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FINANCE INTERVIEW QUESTIONS Contents, Study notes of Finance

University of the Sciences in Philadelphia Finance

Personal Questions: • Briefly walk me through your resume. Tell me about yourself. Tell me about your experience. • What motivates you?

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FINANCE INTERVIEW QUESTIONS

Contents

• General Questions

• Investment Banking Questions

• Sales and Trading Questions

• Corporate Finance and Risk/Insurance Questions

• Other Finance Area Questions

• Firm Specific Private Wealth Management

• Firm Specific Investment Banking Questions

• Firm Specific Sales and Trading Questions

• Firm Specific Equity Research Questions

• Firm Specific Corporate Finance & Risk/Insurance Questions

• Questions to Ask Interviewers

General Questions

Personal Questions:

• Briefly walk me through your resume. Tell me about yourself. Tell me about your experience.

• What motivates you?

• What is the latest book you have read outside of school?

• What are your short and long-term goals? How you intend to achieve them?

• What are the three most important events in your life?

• Where do you see yourself in 5 years? 10 years?

• What are your greatest strengths and weaknesses? (Typically 2-3 each)

• How would your peers/family describe you?

• How would your supervisor, professor, and a teammate describe you?

• Are you the type of person who plans everything out and sticks to a plan or are you the type of person that changes

and adjusts your plans frequently? Support with examples.

• What are the three most important events in your life?

• Define leadership? Are you a leader?

• What’s the difference between a leader and a manager?

• Tell me about a time you had an ethical dilemma. What did you do?

• Name 3 characteristics that distinguish you?

• Describe one of your most significant accomplishments at school and at work.

• How do you feel about traveling for work?

• What skills are you lacking, and how do you plan on attaining them?

• How smart are you? How do you know you are smart?

• What argument should I make to my partners for your candidacy?

Academic Questions:

• What schools did you apply to? Why did you choose George Washington?

• How do you feel you stack up against everyone in your class? (academically, professionally, etc.)

• Why did you choose your undergraduate institution?

• Why did you choose your particular major/concentration?

• Why did you go to business school?

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Download FINANCE INTERVIEW QUESTIONS Contents and more Study notes Finance in PDF only on Docsity!

FINANCE INTERVIEW QUESTIONS

General Questions
Investment Banking Questions
Sales and Trading Questions
Corporate Finance and Risk/Insurance Questions
Other Finance Area Questions
Firm Specific Private Wealth Management
Firm Specific Investment Banking Questions
Firm Specific Sales and Trading Questions
Firm Specific Equity Research Questions
Firm Specific Corporate Finance & Risk/Insurance Questions
Questions to Ask Interviewers

General Questions

Personal Questions:

Briefly walk me through your resume. Tell me about yourself. Tell me about your experience.
What motivates you?
What is the latest book you have read outside of school?
What are your short and long-term goals? How you intend to achieve them?
What are the three most important events in your life?
Where do you see yourself in 5 years? 10 years?
What are your greatest strengths and weaknesses? (Typically 2-3 each)
How would your peers/family describe you?
How would your supervisor, professor, and a teammate describe you?
Are you the type of person who plans everything out and sticks to a plan or are you the type of person that changes and adjusts your plans frequently? Support with examples.
What are the three most important events in your life?
Define leadership? Are you a leader?
What’s the difference between a leader and a manager?
Tell me about a time you had an ethical dilemma. What did you do?
Name 3 characteristics that distinguish you?
Describe one of your most significant accomplishments at school and at work.
How do you feel about traveling for work?
What skills are you lacking, and how do you plan on attaining them?
How smart are you? How do you know you are smart?
What argument should I make to my partners for your candidacy?

Academic Questions:

What schools did you apply to? Why did you choose George Washington?
How do you feel you stack up against everyone in your class? (academically, professionally, etc.)
Why did you choose your undergraduate institution?
Why did you choose your particular major/concentration?
Why did you go to business school?

What activities are you involved in at school?
What were your goals when entering GW?
What did you get on your SAT and/or GMAT?
What was your undergraduate GPA?
What is your business school GPA? Any other graduate programs?
What were your grades in Accounting & Finance?
Summarize the skills that you learned in your major/concentration in 3 simple headings.
Tell me about your coursework and how it has prepared you for the job?

