Top 100+ Investment Banking Interview Questions And Answers
Question 1. What Is Investment Banking?
The funding bank plays primary, essential functions:
Acting as an intermediary for capital elevating, and as an marketing consultant on M&A transactions and other foremost corporate movements. As an middleman, it connects companies that want capital with investors who've capital to spend. It helps this via debt and equity services. As an consultant, an funding bank counsels companies on such corporate actions as mergers, acquisitions, spinoffs, and restructurings.
Question 2. What Exactly Do Investment Bankers Do?
Investment banking is the business of raising capital for groups and offering advising offerings on financing and merger activities. Thus, as an instance, a business enterprise will method an investment financial institution whilst it needs to elevate capital or while it needs advice in negotiating and structuring an acquisition of some other organisation. Here are examples of some of the specific functions a banker will perform, in addition to some different critical basics to understand about the job:
Underwriting: an association wherein funding bankers boost investment capital from buyers on behalf of corporations and governments who issue public securities (“public offering”). These securities can come inside the form of equity (IPO, secondary equity issuance) or debt (excessive-grade debt, high yield bonds, government securities, etc). Investment banks make cash via securing underwriting charges (% of the capital raised) from the public offerings.
Financial Restructuring: offer advisory offerings which includes recommending the sale of belongings (company divestitures), capability bolt-on acquisitions and merger possibilities, or even running with M&A bankers to promote the business enterprise totally.
Investment Banking Job Hierarchy: Analysts → Associates → Vice Presidents (VPs) → Directors → Managing Directors (MDs)
General Pitch Book: Created through the bankers and used to manual introductions and displays throughout a sales pitch. Pitch Books include wellknown information and consist of a extensive kind of promoting factors, which include a top level view of the funding financial institution, together with details of its particular talents in research, corporate finance, and income & trading, and commonly presents updates on enterprise/market and pointers at the finest capital shape method for the organisation.
Deal-Specific Pitch Book: Highly custom designed depending on the scenario; consists of valuations, comparable enterprise analyses, and industry analyses, as well as the bank’s popularity, prominence and acumen of its studies analysts, overall performance on past/similar work, and facts on scores/expertise.
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Question 3. Why Do You Want To Be An Investment Banker?
Responder #1: As I have grown in my career, I actually have had the possibility to work in numerous jobs and had been able to speak with people worried in a spread of profession tracks in one of a kind fields. Among these are regulation, schooling, entrepreneurship, medication, non-income organizations, investment banking, and sales and buying and selling. Based on those reports and contacts, I determined that the most appealing subject to me became investment banking.
In particular, I trust funding banking gives the high-quality surroundings for increase and development in the areas of finance, economics, and accounting—all essential regions for enterprise. Banking offers a outstanding quantity of schooling, a steep on-the-process studying curve, a competitive paintings environment, and proficient people to paintings with. As a result, I trust it gives the fine opportunity to enhance my skill set and follow it on a real-life and contemporary basis. Furthermore, I enjoy conditions that contain analyzing strategies, environmental situations, shape, and future possibilities. There is no other enterprise that I realize of that gives a primary-year graduate with the quantity of responsibility that funding banking offers. I can’t think about a better manner than to hit the floor running right out of faculty.
Responder #2: The first-class advice my father gave me became “some thing you do, placed yourself in a role to be successful.” And I assume proper out of university, investment banking offers the pleasant enjoy to be had for folks that need to work inside the company arena, fingers down. I recognize the work turned into going to be difficult and the hours excruciating, however I revel in the stress and mission to supply that appears to return up on a day by day foundation. Also, in my view, finance is unpredictable and exciting; I enjoy the fact that there's in no way an ordinary day.
Responder #3: I think for me the work is worthwhile. Nowhere else out of university will you get a better corporate experience. The work will always be hard and you’re going to be running with a number of the brightest human beings. This fosters a competitive surroundings in that you are nearly forced to develop professionally on a day by day basis.
I think that’s one of the foremost reasons I need to come back to New York: the opposition. One of the wonderful blessings running out of New York is the networking opportunities to be had with such a lot of vibrant, hard-running young experts round. Chicago will continually be my domestic, however New York is the center of the economic global and I need to get the exceptional enjoy viable.
Question four. What Qualities Do You Think Would Make You Successful Investment Banker?
I may be a hit in investment banking due to the fact I actually have a “whatever it takes” mind-set. In many approaches it is able to be inconvenient and draining to do so, but it’s been ingrained in my head to have an entrepreneurial mind-set and to do something it takes to get the task finished.
