31 31 Interview Questions Banking

7/30/2019 31 31 Interview Questions Banking

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INTERVIEW QUESTIONS BANKING

1. Why are you interested in banking?2. Why are you interested in our firm? Are you interviewing with other firms? Which

ones?3. Tell me a time thats not on your resume that you had a group conflict and how didyou resolve it?

4. I actually know *your ex-boss* personally, If I pick up the phone and called him whatwould he say about you?

5. Tell me about this *school organization*.6. Tell me about your internship at *past work*7. In what area of investment banking do you want to work?8. Are you familiar with what an investment bank does and the typical work of an

analyst?9. What do you think makes a good analyst?10.Why do you think you are qualified for this position?

11.How would you juggle having two assignments by two different MDs due at thesame time? What would you do if you cant do both?12.Why should we hire you instead of other qualified candidates?13.How well can you deal with long hours and a high-stress work environment? Give

me some examples.14.What are you learning that will help you in your work with us?15.What are the most important things to you in a job?16.What an interesting thing that you have read on the Wall Street Journal recently?17.Do you follow the market? For how long? Do you invest?18.Sell me 2 stocks.19.Do you follow financial news or some particular stocks? Why?20.What can you tell me about a particular industry?

21.Tell me a joke.

Behavior1. Tell me about yourself.2. What are your strengths and weaknesses?3. How would your friends describe you?4. What are your short/long term goals?5. In which kind of setting do you work best?6. Give one example where you had to come up with a creative solution for aproblem?7. Give one example where you had to overcome substantial difficulties8. Give one example where you had to work under immense pressure and how did

you deal with it?9. How would you approach a particular assignment?10. Tell me an interesting extracurricular experience and what did you learn from it?11. What kind of role do you usually play in a team setting?12. How would you ensure the quality of your work?13. Given the hectic work schedule, how well do you think you can handle it?14. What is one accomplishment that you feel most proud of?15. How would you go about meeting strict deadlines?


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16. When it seems impossible that you will be bale to complete all assigned work ontime, what would you do?17. What is your most exciting/valuable extracurricular activities and why?18. Tell me about the time you worked the hardest in your life19. Tell me about a time you had to develop relationships with others.20. Describe an instance in which you've had a significant impact on a situation,

either inside or outside your job..21. Are you entrepreneurial?22. Give me an example of a situation where you demonstrated leadership.23. Give an example of how you worked on a team.24. How creative are you (creative solution)? Give an example.25. Give an example that demonstrates your problem-solving/analytical skills.26. What do you do in your spare time?27. What would you like me to know most that is not in your resume?28. If you could go anywhere for 24 hours, with an unlimited budget where wouldyou go?29. Give me an example where you had to shoulder enormous responsibilities.30. Why did you choose to pursue a business degree?

31. What motivates you?32. Whats your favorite class? The one you like the least? Why?33. Tell me about a time when you had a group conflicts and how did you resolve it?34. Tell me about a time when you had to make sacrifice for work35. Describe a project that you have worked on and enjoyed?36. Why did you select your college or business school?37. Give me an example of experience of failure.38. Give one example where you made a mistake and how did you respond?

Technical1. Please walk through the basic financial statements and discuss their relationships.

a. Balance Sheet economic resources of a company, including claims on them

from both creditors and equity holders. (NI from income statement intofinancing section)

b. Income Statement Measures success of a companys operations (Interestexpense from balance sheet)

c. Statement of Retained Earnings reconcile beginning and ending balance byadjusting for net income and dividend. (NI from income statement)

d. Cash Flow Statement Shows sources and uses of funds; obtain informationfrom all three statements net income, working capital and dividend. (NIform income statement, beginning cash, non-cash items and working capitalsform balance sheet)

2. Whats FCF and how do you calculate it?a. FCF = EBIT, apply taxes to EBIT, +D&A, - CAPEX, - WCb. In order for a company to generate revenues, it does not just incur operating

expenses, it also needs to make investments in real estate, buildings andequipments and working capital. Also the company must pay taxes on itsearnings; the amount of cash that is left over is FCF.

c. Earnings can be distorted by accounting gimmicks, but it's tougher to fakecash flow. For this reason, some investors believe that FCF give a muchclearer view of the ability to generate cash (and thus profits). Negative cashflow is not Always bad, it could mean that a company is making big


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investments, if these big investments make a high return, in the longer runthis negative CF is not all that bad.

