Good Steps to successful Life: June 2010

Tuesday, June 1, 2010

Investment Banking Interview Questions

There are four interview questions that every candidate planning to attend Investment Banking interviews should prepare for. You will almost certainly be asked each one, for more or less every interview you attend, so it is well worth taking some time to familiarise yourself with possible question variations and of course, model answers.

The four most common investment banking interview questions are:

· Tell me about yourself (or, your talk through your CV).

· Why do you want to be an investment banker? (or, Why have you chosen investment banking as a career?)

· Why do you want to work for our bank in particular?

· How do you value a company?

Other Investment Banking Interview Questions

Below is a list of questions that have been asked at investment banking interviews.

Career Questions

[Edit]

· What other firms are you interviewing with and why?

· Are you interviewing with management consulting firms too?

· What career opportunities are you exploring other than investment banking?

· What are the most important qualities for a career in investment banking?

· What do you understand the responsibilities of an analyst to be?

· Describe a current event in the market?

· What is your most challenging professional experience?

· What would you do if you were giving a presentation to a client and suddenly noticed a mistake in some of the calculations, which you had prepared?

Education Questions

[Edit]

· What were your grades each year at university?

· Why did you choose your university?

· Why did you selected this course

  Eg: Why you have selected BBM (E- Banking & Finance) why not Simple B.Com

General Questions

[Edit]

· What are your greatest strengths?

· What are your weaknesses?

· Where do you see yourself in five years/ten years?

· What are your proudest accomplishments?

· Who or what is your greatest influence?

Competency Questions

[Edit]

· Are you a leader or a follower? Give examples.

· Describe an ethical decision you had to make?

· Describe a time you failed, why did you fail, what did you learn?

Finance Questions

[Edit]

· Why would two companies merge?

· What major factors drive mergers and acquisitions?

· What are some common anti-takeover tactics?

· Why might a company choose to issue debt vs. equity?

· What could a company do with excess cash on the balance sheet?

· How would you calculate a firm's WACC? What would you use it for?

· How do you calculate the firm value for the following firm?

· What would greater impact a firms valuation, a 10% reduction in revenues or 1% reduction in discount rate?

· What major factors affect the yield on a corporate bond?

· Walk me through the major line items of a Cash Flow Statement.

· Say you knew a company's net income. How would you figure out its cash flows?

· What is the difference between the balance sheet and the income statement?

· What is goodwill? How does it affect net income?

· What is the difference between Purchase and Pooling accounting? Under what circumstances would you use one or the other?

· What are deferred taxes? How do they arise?

· What is working capital? How would you calculate it?

Industry Questions

[Edit]

· What was our firm's share price yesterday?

· What is the FTSE at today?

· Which way is the market going? Bond, equity and foreign exchange?

· Where do you think interest rates will be in the next 12 months?

· What has happened in the markets in the past three months?

· What were the headlines in the Financial Times today?

· What do personally invest in?

· What industry do you follow and what numbers do you look at to determine if a firm is doing well in the industry.

Investment Banking Questions

[Edit]

· Why have you chosen to work in investment banking rather thanmanagement consulting?

· How does your past career qualify you for a position in investment banking?

· What department do you want to work for inside investment banking and why?

· Who is in the bulge bracket?

· If you were the CEO of our firm, what major changes would you implement?

· Describe a typical day of an investment banking analyst?

· What is your greatest concern about investment banking right now?

To discuss investment banking or investment banking interview questions in further detail, visit the WikiJob forums.

· Investment Banking Interview Questions Company Valuations

· Investment Banking Interview Questions Example Case Study Questions

· Investment Banking Interview Questions Tell Me About Yourself

· Investment Banking Interview Questions Why Investment Banking?

· Investment Banking Interview Questions Why Work For Us?

Investment Banking Interview: Questions, Answers, Guide & Tips

Investment banking is one of the most challenging professions today. Since it is a financial position, the questions are more critical and pointed as compared to the questions in other professions.
This is simply because an investment banker looks after the investments and financial futures of individuals, families and businesses.

This article brings questions and answers for investment banking interview with tips.
The article consists of -
1. General questions.
2. Entry level investment banking.
3. Professional investment banker.

Investment Banking Interviews – General Questions

There will be typical interview questions about your education and your qualification.

The interviewer may actually ask the grades at the business/finance school, MBA business administration, finance, accounting or analyst.
It is at these times that the name and reputation of the academic institutes that you attended are important.

Make sure that you answer all the questions factually and truly. Any slip up in this department will only leave an indelible mark on your credibility and may have you lose the interview even before you actually begin answering questions that are in line with your qualifications and the job that you have applied for.

Entry level investment banking jobs: interview questions, tips & answers

Here is a brief guide for the generally asked questions to entry level jobs during an investment banking interview:

Why do you want to become an Investment Banker? Why this career?
This question is one of the common questions asked to a person who show their willingness to join a profession that is one of the most lucrative jobs in the world today. There may be many reasons, like one being interested in the job only for the money that it offers. These individuals may not be actually interested in the work that an Investment Banker has to carry out on a daily basis.

