What are the three forms of market efficiency?
Sample Investment Banking Interview Questions
Generally speaking, investment banking interview questions will fall into two categories:
1. Technical Questions: To determine your aptitude and knowledge of finance, accounting, valuation and the investment banking business.
2. Fit Questions: To determine your fit for the job and the firm.
Investment Banking / Corporate Finance / Private Equity
Walk me though the primary methods of valuing a company and the pros and cons of each:
If you could choose between two of the three primary financial statements for valuation purposes, which would you choose?
How would you describe the concept of terminal value to a lay person? How do you calculate a company’s terminal value?
Company A wants to buy Company B for $600 million, the max they think it is worth. However, Company B wants $630 million. Company A could use stock v. cash for the additional $30 million. Under what circumstances might Company A agree to the additional $30 million?
If I gave you $100 a year for 10 years or $900 today which one will you choose?
How did the recent sub-prime crisis result in major write-downs for investment banks?
Consider the following investment:
Cost of investment: $1,000
2 equally likely events: Pays $800 in a weak economy and $1,400 in a strong economy
The risk free rate is 4%.
1) Calculate the expected return of the investment.
2) Calculate the expected return
3) Calculate the implied market risk premium.
Should the bonds below trade at a premium or discount if the yield is 8%?
Bond 1) Pays a 10% coupon
Bond 2) Pays a 5% coupon
- Why investment banking?
- So, what brings you to interview with XYZ Bank?
- What do you know about XYZ Bank? Our culture? What appeals to you about the firm and the culture?
- Why did you choose to interview with us?
- Why are you interested in the industry? Why are you interested in this field of work?
- What do you know about the investment banking industry and why are you interested in a career in this industry?
- Why banking over consulting?
- Why our firm relative to the competition? What differentiates us?
- What do you think an investment banker does during a typical day?
- Why investment banking versus sales and trading? What is the difference?
- In what area of investment banking do you want to work?
- Do you want to work in an industry or product group?
- If you were not offered a position in investment banking, what other jobs would you consider?
- Who have you met from our firm?
- How did you learn about our organization?
- Where do you see yourself in five years?
- How do you see the future of investment banking? What action do you think our industry leaders should take?
- Why did you select your college or business school?
- What’s your major, why did you choose your major?
- At what point in your career did you think an MBA was necessary?
- What courses have you liked most? Least? Why? What was your best and worst subject in school?
- Tell me about yourself.
- Walk me through your resume. Do not simply recite details from your resume. Have a good, concise story prepared that sells why you are a great fit for the job. Emphasize transferable skills form prior jobs and activities.
- Talk about your resume not in terms of what you did, but why.
- What motivates you?
- What are your strengths and weaknesses? Your strengths should sell why you are a great fit for banking. Your weaknesses should not be those that preclude you from being a good banker. Being bad at math or not detail oriented are terrible weaknesses to have.
- Tell us about a failure.
- How would your friends describe you?
- How would your peers describe you? How would a supervisor/manager in a previous job describe you?
- What do you really want in life?
- What is important to you?
- What do you do in your spare time?
- Give an example of how you worked on a team.
- Tell us about a team experience that went poorly and why. Difficult team situation
- Describe a situation in which you were able to build team spirit during a time of low morale.
- What kinds of people do you have trouble getting along with?
- Do you like working with people?
- Would you rather have a job that interacts with people or where you can work alone?
- Give me an example of a time when you had to resolve conflict with a co-worker.