3. What is Working capital? And how do you calculate it?a. Working capital is calculated by current assets current liabilities, excluding

cash and s/t debtb. If a companys current liabilities is > than current assets then it might not be

able to meet its near term debt obligations4. What is CapEx?

a. Capital expenditures is a fund that the company use to make new purchasesand upgrades on buildings, properties and equipments

5. If you were to pick one of them, which one do you think is the most important one?a. Cash flow statement cash is kingb. Net income number on the income statement may not necessary reflect the

true financial performance of the company due to accounting distortion(accrued basis).

c. Understanding the sources and uses of funds are essential in analyzing thebusiness

d. True measure of liquidity and solvency

6. How would you explain deferred tax?a. The difference in tax liability created by the difference in GAAP and IRS codes

7. What statements and how would they be affected by a particular transaction(acquisition of asset)?

a. Assets = Liabilities + Equities8. What are the different methodologies to valuate a company and what are some of

the advantage and disadvantages associated with each one?a. DCF Value a company based on its expected future free cash flows. Good

for stable companies with relative more reliable CF projection and privatecompanies that have no comparables. Extreme uncertainties in projectingdiscount rate and future cash flow. Highly dependent on assumptions onterminal years. Provides a sanity check what kinds of assumptions are

needed to justify a particular value? Good measure for synergy too.b. CSC commons stock comps Value a company by applying certain average

operational or trading multiples of comparable companies. Commonmultiples: EV/Sales, EV/EBITDA, P/E. Good for understanding relativevaluation, as well as private companies. However, no two companies arealike. A company could trade at abnormal multiples due to short-termtrading pressures (M&A rumor).

c. Past transaction comps Valuing a company based on the price of similartransactions in the past. Good indication of relative value and premium isfactored in the valuation. But again, no transactions are exactly similar, timeand market environment might have changed. Common multiples: EV/ Salesor EBITDA or price / Earnings

9. How would you measure enterprise value and market value?a. EV = Market Cap + ST & LT Debt (PS and Minority Interest) Cash

10.What are some of the possible motives behind a merger or an acquisition?a. Potential revenue and cost synergies from pooling of resources operation

integrationsb. Opportunities to enter attractive markets, expand client base and build up

abilities to offer a range of complementary products and services


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c. Simply a growth strategy might be cheaper than developing own brandname/market

d. Spread riskby diversifying a companys operatione. Need to stay competitive in consolidating industriesf. Companies could be deemed mismanaged and undervalued (LBO financial

acquirer)

11.Walk me through a DCF.a.

12.Walk me through a Accretion / Dilution modela.

13.What are the issues to consider for M&A?a. How much does it cost?b. Is it affordable?c. Does it make strategic sense?

14.What is 10-year US Treasury Bond and LIBOR?a. Used as risk-free rate in the marketb. London Inter-bank Offered Rate rate at which major international banks in

London charge each other for borrowing -- used as a basis for many US

interest rates15.What would happen when the Fed lowers/raises interest rate?

a. Interest rates would impact the values of fix-income instrument such asbonds, whose prices will move in opposite direction with the interest rate

b. Lower interest rates might prompt companies/individual to refinance theirdebt at a lower cost by issuing new debt

16.Tell me about the cases that you have done.17.How would companies usually finance a merger of acquisition (cash Vs stock) and

what affects the selection of either method?a. Stock financing could potentially lead to ownership/earning dilutionb. Relative price strength (exchange ratio) determines how expensive it is to

finance. However, stock deals are subjected to market volatility too.

c. Leverage position of a company determines its ability for cash financingd. Cash acquisition is fully taxable for shareholders of the target (39.6%) where

as stock swap is only subject to capital gain tax when stocks are sold (20%).e. Potential pro forma upside/downside of stock-swap for target shareholders

18.What are the main considerations when choosing between equity and debtfinancing?

a. Risk of financial distressb. Tax purposesc. Agency cost as a result of ownership dilutiond. Management control with debt (lean diet for the company)

19.Tell me some of the specific duties you performed as an intern.a. Valuation; pitchbook; due diligence (document drafting); creating and

maintaining database, building models, ect20.Tell me more about the live deals that you worked on.21.What does pro forma mean and why is it important?

a. As if assumption (i.e. consolidate reporting, companys real operations taking our one-time charges and other non-recurring items

b. Helps to assess the true operational performance of a companyc. Allows to analyze the potential strategy and M&A transactions

22.How would you go about doing an accretion/dilution analysis?


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31 31 Interview Questions Banking