Having gone through similar experiences as an fellow undergrad @ waterloo ('14), I wish I had read this back when I was in first year.
"During your interview, your interviewer is likely to be testing the limits of your ability, and not just whether you meet a certain bar. Naturally, they will pick a problem that they think they know better than you do. If they stump you, or point your mistakes, the way you react is likely more important than the fact that you made a mistake. "
I couldn't have said it better.