Company:

The three questions you will always get: “Why finance?” “Why our firm?” “Why you?”
What other firms are you considering? What are the differences between us and them?
Who are our competitors?
In which areas is our firm strongest / weakest?
Do you have any questions for me?
Why NYC? (Chicago, Charlotte, DC, San Francisco etc)
What other industries are you considering? Why?

Work Experience Questions:

*If you cannot answer a question with an example from work then choose a school related or

personal example.

Tell me about a time when you faced adversity and how you overcame it? / What is an example of a high-pressure experience you have had and how did you handle it?
Talk to me about leadership positions you've held, whether in a personal, academic, or professional setting.
What were your responsibilities at your last job/internship? Why did you choose to work there?
Tell me about your efforts to accomplish a goal or meet a standard in your last position. What were the goals or standards? Give me an example of what you did to meet them.
What was one of the toughest problems (or assignments) you have ever encountered at work? Describe the situation and what you did about it.
Describe a situation in which you recognized a potential problem as an opportunity. What did you do?
Describe a time when you encountered unexpected obstacles or setbacks when you tried to accomplish objectives and deliver what was expected. What was the outcome?
How has your past work experience made you suitable for this job?
Tell me about the most complex project you ever worked on. What was your approach? What role did you play? What problems did you encounter as you tried to find and implement a solution?
Give me an example of a time when you successfully worked within a team.
Describe a complex or challenging team project of which you are particularly proud. What was the accomplishment? What was your role and contribution?
Have you ever been part of a group or team that was floundering? What was going on? What did you do?
Tell me about a time you worked with a group of people who were very different from each other, including yourself. What was that like? What were some of the situations that came up? How did you handle them?
What role do you play in team situations?
Have you ever worked on a newly formed team? How did it go? What did you do?
Have you ever worked on a dysfunctional team? What was the issue? What was the outcome?
Have you ever worked on a cross-functional/cross-departmental team? What was the outcome?
Tell me about a time when you helped someone else achieve a goal. What did you do?
Tell me about an instance where you faced an ethical issue. What was the outcome?
Tell me about a time when you successfully resolved a conflict.
Tell me about a failure, and what you learned from it.

Think of the team you worked most with and give me a word that describes each team member.
Are you more risk averse or risk seeking?
Let’s imagine you died and are giving a speech at your funeral. What would you say?
How would you spend $1,000,000 besides investing it?
While interviewing for a Chicago office of a bank, the interviewer tells you that he/she is getting the impression that you are more interested in the New York office. You are. However, why do you tell him/her that you are more interested in Chicago?

Investment Banking Questions

General

What makes a good LBO target?
Rank in order of the cost of capital: Treasury Bill, Mezzanine, Convertible and Equity.
Your client's company has P/E of 20. He asks you to advise him between two acquisition targets, one with a P/E of 15 and the other with a P/E of 25. What is your advice?
What is an alternative to declaring dividends?
On average, what happens to the acquirer’s share price in a large stock merger? What happens to the target’s share price?
Why merge? Why go public?
What does it mean if a deal is “accretive”?
What is a bond?
In summary, what is a convertible security? What are the benefits of issuing/buying this security?
A company needs to invest in a new business opportunity. Describe three ways they can obtain this funding.
A company with negative EPS has a share price of $100. What is going on here?
What are some considerations when adding leverage to a company?
Why add debt to your capital structure?
How do you measure the value added to the firm by taking on leverage?
Your MD comes to you and tells you to look at Company X as an acquisition candidate. What do you look at?
What is Due Diligence? What are you looking for? Why do it?
Tell me about an acquisition/merger idea that you have. Why is it a good idea?
A high P/E firm acquires a low P/E firm. What is the impact on stock price? Vice versa?
Who are the stockholders of a corporation? What are their differing objectives?
What are synergies?

Valuation

Explain the concept of present value.
How do you value a company?
Value this company.
Why might a technology company be more highly valued in the market (P/E) than a steel company stock?
How would you value a three-legged stool company? (Key is defining economy, industry, competition, sources of supply, etc. to create full picture)
How do you value the equity of a company?
You have one night. How would you value a Moroccan bank (private)?
Discuss methods to calculate Terminal Value.
How do you value the entire firm?
You have a software company and a shoe company. Both need to raise capital. You can use debt or equity. Which do you choose and why?
What are some ways you would value a private company?
You have 2 hours to value a telecom company using comparables analysis. Walk me through the steps you would take.

