Interview Questions

You will be asked the same set of questions again and again by different interviewers. Likewise, you should be asking a different set of questions again and again to each new interviewer. Don't be afraid to repeat questions with a new interviewer. Even if you have answers to your questions, ask different interviewers the same questions. That way you can appear to have questions to ask and you can compare answers. Often times it helps to use answers from previous interviewers at the same company (credited to the person, of course) in phrasing your new questions.

The following lists of questions are common ones for you to ask and common ones you will be asked. The lists are far from exhaustive. These lists combined with a couple of career books and mock interviews will adequately prepare you for investment banking analyst interviews.

It is important that you think over answers to the questions, but don't overlook the purpose of questions. The recruiters are asking questions to see if you are investment banking "material". If you have done your research on investment banking and the firm, you will already know how to push their buttons. The key factor in interviewing success is to keep an ideal investment banker profile in your head during your interview. Also keep in mind that it is a game.

The questions for you to ask are also very important. You want to find out if this firm would be a good employer. Asking the right questions can help you discover this.

1. Why do you want to work at a New York investment bank instead of a regional investment bank?

2. What about your cultural fit with New York?

3. Why are you coming to NYC? (Think about why the change - job, location)

4. Why come to NYC now?

5. How does your background relate to finance or investment banking?

6. What have you learned in your classes?

7. What did you learn in so-and-so class? (they ask this after looking at your transcript)

8. Why do you want to get into an investment banking analyst program? (at any investment bank)

9. Do you understand the difference between a regional investment bank and an international one? (just be able to list off a few key differences)

10. I'm in so-and-so group and we are about to do so-and-so deal, what are some world events/situations that I should be concerned about? (i.e., you should be reading the
Wall Street Journal daily)

11. Why did you pick the University of Alabama (instead of maybe UGA, UFL, etc.; what drew you to it)?

12. Are you prepared to work 100-hour weeks? Give an example of how you know and how they will know you are ready.

13. Why did you pick so-and-so major?

14. Why did you work at so-and-so firm (during school, summers, etc.)?

15. Briefly run through a standard income statement.

16. What is your understanding of the job position and responsibilities?

17. What are some ways a company can raise its stock price?

Fairly Complete Answer:

- Repurchase its own stock to send signals to the market that the company is confident that purchasing its own stock will give it the highest ROE for the company's cash.

- Cut costs, refocus product lines, and announce these changes to the market.

- Mergers, acquisitions, and divestitures: Mergers sometimes help an acquirer's stock, only if obvious synergies exist. The usual case is that the acquiring firm's stock falls or remains level while the target firm's stock rises.  Divestitures of poorly performing divisions receive a sort of "finally!" congratulations boost from Wall Street to the parent company's stock, while spin-offs of high flyers benefit a parent company holding large equity interests.

18. How would you value a company? (This is an M&A-focused question.)

(Most recruiters would not expect a complete answer. Therefore, do a little more research about this question and shock them.)

Fairly Complete Answer:

- Comparable Companies' Values - For example, to see how much a certain toy company is worth, you would list other toy companies with similar product lines, sales volume, and strategy and then find values for current market trading multiples (such as P/E, Firm Value/EBIT).  Using these average multiples, you can multiply the target firm's operational and financial numbers to determine valuation ranges.

- Discounted Cash Flows - Basically, this valuation method looks at a company as a cash-generating machine and values it as such.  You remove the effects of interest to fulfill the assumption that the company has no debt.  Use a model to project out the company's free cash flows provided by operations for about ten years and figure the NPV of this unlevered cash stream using an appropriately risk-weighted discount rate. You make some assumptions to generate a terminal value for all of the years beyond your projections. An elegant valuation but riddled with holes, such as projecting cash flows for multiples years ahead and having too high or low of a discount rate.

- Breakup Value - Determine the liquidation value of all assets and liabilities. Net them out and determine the value of the firm left for the shareholders.

- Comparable Transactions - Simply look for transactions involving peer companies.  By dividing the transaction amount by the equity interest involved, you can come up with the value of the target firm's equity (for transactions involving controlling interest, there is a control premium attached to the transaction).

- Leveraged Buyout Analysis - The valuation process is meant to produce valuation ranges. One of the prices in this range should be the price that a financial buyer would be willing to pay for the firm.  An LBO analysis is used to model how much a financial buyer could pay for the firm with debt secured against the firm's cash flows while still maintaining acceptable interest and debt coverage ratios.

19. Sell yourself to me in two minutes. Why should we hire you? What distinguishes you from your peers interviewing here?

20. What is your path to investment banking? This analyst program?

21. What is your greatest strength? Your greatest weakness?

22. Why are you applying to this firm?

23. What are some interesting classes that you have had?

24. Where do you see yourself in 5 years? 10 years?

25. Why investment banking? Why the analyst program?

26. Why would you be a good choice for the analyst program at this firm?

27. Describe your current job position.

28. Describe your involvement in so-and-so activity. (They ask this after looking at your resume.)

29. Why do you want to work in Financial Institutions M&A? (in response to your cover letter requesting to work in that specific group)

30. What are some classes that you have liked/disliked? Why?