I had my first paintings internship with a paint organization, all through my freshman yr of university. During the spring semester, interns had been predicted to visit their hometown as soon as a week or as soon as each weeks as a way to have sufficient time to do marketing and sales paintings. Obviously for beginners in college, this could be very taxing. I knew it changed into going to be difficult, but I attempted to commit as plenty time to the program as feasible. Some weeks I went domestic two times every week if I needed to get advertising work achieved for the organization. It changed into thru this revel in that I found out how tough I can work after I’m placed to the test. I consider I can be a hit in investment banking because I’m a grinder who will do whatever it takes, each time it takes.
Importantly, as I to go into banking, I know what I am getting myself into. I know the grueling hours; I recognise what stage of work is anticipated of me. This isn’t a position I am applying for honestly due to the fact I “see the dollar signs and symptoms.” I know banking could be a useful experience that might help set me on the right route for expert achievement inside the future.
Other crucial features for a banking analyst:
Being a fast learner
Having a “Work difficult/play difficult” mindset
Good attitude and a crew player
Not being afraid to invite questions nor to be wrong from time to time
Strong attention to detail
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Question 5. What Do You Think An Analyst Does On A Typical Day?
I understand analysts are predicted to go through 2 years of in depth finance boot camp. I anticipate the hours to be long, normally doing monetary modeling, making pitchbooks, doing due-diligence, and yet again having to reschedule plans with pals.
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Question 6. Why Do You Want To Work For This Bulge Bracket Bank?
I like the prospect of having the exposure to many specialists, industries, merchandise, and ideas in a bulge bracket firm. I understand that in that surroundings I’m going to get get right of entry to to the nice gaining knowledge of revel in viable. Also, I like how (this precise financial institution) has both a greater informal and entrepreneurial environment than many other banks. I also think that being in an Industry organization, I might be capable of get more exposure to a large number of products. This is an vital attention for me.
NOTE: Make sure you know approximately the subculture and philosophy of the financial institution you’re interviewing at! You need to specific that you understand the company/group’s view in this concept, and that with them you’ll be “working for the best human beings in banking, who will challenge you to learn extra.
Question 7. Why Do You Want To Work For A Middle Market Bank?
My #1 precedence is to be in New York. My view is, “if I’m going to be operating ninety-a hundred hours a week, I need to be close to my family and pals in NYC.” In addition, (this Middle Market financial institution) gives a completely unique revel in, an opportunity to gain exposure to higher-degree executives, and also greater possibilities, if I paintings in the M&A institution, to work on each purchase-facet and promote-facet offers. That’s surely some thing that is a key consideration for me. I need to work on offers that are in reality important to the human beings involved as it will supply me the stress to carry out to the first-rate of my ability—that is an important aspect within the function I am searching for. Finally, I experience that with the lengthy hours I am going to be operating, I want to be working for a company that I experience. The reality that (this bank) is rated as one of the “Best Companies to Work For” is actually a plus.
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Question eight. Why Do You Want To Work For Goldman Sachs?
I need to work for Goldman Sachs due to the fact I need the excellent ordinary enjoy possible. I need to work with individuals who are smarter than I am, so that I can be constantly challenged to turn out to be better at what I do. Also, I consider that, hands down, Goldman Sachs would offer me the nice deal revel in. Goldman invented and has because revolutionized, usually over, what defines an “funding bank.” Only Goldman Sachs can offer a advanced deal waft across all merchandise and markets.
When it comes right down to it, the work is profitable and I enjoy it. My internship this summer season definitely affirmed that I want to do investment banking at the least for multiple years. Although I might be creating a 2-12 months sacrifice outdoor of labor, I revel in the venture to execute and I can’t see my see myself working for a better firm than Goldman Sachs. This is a sacrifice I am maximum organized to make for the sake of my career and expert improvement.
Question nine. How Was Your Internship Experience At Barclays?
I had a great revel in with Barclays. I labored with the Consumer Retail institution in Chicago, and it become a totally tight-knit group:
28 experts which include the Vice President and Managing Director. Though I enjoyed the revel in and I were given a glimpse of a diffusion of deals, it did now not provide the giant network of human beings that New York gives. I acquired an offer from the Energy group, but I recognize that if I as a substitute paintings for Goldman Sachs, I’m going pop out with a network of the fine and brightest humans on Wall Street.
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Question 10. Tell Me About A Deal You’ve Worked On?
Attention, ladies and gentlemen! If you have got prior investment banking revel in the interviewer may be much more likely to want to spend a number of time speaking about your enjoy in element. The maximum vital element to get rid of right here is: Do no longer write down deal enjoy for your resume except you're very assured you recognize the whole lot that took place in the deal technique (inside the plain obstacles of your rank inside the organization). If an interviewer begins asking you questions you don’t recognise, then it can mean the end of your interview method with that bank.
The interviewer will also need to recognise in case you did any sort of valuation modeling for the deal. If so you’ll want to surely apprehend how the company functions (the economics of the enterprise, how the corporation makes cash, how buyers cost the industry) and the way you valued the employer (DCF, multiples, and many others.). Make positive why the organization desired to promote itself, increase debt or fairness, accumulate groups, or be sold through other agencies. Be able to join company valuation with corporate approach.