If you could pick one of the three to value a company which would you use and why? : EBIT, EBITDA or NI.
Which valuation method typically produces the highest value? Why?

Discounted Cash Flow

Perform a Discounted Cash Flow Analysis.
Describe components of free cash flow in a DCF?
What are the primary weaknesses of the DCF?
What is the most volatile part of a DCF?
What is the most volatile part of a DCF: WACC, Free Cash Flows or Terminal Value?
How would the DCF model for an oil company differ from that of a high tech company
What is IRR? How is it calculated?
Describe the two most important components of a DCF. Why are these components the most important? How do you mitigate this?

Cost of Capital / Risk

How would you calculate WACC? What is it?
What principal underlies weighted average cost of capital?
How would you calculate cost of debt?
Explain Beta in plain English. How do you compute Beta?
Which company would have a higher Beta and why - a waste management company and a high tech company?
What is CAPM? How do you find the cost of equity? What does it mean?
What does a stock price measure?
The Fed makes a statement saying that inflationary concerns are leading to an increase in interest rates – how will this increase in interest affect bond prices? Yield?
Calculate the yield to maturity of a bond whose price is $99, face is $100, 10% coupon. The bond matures one year from today, and pays an annual coupon.
If you buy a put and buy a call, what is this strategy called?
What would you use as a proxy for the long-term risk free rate?

Private Equity

You are looking to invest in a new biotech company. How would you value it?

In a Venture Capital/Private Equity environment, the valuation approach is different from the typical Discounted Cash Flow (DCF) method—more of a ‘bare bones’ approach. Basic steps are:

_1. Project performance of firm into the future and assume exit in 3-5 years. (typical of private equity)

Estimate exit value using an exit multiple
Discount exit value to present using a discount rate from 30 – 75% -or- you could calculate the IRR of the cash_ flows and compare them to a targeted rate of return.

A private equity firm would avoid using WACC, CAPM, etc. because their investments are typically on the outside edge of the industry, without peers, without publicly traded markets, etc. Also, one of the key value drivers for VC firms is the exit values, and this method highlights that.

Sales and Trading Questions

General

What is your view of the economy over the next year?
What is your view of the stock market over the next year? The bond market? The currency market?
If I gave you $100,000 to invest, what would you buy? Why? Give me 3 stocks you would buy? Why?
What makes a good Salesperson/Trader?

What skills are necessary to work in a (corporate /commercial bank) finance setting? What skills from your past experience are transferable to a position in our corp. finance dept.? What sills are you lacking?
(e.g. if using Nestle ) What happened with ( Hershey)? What changes would you have made to ensure a successful outcome? ( For another corp. choose an applicable situation. The idea is to test market knowledge and critical thinking skills)
What is our stock trading at? Market Value? Price-earnings ratio? (if applicable)
We are having trouble managing our division. What do you think are the key performance metrics and how might you go about improving them?
Tell me about a recent deal that has been in the papers.
How would you go about valuing for a potential sale, spin-off or liquidation? Regardless of industry, there are a number of different valuation methodologies; however, the three principal methods of valuation are: Discounted Cash Flow (DCF) Analysis, Comparables Analysis, and Industry/M&A Multiples. Which of these methods would you use for a start-up (Comps)
What is/how do you determine free cash flow? (Free cash flow is calculated by subtracting capital expenditures and dividend payments from cash flow from operations.)

