Congrats, you landed an investment banking interview! But what interview questions do you need to ace to land the position?
In this guide, I’ll go over the six most important investment banking interview questions I have my students prepare for. We’ll cover:
- How to effectively answer each question to maximize your chances of landing the internship or job.
- Some rare gems of investment banking interview tips and tricks.
- The #1 question you absolutely need to crush.
Now let’s get started!
Technical Investment Banking Interview Questions
Naturally, most people assume the technical questions are the most important. In reality, that’s not the case. Believe it or not, it’s actually the “Behavioral” questions, but we’ll discuss that later in the video.
The technical questions just prove that you know what you’re talking about, basically whether you’re qualified to be there or not. Now, some firms do place a higher weight on technicalities, so you definitely want to come prepared.
Let’s break it down.
Accounting
This category represents about 75% of the technical questions you may be asked in your investment banking interview. It really just revolves around your knowledge of the three financial statements:
- Income Statement
- Balance Sheet
- Cash Flow Statement
If you know how to model, and properly balance a full three statement, this should be relatively easy for you. If you’re trying to memorize from a guide, do keep in mind that interviewers know how to reword things. This can confuse you, and get you off your game.
So make sure you have a good understanding of the subject.
Valuation
These interview questions primarily revolve around your knowledge of how a discounted Cash Flow Model Works, as well as a Comparable Analysis.
Here’s a few examples of questions you may be asked:
- Can you walk me through a DCF?
- How do you calculate WACC?
- If you were trying to value a chemicals company, which Valuation Metric would you use, and why did you choose that method?
As long as you’re pretty familiar with how a DCF works, and how to do a Comparables Valuation Analysis, this shouldn’t be an issue.
Brain Teasers
Now, these aren’t as common, but every once in awhile an interviewer likes to throw a curveball and test your brain power. Questions may be similar to this:
“If you had all the marbles in the world, how many marbles would it take to fill up all the buildings in New York City?”
But before you answer…
- Take your time. If you don’t know the answer, that’s ok. You can actually say something like, “Okay, give me a second. Let me think about how I would approach this.”
- Slowly explain your thought process, how you would solve the problem, and your answer.
For a question like this, you need more information. Unless you have all of the data, like square footage, volume of every building, etc. you can’t answer the question correctly.
And that’s 100% okay. Their whole goal is to throw you off. Good composure, and taking your time is key. They want to see how you think and apply your problem solving skills.
Advanced Modeling
I’ll briefly touch on this subject, as it’s unlikely most will have questions like these, but they do rarely come up, especially if you’re at an M&A specific firm or a private equity firm. These interview questions focus on your knowledge of how an M&A or LBO model might work.
Here’s a couple examples:
- What are some characteristics you might look for in an acquisition target, and why?
- How can you tell if a merger is creative or dilutive?
If the firm has more of a niche and strategy, it’s a possibility this will come up and it would be wise to be prepared for questions such as these.
Market Based Investment Banking Interview Questions
Similarly to the “Technical” interview questions, the whole thought process behind these questions is for the interviewer to gauge whether you know what’s going on in the market right now.
Are you informed and up to date on the latest interest rates, earnings, IPO activity, M&A activity, and so forth?
If you’re interviewing for a specific investment bank, you’ll want to be “In the know,” of information that relates specifically to them.
Tips for staying informed:
- Follow our daily newsletter. It’s like a Spark notes version of the Wall Street Journal, but more in depth on what’s important for you to know. It’s called The Breakfast Check.
- Read through about 30 second of information each day via our link, and you’ll already be ahead of the game.
- Do a little more digging of topics you’re really really familiar with, and interested in so you’ll look like a professional.
Experienced-Based Investment Banking Interview Questions
Now, the good news is that you’ve made it to the interview. You’re obviously doing something right. They’re already interested in you and the experience that you have to offer.
As far as questions go, this is more like your typical, “Walk me through your resume.” Or they may just ask you questions about school, internships, work experience, etc. You really don’t need to over prepare for this. It’s as simple as telling them what you’ve done, and why. Like I said before, if you have experience and were impressive enough to get the interview, you’re already doing something right.
Personality-Based Investment Banking Interview Questions
So you remember in the beginning when I talk about the one question you absolutely need to crush? Yeah, this is the one. I’m talking stories, personality, essentially what makes you interesting and likeable.
Storytime
If you really want to land this job or internship, there needs to be something unique about you and what you have to offer. You need to connect with the interviewer, and make an impression.
Your story should be either really weird or interesting, and do the following.
- Help you stand out.
- Grab their attention.
- Make them remember you.
Maybe it’s a story about a famous person you met, and how that encounter led you to investment banking. Or about your dad back in the 80’s, in the jump on era or something like that, that got you interested in the field. Whatever it is, it needs to be different. It’ll be a refreshing break from all the generic, bullshit answers they’re used to hearing, and will help them remember you at the end of the day.
The Art of Sucking Up
Now, half the time investment banks are like a fraternity. Let’s be real, no matter how smart you are or experienced, if they don’t like you, they’re not going to hire you. Simple as that.
It’s essential that you connect with the person interviewing you. If you learn he likes football, go off on a tangent about football. Maybe he mentions that he played lacrosse in college, and you did as well… talk about it!
Whatever it is, you need to find some sort of connection or common ground. Stroke their ego a bit. This will seriously increase your chances of getting the position.
Firm Knowledge Investment Banking Interview Questions
You may not be asked any direct questions about the firm, but it’s imperative that you showcase your knowledge of their company anyhow. You need to make sure you’ve researched the company, their leadership, and their recent deals. Show that you didn’t just randomly apply for this position, but that you have a real and specific reason for wanting to be there.
Not only will you seem more knowledgeable and interested in their firm, but your conversation will flow much smoother
Why Do You Want To Be There?
If they ask you, “Why JP Morgan?” Or why so and so… This is your opportunity to tell stories about different people you talk to, their experiences, and why after hearing their stories you knew that working at JP Morgan, (or Goldman Sachs, etc) would be a perfect fit.
If you know someone at the firm, bring them up. Name drop like crazy. The more people you know on the inside, the better your chances are of actually getting the job or internship. Networking ahead of time is essential. If you have five people on the inside pushing for your hire, versus the other student who only has one, your odds of landing the position are much, much higher.
Showcase your knowledge of the company, the people you know, and why you want to be there.
Final Thoughts
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Now, I’m going to turn it over to you. What other types of investment banking interview questions do you think are vital to crush your interview?
Is there anything you’d like us to expand on? Let us know by commenting below!