Market making questions put you in the trader's seat: quote a bid and an ask on something uncertain, then trade against an interviewer who may know more than you. They test pricing under uncertainty, updating on every trade, and managing the position you end up holding.

1. 1

   Fair value first

   Centre the quote on your best estimate of the expected value, then choose the width. A tight market earns less per trade but trades more often.

2. 2

   Adverse selection

   A counterparty who trades with you may know something you do not. When they keep buying your offer, raise your estimate as well as your price.

3. 3

   Inventory and skew

   After you are lifted you are short, so shift both sides of the quote up to buy back more readily and sell less. Skewing manages risk without widening.

4. 4

   Arbitrage between quotes

   When related prices disagree, such as an ETF and its basket or two bookmakers' odds, a combination of trades locks in a profit with no risk.