The best way to answer this question is to inform the interviewer about your genuine interest in the profession. You should also bring to their notice that you would like to act as a safeguard of people’s dreams and ambitions by imparting knowledge about what would be the best investment options for them.

Your long term career goals as an investment banker
These general questions try to gauge whether you are serious about your career and the job and whether you are serious about working with the bank in the long term. Since it is a financial job post, it is quite important for the bank to hire employees who have decided or are prone to decide to stay with the same bank for a long time.

Professional Investment Banking Interview Questions and Answers

Here is a guide for pro level interview preparations:

Why do you want to work with our Bank?
This is another question that can be termed as a trick question, but is basically a question that aims to find out whether you have done your homework and research on the profession and the job that you aim to do.
When asked this question, all you have to do is to speak about the past of the company and ensure that you get the point across that you consider working with the company a definite stride forward in your professional life.

What are the most important qualities for an investment banking career?
This question is actually a question about your academic qualifications and the thoughts with which you have decided to join the profession of investment banking.
To answer this question perfectly, you would have to go back to your books and understand the concepts that were taught to you in business school. Make sure that you put across the point that being good with numbers, being in the knowledge of current and past market status, and having a good financial strategy that is unfailing are some of the most important qualities for a career in investment making.

What was the most challenging situation (with clients) that you faced during the stock market falls?
The recession and the stock market fall are still fresh in everyone’s mind. And being a person in the financial business, you are bound to experiences during the stock market fall. This question is asked not as much as to know whether you can handle such situations.
The best way to answer this question is to be truthful about any situation that you came across as the stock market fell.

How do you secure investments? Describe your daily flow of work.
Once the interview is satisfied about your skills and that you fit the job, they will begin to ask you questions that are related to your day to day activities as an investment banker. It would be safe to say that once the interviewer begins to ask questions related to your day to day activities in the job, you have a good chance to be employed by the company.

To answer this question, you have to make sure that you have done your homework and know the ins and outs of the business. The best answer, of course, is to take the traditional way of investing a part of the money in the growing companies, while creating a small nest egg in government and government subsidized companies.

Describe your investment bank strategic in general? Way of work? Methods you take?
As and when the interview moves ahead, you will be asked several questions that seem ambiguous but are basically questions that are aimed at knowing whether you are aware of the circumstances and situations in the investor market, and what your responsibilities as an investment banker for an individual, family of company.

The other questions that can be asked are about your knowledge and use of signs and tools for evaluating the market direction, for example – stocks or foreign exchange market software.

SOME USEFUL LINKS

Bank Teller Interview Questions and Answers
Financial Advisor: Interview Questions for Financial Advisors with Answers
Financial Analyst Career: Job Interview Questions for Financial Analyst
Pharmaceutical Sales Interview Questions, Answers and Tips..
Final Interview Questions and Answers: Final Round Interview Tips

15 Most Common Banking & Finance Interview Questions

Some of the most common interview questions for an investment banking interview include (some are a bit on the tough side but they DO come up very often, increasingly as a means of trimming down the candidate lists as the finance graduate job market gets harsher):

How many degrees (if any) are there in the angle between the hour and the minute hands of a clock when the time is a quarter past three? [Typically asked during investment banking interviews for entry level investment banking graduate jobs]
Find the smallest positive integer that leaves a remainder of 1 when divided by 2, a remainder of 2 when divided by 3, a remainder of 3 when divided by 4,... and a remainder of 9 when divided by 10 [Asked during interviews for quantitative finance jobs]
Two standard options have exactly the same features, expect that one has long maturity, and the other has short maturity. Which one has the higher gamma? [Typically asked during interviews for bank derivatives trading jobs]
How do you calculate an option's delta? [Asked during investment banking interviews for derivatives trading jobs]
When can hedging an options position make you take on more risk? [Typically asked during interviews for trading jobs]
Are you better off using implied standard deviation or historical standard deviation to forecast volatility? Why? [Asked during interviews for quantitative finance jobs]
Describe "duration" and "convexity". Describe their properties and uses [Typically asked during investment banking interviews for graduate investment banking jobs]
Two players A and B play a marble game. Each player has both a red and a blue marble. They present one marble to each other. If both present red, A wins $3. If both present blue, A wins $1. If the colors do not match, B wins $2. Is it better to be A or B, or does it matter? [Asked during interviews for quantitative finance or derivatives jobs]
How do you "value" yourself? Here "value" means in financial terms [Typically asked during interviews for MBA finance jobs or experienced banking hires]
What distinguishes you from other candidates we might hire? [Typically asked during investment banking interviews for graduate investment banking vacancies]
If you could go on a cross-country car trip with any three people, who would you choose? Why? [Typically asked during interviews for corporate finance / mergers & acquisitions banking jobs]
Tell be about a stock you like or hate and why [Asked by job interviewers for any accounting, finance or job!]
What is the difference between default and prepayment risk? [Typically asked during interviews for credit jobs / risk management jobs]
How would you move mount Fuji? [Typically asked during investment banking interviews for consulting jobs or graduate accounting jobs]
Estimate the annual car demand for car batteries [Typically asked during interviews for corporate finance jobs, mergers & acquisition banking jobs or consulting jobs]