The calculation can be illustrated as follows: Earnings Before Taxes and Interest (EBIT)

Taxes on EBIT

Change in Deferred Taxes = Net Operating Profit Less Adjusted Taxes (NOPLAT)
Depreciation and other non-cash expenses (e.g., amortization & depletion) = Gross Cash Flow

Increase in Operating Working Capital

Capital Expenditures (CAPEX)
Investment in Goodwill
Increase in Net Other Assets (this can be a catch-all category = Gross Investment

Wealth Management

What are some of the factors that differentiate private portfolio managers from mutual fund or pension fund managers? - Unlike a mutual fund manager, a private asset portfolio manager has to be familiar with the risk and return tradeoffs for numerous asset classes, and be comfortable with the tax and legal structures of the accounts. - Private wealth managers are much more involved in their clients’ day to day lives and changing goals. - Private wealth clients may care less about the total return of securities and more about tax issues, preservation of capital, return effects on non-liquid assets and reaching charitable goals. - Individuals who are involved in private client services have the key challenge of balancing their duties as money managers and personal client service

Accounting

What is the largest contributor to deferred tax assets on a balance sheet?
What are deferred revenues? Give me an example of a firm that would have deferred revenues and why.
How do all the financial statements tie together?
How do you get NOPAT from NI?
What has more impact on the value of a company - a 10% drop in revenues or a 10% increase in cost of capital?
How do you derive Free Cash Flow (FCF)?
A company discovers that some of its equipment is overvalued, and takes a write-down. Describe all the changes that would take place on the financial statements.

What is working capital? Why is it important?
Define sources and uses of capital?
Run me through an Income Statement. Define Operating Income?
What are the three main sections of the Statement of Cash Flows?
What goes into cash flow from operations? Give me an example of a source/use of cash.
If a firm pays out 100% of their earnings as dividends, is their cash flow negative?
Where do you find shares outstanding?
How can Accounts Payable, which are debts that you pay down, be a source of cash?
How do you value NOLs?
Give me the journal entry for the write-down of debt.
All else being equal, how would the balance sheets of Coca Cola and Pepsi differ?
What are deferred taxes? Give me an example of how they arise.
What is EBITDA? Why is it important?

Project Finance

What experiences led to your interest in a career in project finance?
What industries do you think are conducive to Project Finance?
- Power
- Oil and gas
- Mining – resource extraction
- Some infrastructure
What criteria are important to consider when first assessing a project?
- Political Risk / local political involvement
- Market for the commodity
- Availability of commodity
How would you approach making a model for the project?
- Get input/assumptions from the sponsor
- Determine the financial market conditions for the site
- Get data availability from public services
- Determine the length of construction and operation period
- Segregate inputs clearer fashion, outputs into financial information
- Determine who is the reader for the output (gov’t, investor-lender…) and write accordingly
What evidence can you present that you have excellent modeling skills?
Determine a (financial) sensitivity analysis.
- Interest rates
- Price
- Loan structure
- Input costs
Tell me about a time when you failed to apply good quantitative skills in an analysis.

Real Estate

Where are the most advantageous development opportunities?
Should a specific project be developed?
If so, of what product type should it consist?
When should it be developed?
How would you determine the financial viability?

Firm Specific Private Wealth Management Questions

Goldman Sachs

What does it mean if a stock has a beta of 2?
If you have cost of debt of 10% and cost of equity of 10%, what is your WACC?
What is deferred revenue?
How would a $50 gain on a sale of equipment flow through the balance sheets?
What are the three valuation methods? Which gives the highest value? Lowest?
Tell me about a deal in the last year that you found interesting, and tell me why;
Which company would have a higher Beta and why - a waste management company and a high tech company?
If Company A has a Beta of 2 and Company B has a Beta of 0.5 - what does this mean?
Book value of asset= 1 Sale value= 2. Take me through the changes in the financial statements. What would be the difference if the company manufactured these assets?
A company has $400 million in cash and no other assets. They have no debt, and their market capitalization if $200 million. What is happening here?
What are the four main components of the Statement of Cash Flows?
A company’s 2004E P/EBITDA is 10x, and its 2005E P/EBITDA is 8x. What is happening here?
What qualities make a good Managing Director?
Last question: can you tell me a joke?

Credit Suisse

Graduate - MBA

Why do you use WACC to discount Free Cash Flow?
Sell me on your technical skills.
Walk me through a typical day as an Associate.
Explain deferred revenues. What is an example?
Walk me through the sale of an asset. How does this affect the financial statements?
A company earns income, which increases retained earnings. How does the balance sheet balance? What happens to the other half of the balance sheet?
You have two companies. One uses LIFO to account for inventories, and the other uses FIFO. Which one of these companies will have higher net income?

