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Investment Banking Interview Questions and Tips

Practising investment banking / finance interview questions will be crucial in order to distinguish yourself from the next commerce / law graduate with first class honours who probably has a very similar resume to yourself.

How to get into investment banking

Whilst I do not speak from experience, I hope the following investment banking interview questions and tips which I have pulled together from research across the internet will help graduates considering a role in investment banking. I query whether now (mid 2008) is the most ideal time to be jumping into investment banking but I’ll get to that another day.

Expected Investment Banking Interview Questions

Ultimately, investment banking interviewers want to know two things regardless of the role you are applying for:

1. Why do you want to go into the investment banking?

2. Why do you want a job with the particular firm you are applying for?

From my analysis of a couple of insider surveys done by Wetfeet, the key is to be prepared by having thought well about these questions before the interview. Research into the firm and where the banking division (trading / M & A /advisory / etc) is placed comparatively to its competition (League tables) is a good place to get started when thinking about these questions.

However, to stand out, originality and some degree of understanding of the culture of the firm would probably be required to differentiate you from the talented competition.

Investment banking interviewers will be looking for different skill sets depending on the type of investment banking job you’re pursuing. Types of Investment Banking jobs can be seen in my post what is involved in a career in investment banking.

“One insider who worked in corporate finance after college and pursued a sales position after business school observes that in her corporate finance interviews, the recruiters focused on her analytical skills and experiences, while her sales interviews were more weighted toward evaluating her people skills, particularly those related to negotiation, relationship building, and persuasion.” Wetfeet Insider Guide to Investment banking

Common Investment Banking Interview Questions

Being prepared for the following questions will give you the best chance at performing in the interview:

  1. What most excites you about a (corporate finance, research, sales, trading) job?
  2. What can you tell me about a couple of stocks that you follow?
  3. Why do you want to work for this bank versus our competitors?
  4. Who is our competition (in the major categories)?
  5. Tell me about your leadership experience…
  6. Tell me about a high-stress situation you’ve been in. How did you handle it?
  7. What could you do better the next time?
  8. What did the stock market do last week?
  9. The Fed recently lowered interest rates. Do you think the move will be sufficient to stimulate the stock market? Why, or why not?
  10. In which areas is our firm the strongest? The weakest?
  11. What other banks are you interviewing with?
  12. What career opportunities are you exploring other than investment banking?
  13. Sales/trading: Pretend that I’m a portfolio manager for Investment bank A. Explain to me why I should buy the latest IPO the firm has underwritten…
  14. Research: You’ve just been hired as our firm’s new finance industry analyst. In 2 weeks, you’re scheduled to address a growth-stock conference on industry trends. How would you prepare?
  15. Corporate finance: In a merger discussion, ABC Systems says Magnatech is worth $23 per share; Magantech says $34 is more in the ballpark. Who’s right, and how would you arrive at a valuation?

Investment Banking Interview Tips

Finally, following the following tips likely prove useful depending on the role you are applying for:

  1. Be prepared to be able to explain how to value a company
  2. Be prepared to work with a few numbers in the interview
  3. Be prepared to promote your individual advantages as opposed to the next interviewee (speak other languages, finance experience, successful investing history, people you know within the firm and hence cultural fit)
  4. Be honest
  5. Focus your skills and experience towards the particular role you are applying for (eg, a career in Mergers and Acquisitions required different skills to a career in sales and trading)

I hope the above information helps you in your path to becoming an investment banker! If its not for you, try my post on Law firm summer clerkship tips, resume advice and law firm career site links.