Investment banking interview questions

The thirty questions that everyone interviewing for a graduate job or internship in investment banking should be prepared for

Your time at university

1. Why did you choose your degree subject?

2. What have you learned from your studies that can be applied to a career in investment banking?

3. What have you gained from the things you have done aside from your studies at university?

Your motivation

4. Why do you want to work in finance?

5. Within the overall field of finance, why do you want to become an investment banker?

6. Why do you think you are suited to a career in investment banking?

7. Is there anything that puts you off working in investment banking?

8. What other careers are you considering and why?

Your understanding of the job

9. What do you think you will be doing during your first year in investment banking?

10. What types of financial models will you build? What purpose will they serve? What research will you be asked to do?

Your understanding of the market

11. What are the current prospects for the global economy?

12. What opportunities does financial downturn present to financiers?

13. Name a live investment banking deal that interests you or that the interviewing bank is involved in. What are the main issues at stake?

14. What is the current price/level of: FTSE100, S&P 500, Bank of England base rate, LIBOR, a barrel of Brent Crude, an ounce of gold, the US dollar, and the euro?

Your understanding of the employer

15. Explain our business model. What do we do different or better than our competitors?

16. What are the key milestones in our history?

17. Who is our chief executive?

18. What deals that have been announced publicly are we currently involved in?

19. What are our values towards our customers? What are our values towards our employees?

Your understanding of the theory

20. What are the different ways to value a company, a share, and a bond? What are the strengths and weaknesses of each approach?

21. When is a good time to sell an asset? When is a good time to buy?

22. Why is accounting profit different from cashflow and why is cashflow a better measurement of a company's financial health?

23. How do you derive the cashflows to be entered into a DCF model? How do you calculate the discount factor to be used in the model? What is the formula?

24. What are the main issues to be negotiated in an M&A deal?

25. If there was a difference between the stand alone valuation of a target company in an M&A deal and the price demanded by its current owners to acquire it, what would justify paying this "control premium"?

26. What are the respective advantages and the disadvantages of both equity finance and debt finance to a company raising the finance and the investor investing the money?

27. When companies float to become listed on the public market? What are the advantages and the disadvantages? Why do some public companies become private again?

28. What is the effect of rising interest rates on the following: Corporate valuations? Bond prices? Exchange rates? Inflation? Economic growth?

29. What are the risks inherent in the following: Buying a company? Selling a company? Lending money? Borrowing money? Taking out an option? Writing an option?

30. How can each of the above risks be mitigated?