Deutsche Bank

Grduate - MBA

Discuss how you would handle currency issues in cross border deals.
Discuss changes in WACC to accommodate cross border deal needs.
How do you value an Australian boating company? If you could only compare it to US-based companies, how do you account for differences in their betas?
(After expressing an interest in M&A) Take one your old employers as a potential client, and from a high-level strategic point of view, explain what type of company you would recommend it to acquire or merge with?
Talk about the most stressful 24-48 hours of your life. Why was it stressful? How did you respond? What did you take away form it?
Walk through the valuation of a firm with special emphasis on the market multiples method.
What is the definition of deferred revenue? Provide an example. Where is it on the balance sheet?
What are some ways you would value a private company?
What is the difference in the numerator between a P/E ratio and a P/sales ratio?
How do all the financial statements tie together?
Explain equity accounting, how would you account for dividends from a firm in which you have an equity interest?
Explain beta in plain English.
Is size a factor when finding a company’s beta?
What was your biggest failure? Why? What would you have done differently?
If you got an offer from every other bank except ours, which one would you accept? Why?

Your client's company has P/E of 20. He asks you to advise him between 2 acquisition targets, one with a P/E of 15 and the other with a P/E of 25. What is your advice?
You have 2 hours to value a telecom company using comparables analysis. Walk me through the steps you would take.
Explain how you will build a helicopter that can fly to the moon.
What would the P/E be for a tech stock?
How would you value a stock that doesn't pay dividends?
Why would a corporation not want to have large amounts of cash on its balance sheet? What would you advise such a company to do?
Follow up: Do you think Microsoft is a takeover target? Why?
Where do dividends show up in the free cash flows computation?
Where are dividends on the income statement?
Are dividends tax deductible?
You are given 10 stocks, what criteria do you choose to evaluate which stock is the best?
How do you determine cost of debt if you are not a public firm?
Case: How much fee do you pay as an airline to the government when you want to start a new airline route from NYC to Ithaca? Give me your thought process? How do you value the new airline?
Which multiple do you use for which industries?
Explain why you take Enterprise value for the EBITDA multiple and why Equity value for net income multiple?

Goldman Sachs

Undergraduate and Graduate:

Why Goldman Sachs?
What is inflation?
What do interest rates mean?
If you had $100,000,000 at age 20, how would you invest it?
What are you most passionate about?
What do you think of the current state of the market?
Where do you predict interest rates to go?
If you were advising the CEO of a company that owns 30 office buildings throughout America, how would you value his properties?
What countries do you believe are suitable for investment at this time?
What are the Treasury Secretary’s current goals?
Explain the situation with the Chinese Yuan
Why don’t the Chinese revalue their currency?
What is the current situation in the housing market?
What caused the housing boom? The housing bust?
What is the current price of a barrel of oil?
If you were representing the Saudi government, where do you want oil prices to be?
What would be the effect of changes in oil prices?
Since alternative fuel is such a big issue, tell me about your opinions and any solutions you foresee
What do interest rates do to the housing market?
What is the purpose of raising interest rates?
Why would inflation potentially decrease interest rates and how would that affect stocks?
How confident are you that you want to do Investment Banking/Equities?
What can you bring to Goldman?
If you could choose another career other than investment banking, and money was not a factor, what would you choose?
Be able to discuss a few stocks and if you think they are over/under valued
Without knowing anything about real estates and how it is valued, how would you assume property is valued?
What 6 factors affect the price of an option?

What other incentives do you offer to a seller of a company when you want to acquire him, aside of paying for a premium?
Give me the factors that affect the decision why pay cash, stock or both, when acquiring a company?
Different ways to calculate the terminal value?
Explain WACC to me and how cost of equity and cost of debt relate to the growth of WACC?
Tell me what our biggest risk in hiring you is?
How are you going to deal with transitioning from a relatively senior position at your past job to an Associate position with us?

Undergraduate – Investment Management – Full-Time- Final Rounds My particular interviews with GS were very conversational. Questions were “fit” questions and were not heavily technical.

Walk me through your resume. (A lot of discussion focused on resume and past experiences, probably 80%)
Why are you interested in investment management?
How has prior work experience contributed to your interest?
What aspects of investment management are most appealing?
What extracurricular activities are you involved in?
What attracts you to Goldman Sachs?
How did you find out about the internship opportunities?
What do you want to get out of the summer?
What is your opinion of what is going on in the markets?

