partners1Invesco1Mizuho1Moelis & Company1MSMorgan Stanley1PIMCO1SCSchroders1Scotiabank1T. Rowe Price1TSTruist Securities1

Topic

All topicsResearch process9Stock pitch6Company analysis8Investment philosophy5Valuation14Modelling2Portfolio and risk8Macro8Sector knowledge2Accounting8Career and fit12Industry knowledge6Quantitative research1Sector: technology3Sector: consumer1Sector: healthcare1Sector: energy1Sector: financials2Sector: industrials1Case and estimation2

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseFitBrainteaserMarket view

1. 038What is the rule of forty, and what are its weaknesses?Sector: technologyIntermediatetechnicalTechnology coverageGrowth equity

   Say this

   Revenue growth plus profit margin should exceed 40. It says a software company can be forgiven for losing money if it is growing fast, or for growing slowly if it is profitable, but not both.

   Then walk it

   1. The logic is a trade-off: spending on growth suppresses margin, so the combined figure measures whether that spend is productive.
   2. The first weakness is the margin definition. Free cash flow margin, operating margin and EBITDA margin give very different scores for the same company, and firms naturally quote the flattering one.
   3. The second is that it treats a growth point and a margin point as equivalent. They are not: for a long-duration asset, a point of durable growth is worth far more than a point of margin, because it compounds.
   4. The third is that it ignores the quality of the growth. Growth bought through acquisitions, or through discounting that damages net retention, scores the same as organic growth from pricing.
   5. And it says nothing about durability. A company at 60 today that decelerates sharply next year is worth less than a steady 42.
   6. So I would use it as a screen to compare companies quickly, never as a valuation input. The valuation question is always durability, and the rule of forty is silent on it.

   Where candidates lose it

   Quoting the heuristic without a critique. Anyone can state it. Naming the margin-definition problem and the growth-versus-margin asymmetry is what shows you have used it rather than read it.

   Expect next

   • Which margin would you use?
   • Would you rather have 20 percent growth at 20 percent margin, or 40 percent growth at breakeven?
   • How do you assess durability of growth?

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.