Investment Banking Interview Questions – A Comprehensive List

For securing an Investment Banking job at a good package, it is extremely important to crack the interview in an excellent manner and leave an extraordinary impression on the interviewer. Interview consists of case study or an assignment round and personal face to face discussion round.

And unlike other finance interviews, Investment Banking Interviews are more in depth and candidates find it difficult to crack the interview questions because of the following reasons:

• Diversity of questions asked (Questions are asked from varied topics, basically from anywhere and everywhere from finance concept)
• Intensity of the questions asked (One topic can be questioned in a detailed manner)

Here, in this article, I have created a list of questions which interviewers usually ask while hiring for an entry level profile of Investment Banking. There are multiple skills on which the interviewers test an individual and I will be covering majority of those skills in this article.

Major Questions asked in an interview of Investment Banking Job Profile

 1. Personal/ background Questions:

Primarily, any interview in Investment Banking starts with questions related to personal/ personal background questions in order to gauge the basic understanding of the candidate. These questions are asked to judge the attitude and personality of an individual towards life and his/ her career. This serves as a first step in the interview and defines the whole direction, structure and timing of an interview

These questions include:

1. Brief on your education and experience?
2. What are your strengths and weaknesses?
3. What is your family background?
4. What is unique about you?
5. What do we consider you for this job?
6. What are your best skills?
7. Do you prefer to work independently or as a team?
8. Rate yourself in the following skills – Excel Skills, Powerpoint Skills, PPT Skills, Team Building Skills, Analytical Skills, Communication Skills, Interpersonal Skills, Stress handling skills etc.

2. Career related Questions:

Another stream of questions which interviewers ask in Investment Banking interview is related to career and life goals. It determines the willingness of a candidate for the job and determination towards the field.

These questions include:

1. What are your career goals? How do you see yourself after a span of 5 years or 10 years?
2. Why are you choosing finance as a career option?
3. Why are you looking to enter into Investment Banking Industry?
4. Where do you see yourself in Investment Banking in future; whether in front end or back end? And, why?
5. How this job/ profile will help you in achieving your career goals?
6. Are you planning to pursue any further study, MBA, CFA etc. for your growth?
7. How will you cope up with your studies and your job in future?
8. Till how long, you are planning to stay with our company?

3. Finance related Questions:

This is the major part of the overall interview process and interviewer usually asks questions from any topic related to finance which may vary from ratios to cash flows and from company’s financial statement analysis to finance statements’ preparation.

These questions include:

1. What is the structure of Statement of Profit & Loss, Balance Sheet and Cash Flows Statement?
2. What do you mean by liquidity ratios, solvency ratios, profitability ratios?
3. What is debt equity ratio, ROE, ROCE, ROA, Net Margin, EBITDA Margin, Assets Turnover, financial leverage etc.?
4. What is Dupont Analysis, how is it helpful in determining ROE?
5. What is the difference between net profit, cash flow from operating activities and cash profit?
6. What all numbers will you consider while looking at a financial position of a company?
7. As an equity investor, which are the most important ratios that you will calculate before making investment decisions?
8. What is working capital and how will you calculate working capital days?
9. What are the ways to projects revenue of a company?

4. Financial Modelling and Valuation related Questions:

Investment Bankers spend hundreds of hours on building financial models and conducting valuations of multiple businesses. Thus, Interviewers expect candidates to have some knowledge of financial models and valuations which they test either from an assignment or from direct interview questions.

Generally the questions include:

1. How will you forecast revenue/ turnover of a company?
2. What is the process of making financial models?
3. What are the different types of financial models prepared by the Investment Bankers?
4. Draw a projected Profit & Loss account of a company based on its past numbers.
5. Explain the valuation techniques in detail.
6. What is the difference between relative and absolute valuation?
7. How do you compute valuations through trading and transaction comparable?
8. Explain a rough DCF Valuation Model.
9. How do you compute discounted cash flows?
10. What are free cash flows?
11. What is difference between cash flows at the end of the year and free cash flows?
12. What is difference between FCFF and FCFE?
13. What is the formula of FCFF and FCFE?
14. Explain CAPM model in detail.
15. What is WACC and why do you compute it?
16. What will be the impact on WACC if there is high debt in the company?
17. What do you mean by Beta? And, how do you calculate Beta?
18. What is the difference between levered and unlevered Beta?
19. What is terminal value?
20. How will you compute growth rate (g) while calculating terminal value in cash flows?

5. Accounting related questions:

Investment Banking has its roots lying in finance and knowledge of basic accounting is required for finance. This is the primary reason why CAs are increasingly getting hired in IB profiles. Accounting questions serve as a basic assessment topic for any finance profile and hence it is must for any interviewer to judge the candidate knowledge in accounts domain as well.

These questions include:

1. What are the sub heads of Non-Current Liabilities, Current Liabilities, Non-Current Assets and Current Assets?
2. Why deferred tax assets and deferred tax liabilities come in balance sheet?
3. What are the ways of calculating depreciation?
4. What is the difference between EBIT and Operating Profit?
5. What are the two ways to show fixed assets value in Balance sheet?
6. Where all does debt (in which head) comes in balance sheet?
7. Which accounting standards do we follow in India?
8. Does GST appear in accounting books? If yes, then where?
9. When do you capitalize any expense rather than putting it in profit & loss as an expense?
10. What is shareholder’s equity? What is the difference between convertible equity and shareholder’s equity?
11. What is the difference between basic and fully diluted shareholding pattern?

6. Resume Questions:

Another key question type is to ask questions directly from the resume objecting certain points. This usually happens in HR interview and they are restricted to asking questions on resume and personality.

These questions might include:

1. Can you walk me through your resume?
2. Specific questions on your educational background; For example; if you have done CFA or CA then the interviewer will ask curriculum related questions of CFA or CA
3. Specific questions on your interests and hobbies
4. Specific questions on certifications/ courses

7. Other Questions:

These questions include:

1. Personality/ psychometric questions
2. Behavioral questions
3. Questions on the Interviewer’s company/ organization
4. Package and salary related questions
5. Questions for interviewer

Note: The questionnaire list is totally inclusive and not exhaustive