JP Morgan Chase

Graduate -MBA

What were the strengths and strategy of your last company?
Describe a team project that didn’t go well? What did you do about it?
You have 1 hour to come up with comparable multiples for a company. What do you do? (Banks maintain databases that update them continually. Get them from there. Some people answer by saying they'll look for comparable companies with similar market caps, product lines, etc., and then calculate the relevant multiples... wrong answer).
An international company is looking to raise funds. What do you advise them, and what is your thinking?
You are advising a multinational manufacturing company looking to set up a plant - what would you advise them?
Value a company for me (on a piece of paper). (Only data given: sales, costs, outstanding debt, interest expense).
How do you value the equity alone of the company?
How do you value the entire firm?
Which would you expect to have higher leverage -a high tech company or a chain of retail stores?
Tell me why you would NOT want to work for this firm?
Describe yourself in one word.
Explain to me each part of your resume and how you made the decision to go from one thing to the next.
Tell me about why you were the best person for the last job you did.
Tell me about a team you were on that had problems and how you dealt with it.
Follow up: If you were to do it again, what would you do differently?
Tell me one of the weaknesses of JPMorgan Chase.
Tell me the ways to value a firm. Explain each. In what cases would you use one versus another?
What is an alternative to declaring dividends?
Why would a corporation not want to have large amounts of cash on its balance sheet?
What are new trends in M&A (they wanted to hear about purchase vs. pooling)?
Tell me how you can apply what you learned at your first job to investment banking.
Do you know what your responsibilities will be as a summer Associate?
If you decided to open a coffee shop in Ithaca what things would you think about? (it boils down to costs, a bit of marketing and NPV)

Walk me through your resume, telling me not what options you chose in your career, but the reasoning for chose them.
Every candidate is asked to choose a word, and only one, for us to remind him/her at the end of the day, what is yours?
Do you think your GPA is indicative of your ability/competence?
You have a very good GMAT; why do you think that you achieved this score because you're smart or because you worked really hard?
Which are the areas where you would like to work at JP Morgan? Why these areas?
Why do firms merge?
What do you think of our merger w/ Bank One? How did it benefit / hurt the investment banking business?
Which banks do you think are targets for acquisition? Why?
Talk about our most recent acquisition.

BofA/Merrill Lynch

Undergraduate

What books have you read lately related to our business? What did you learn from them?
What are some ways you keep current with news in the financial services industry?
What expectations do you have about what it will take to get ahead in this business?
Analytical ability- How many gas stations are there in the USA today?
Walk me through your resume.
Tell me about yourself.
What deals have you read about recently?
How would company X go about valuing company Y? (three valuation methods)
How do you complete a DCF analysis? Walk me through a DCF.
What does a DCF analysis tell you?
What are public comparables?
What industry sectors are you interested in? Why?
Why Investment Banking?
Why Merrill Lynch?
What do you want to get out of the summer?
Any questions for interviewer.
Where do you see yourself in 5 years?
Tell me about yourself.
What can you bring to a team?

Tips:

Read the Wall Street Journal/Financial Times daily and know what is going on in the markets
Read about the company you are interviewing with, be aware of their philosophy and principles
Be passionate
Be conversational
Read Vault Guides, including the Finance Interview Guide - they are extremely useful
Be over prepared

Graduate – MBA - Internship :

How do you assess the current developments in the stock market?
How do you value the entire fish market in Asia?
What is the probability of throwing a 1, 3, 6 and 12 with each time that you toss two dice?
What is 90% of 520?
What are the advantages of issuing a convertible bond? When do you decide when to issue equity or keep bond? What are the factors that affect convertible bonds?

Graduate – MBA - Associate, Energy Investment Banking Position of person who interviewed you: Managing Director (2), Executive Director, Director, Associate Director

What is Project Finance to you?
Where do you see yourself in 15 years?
If purchasing a company would you account for it with the purchase method or another method if you are trying to maximize ROCE?
If you have a portfolio of assets how would you determine how to finance it?
What does deferred tax liability tell you about a company?
Why WestLB?
What have you heard about WestLB?