Question eleven. Why Do You Believe You Would Be A Good Investment Banker?
I think one of my pleasant attributes is the capability to research speedy and to be efficient with my time. Currently, I even have a 3.7 cumulative GPA, which isn’t outstanding, however deliberating that I even have run my very own business full-time in the course of faculty and am supporting myself through college, I think it’s a good accomplishment. I didn’t constantly have sufficient time to place into my studies, however I knew that if I changed into efficient and green, I may want to still gain robust grades.
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Question 12. What Is One Concern You Have About Investment Banking?
One opportunity: Honestly, my biggest situation with funding banking is the politics that come along with the commercial enterprise world. I honestly had a first-hand experience with this trouble for the duration of my internship. It turned into complex with the aid of the reality that I needed to pass places and, on top of that, exchange corporations. I presently have an offer with Bank of America Merrill Lynch Healthcare, and it’s the offer I wanted since it’s arguably one the most powerful organizations at BAML, but it wasn’t one in all my favourite experiences of the summer.
Another opportunity: One subject I actually have about funding banking is the balance among work life and family existence. Family and pals are an vital part of my life because they have formed the individual that I am nowadays. That is why my #1 priority is to live in New York. If I’m going to be running 90-100 hours a week, then I need to be as close to own family as feasible.
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Question thirteen. Would You Prefer A Product Or Industry Group? Why?
Personally, I could select an industry organization, virtually because I assume it might provide me extra exposure to all styles of deals and funding banking merchandise. Also, specially I enjoyed the Technology, Media, and Telecommunications area that I labored on this summer season. But honestly, I’m now not too concerned about what institution I am in, due to the fact I trust that each organization will provide distinctly comparable experience normal.
Question 14. Why Should I Pick You Instead Of Someone From Harvard?
Yes, I am from the [Insert College], however I suppose I can offer enjoy that other students can’t. I chose this faculty mainly as it was in-nation and had decrease tuition. I’ve simply learned lots and were stretched some distance beyond certainly the confines of lecturers by having to assist myself through college. I’ve taken complete gain of all of the educational resources the school has to provide.
Being from a non-middle school, I even have a bit of a chip on my shoulder. I understand I need to show myself. I intend to apply this as motivation to work difficult and display my ability. And additionally, I recognise I’m a great analyst. I assume my song file speaks for itself, moving from a regional workplace to the great group at [insert bank].
NOTE: Be careful of ways you return off while saying this. Be humble however confident. Speak of your accomplishments specially, and what makes you a terrific asset, however don’t communicate approximately “how tremendous you're.” If you need to illustrate that you have potential, come from an absolute in preference to relative location. Say “I am skilled at X” as opposed to “I am better than nearly each person at X.”
Question 15. Hat Are four-five Skills That You Think Are Essential For Banking?
Strong work ethic
Positive, courteous mindset
Strong attention to element
Ability to analyze speedy
Not afraid to invite questions whilst stuck
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Question sixteen. Where Else Are You Interviewing? Are You Interviewing Outside Of Banking?
I am presently handiest interviewing at funding banks; I am no longer inquisitive about another discipline in the meanwhile. At the instant I am simplest interviewing at 2 other funding banks.
NOTE: Whether it’s proper or no longer, we strongly endorse that you kingdom which you are simplest interested in investment banking. If the interviewer finds out you are comparing different fields, he can also question how serious you are approximately banking. Also, if you can name the opposite corporations you're interviewing with, feel free to accomplish that. But make sure now not to fabricate every other interviews. Wall Street is a small location and bankers have pals at nearly each different financial institution. There is a excellent chance your lie might be stuck, and it will be an embarrassing end on your possibilities with that financial institution.
Question 17. If You Had The Opportunity To Jump Early To A Private Equity Or Hedge Fund Like Some Of The Other Analysts/associates Here, Would You Do So?
No I could not. I firmly believe in loyalty and I plan on committing to the company for my complete two yr software. I assume funding banking will provide me a notable platform if I were to pick out to enroll in the buyside, however I truly would now not go away early.
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Question 18. If We Gave You An Offer Right Now Would You Accept?
YES. I will signal right now.
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Question 19. What Other Investment Banks Do You Like The Most?
Suggest one bank which you respect in the enterprise and kingdom a very good best it possesses. Then counter that with announcing the bank you are interviewing at additionally has this super high-quality, and may even be higher. An instance: “Goldman has a well known and pretty respected corporate tradition and teamwork philosophy. However, [Insert Bank] has precisely that however after talking to personnel on the bank, I’m satisfied that the level of teamwork and way of life right here are very robust, and likely a higher healthy for me.”