Tips :

Be relaxed because 6 interviews is a long day. They are generally very nice and open to any questions about the firm.
The last interviewer tried to throw me off by not looking at me and disagreeing with everything I said. He also didn’t introduce himself.

Firm Specific Sales & Trading Questions

Citigroup Global Corporate & Investment Bank

Graduate - MBA

What are the five things you need to price an option?
If you were managing money for GW’s endowment fund would you invest with a hedge fund with a 1/20 fee structure? Why?
If a high yield bond has a yield to maturity of 15%, it would appear you are being paid for idiosyncratic risk. According to CAPM, the market only pays you for systematic risk. Does the 15% YTM on the bond contradict the CAPM principle?
You ride a bike up a hill at 10 MPH turn around and ride down the hill at 20 MPH to the same starting point. What was your average speed?
Suppose you had 100 light switches (numbered 1-100) and you turned them all on. Starting with light switch #2, you flip the switch off and proceed to switch off any switch that is a multiple of 2 (ie: 2, 4, 6, etc). You then move onto #3 and flip that switch and any switch that is a multiple of 3 (ie: 3, 6, 9, etc). Do this all the way up to 100. At the end, how many and which light switches are still on?
How do you take advantage of a yield curve flattening using put options?
What are your thoughts on inflation?
What did you do last weekend?
What do you do for fun?
What is the most important thing you’ve learned from your previous experience?
Is there an industry that you follow? Tell me about it.
What angle are the hands of a clock at when it is 9:30?
What value could you bring to the S&T role that no-one else can. What will make me remember you?
You are on a game show final and the master prize is behind one of three doors. You are told to pick a door and stand by it. The host then goes and opens one of the other doors; the prize is not behind there. You now have a choice to move or stay where you are, what do you do and why?? (hint: the answer is NOT 50:50 probability)
Where’s the Dow?
Where’s the S&P?
Where’s the NASDAQ?

Where the dollar vs. the Yet, Euro, Pound, Canadian Dollar?
Where’s the 5 year, 10 year, 30 year?
I have to choose three people out of twelve, why should I pick you?
T Bond Yields (3 Month, 1 Year, 5 Year, 10 Year, Long Bond)
Oil Prices – View on Oil prices
View on the Market, Interest Rates
What would you do to ensure your success this summer?
Give me 5 adjectives to describe yourself
Give me a 3 minute run-down of your resume
Gold prices?
Why did you pick your undergrad institution?
If you sell 100 at the money calls how would you hedge that?

Credit Suisse

Graduate - MBA

Do you follow the market? Tell me about a stock you like. Since it doesn't have earnings, what's its Price/Sales ratio?
Would you say that you are more of an artist or a mathematician? (apparently he equated equity sales to being an art)
Are German interest rates lower/higher than US rates?
What does the normal yield curve look like and what is different/odd about the current yield curve?
If you are bullish on a stock, how can you use a put strategy?
Give me your opinion on the economy. (Then proceeding to trash my thoughts and told me I wasn’t telling him anything new)
Name a number of recent equity deals CSFB has been involved in?
Explain EVA.
Pitch a stock you like, why, what kind of investor would you try to sell it to? (three times)
What is 7 divided by 8?
Name three things that make a great sales person
What stocks are you watching? Where does it trade, what is its market cap, what is its business, what is demand for its product?
Know basic option diagrams
Where’s the market going?
What would you invest in right now?
If you couldn’t work on Wall St. what would you do?

Goldman Sachs

Graduate - MBA

What would you like to tell me that your resume doesn’t?
How close are you to your family?
Why Goldman?
Are you sure you would like to trade, you seem like you would be much better for research? Are you sure, I could introduce you to the research people?
What do you do for fun?
Explain to me the difference between a trader, a sales-trader, and research sales.
Why should I hire you?
What are your 3 best qualities? What are your weaknesses?
What is your story?
What desks are you interested in and why?
People here work harder than any other firm, give me examples of having to work hard.

What are the kind of things that will help you decide which bank to go to this summer?
Why are mortgage securities negatively convex?

Morgan Stanley

Graduate - MBA

How many cigars do you think are smoked in the US on an annual basis?
A high yield bond and an investment grade bond are both priced to yield 8%, which has higher duration?
How have bonds been doing this year?
What has the market priced in for the Fed through the end of the year?
Are the Red Sox going to sweep the Cardinals?
How is Morgan Stanley different from Goldman Sachs?
Teach me about a product you are interested in.
You’re from GW? How did you manage to get in here for an interview?
What issues will management at this firm face in the upcoming years?
Do you want a cookie?
A zero coupon bond due in 24 years is priced to yield 9%, what is its price?
If you have a zero coupon bond and the company offers to pay par in advance do you take it?
You sell a credit default swap at 150 and buy one later at 75. You buy a credit default swap at 75 and then sell one at 150. Which situation is better?
The yield curve perfectly flat at 8%. You buy a 30 year bond that pays 8% but it is callable in 4 years, how is it priced?
Tell me about a time you had to use estimation abilities quickly.

UBS

Graduate - MBA

If you had $200,000, how would you invest it in the market and why?
What do you think are the variables that move the Hong Kong Property market? (property is the biggest mover on the Hang Seng Index)
What's the most important of the Greeks?
Explain volatility in simple terms.
How is gamma related to delta?
What's your view on the market?
What’s the VIX at?
Why is NASDAQ more volatile than the S&P?
Would you be long or short Vol right now – why?
What’s a credit swap? How does settlement work in a credit swap? How do the traders price the credit swap? (this was an individual’s pre-MBA background)
What other firms are you looking at?
Do you like getting to know 1 thing really well or do you like learning a little bit of everything?
Are the other programs at the other banks similar to UBS’?

Firm Specific Equity Research Questions

BofA/Merrill Lynch

Graduate - MBA

What are your thoughts on regulation FD?
Why sell side as opposed to buy side?
Do you invest in the market? What do you own?
Why GW?
Tell me why you are here?
What do you think is different about my job now and ten years ago?
What do you think is different about my job now and ten years into the future?
What stock do you like? What do you know that the market doesn't know?
What are some qualities you think are important to an analyst?
Explain to me what I do every day? (Interview with a Senior Analyst, not an Associate - roles are vastly different)
How has the role of a research analyst changed over the last 10 years?
What do you think makes a good analyst?
How would you handle a situation where one of your high net worth clients tells you that he/she is going to pull their $50M from your firm because they will pick their own stocks from now on since he/she feels there is plenty of information available to the public to do just as good of a job, if not better than you?
I see that you're a career switcher. How/when did you get interested in equity research?
Why should I hire you? How do you separate yourself from the rest of the candidates interviewing for this job?
What stock do you like? Now tell me something about that stock that the general public does not know? Since you can't answer that question, over the next six months, what do you think would cut that company's stock price in half?

Fidelity High Yield Analyst

Graduate - MBA

Why high yield? As opposed to equity research?
Pitch a stock
If a firm is going to issue debt, and you can only talk to the CEO, what three questions would you ask?
What asset class do you invest in?
How do you value the debt of a firm?
What industry would you like to cover?

Independence Investment Associates

Graduate - MBA

What 2 stocks do you like?
What's your opinion on the market?
What makes you think you are a good analyst?
Name the last three books you've read.
What do you know about research?
What are your finance skills and what are you doing to improve them?
Are you planning on applying to the Cayuga Fund?

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FINANCE INTERVIEW QUESTIONS

Contents

General Questions

Personal Questions:

Academic Questions:

Company:

Work Experience Questions:

*If you cannot answer a question with an example from work then choose a school related or

personal example.

Investment Banking Questions

General

Valuation

Discounted Cash Flow

Cost of Capital / Risk

Private Equity

Sales and Trading Questions

General

Other Finance Area Questions

Wealth Management

Accounting

Project Finance

Real Estate

Firm Specific Private Wealth Management Questions

Goldman Sachs

Credit Suisse

Deutsche Bank

Goldman Sachs

JP Morgan Chase

BofA/Merrill Lynch

Firm Specific Sales & Trading Questions

Citigroup Global Corporate & Investment Bank

Credit Suisse

Goldman Sachs

Morgan Stanley

UBS

Firm Specific Equity Research Questions

BofA/Merrill Lynch

Fidelity High Yield Analyst

Independence Investment Associates