Asha Kiran

Archive for the ‘Investment Banking’ Category

The finance industry is one of the largest sectors in most
developed economies and as such offers many opportunities to
build an exciting and rewarding career. One area which
attracts much attention is investment banking. It’s a high
profile part of the industry because of the types of
business that it specialises in – arranging stock market
listings, mega-bond offerings and takeovers for businesses
seeking financing and expansion. It is also one of the most
lucrative areas in finance, commanding six figure salaries
for first year. Accordingly, investment banking is a magnet
for those seeking high flying careers. This article, part
one of a three part series explores the investment banking
industry including the good, the bad and the ugly.

Part one discusses some of the advantages and attractions of
working in investment banking.

It’s in the money! Of course one of the top attractions for
many is the potential money that comes attached to jobs in
the industry. The industry demands a lot from the people
that work in it both in ability and commitment. To attract
top talent, the industry rolls out large pay packets. Bulge
bracket firms such as Goldman Sachs, Morgan Stanley and
Merrill Lynch can pay more than six figures for b-school
grads. On top of that, there are sign-on and year-end
bonuses that can double, triple or generate even higher
multiples of base salary. At senior levels the compensation
reaches even higher levels of the stratosphere – managing
directors can expect as much as mid-seven figures in good
years.

Another allure is the fast paced action on offer. There’s
never a dull moment as an investment banker. The work
involved in arranging share sales, bond offerings,
acquisitions and sales of entire businesses is fast paced
and complex where details and variables can change rapidly
with movements in the markets. This presents a huge
challenge for those delivering the goods and ensures that
life is almost always moving quickly.

The prestige factor can also be attractive to some. The
nature of the business often involves working with major
public and private sector organisations, particularly at the
leading investment banks. Deals can include initial public
offerings of major industry players and soon-to-be market
leaders. Depending on the industry and location,
transactions can also be industry changing events such as
privatisations of state controlled entities.

As an investment banker there is always the opportunity to
meet and interact with senior people. Not only is this an
opportunity to better understand how top people in a given
industry think and operate, it can present opportunities at
many points along the career path. On top of private sector
contacts, there may also be interaction with senior
government officials, especially in countries where the
state maintains a high level of investment an industry.
These all important connections can prove useful.

For those that are attracted to leadership and
responsibility, investment banks do not disappoint. The
rapid pace of the industry means that those progressing
through the ranks can be given significant levels of
responsibility. It is quite normal for those in their
mid-thirties to be responsible for entire business units.
Investment banking is a big plus for those that like to be
boss, although it must be noted that there are many levels
of management within the larger banks.

Finally, a career as an investment banker can offer the
opportunity for extensive travel, whether it is between
cities within the country or as is more and more common,
across international borders. As bankers progress through VP
and Managing Director levels, there is the requirement to
spend more time cultivating and developing client
relationships. Often this is done in different cities and
different global locations. It can be exciting as well as
enlightening to experience the different cultures and places
located outside of your doorstep.

And there it is some of the main attractions for signing up
as an investment banker – money, travel, action, prestige,
leadership and high level connections. Listed together these
almost sound like a clich

OK, picture this: These investment banking interview questions are fired at you now in quick succession by two investment bankers sitting opposite you. Are you capable of answering them on-cue, right now?

“How would you calculate the value of a bond?”



“What stocks do you follow?”



“Do you play golf?”



“What’s the best idea you’ve had and how will you top it?”



“What is put-call parity?”



“Ever found a innovative solution to a complex problem?”





“Without using paper, what is 17 x 8.5?”

If you can’t answer these now, I’ll be honest, your chances are slim. These are only a FEW of the 80+ questions you could get asked at your investment banking interview. And you only get one chance to make your impression on these busy people!

Now, let me give you a couple of model questions and answers that are taken right out of my eBook.

If the interviewer asked me about a time when I had been in a leadership position and there was a difficult member of the team who was causing some aggravation, and how I handled the situation, I would say:

“I decided to sit him down and outlined his specific skills, which were X, Y and Z. I told him that the team needed his skills and of course, his valuable input. I reminded him of how exciting it would be if the team accomplished our goal. I kept a friendly attitude and carefully addressed the fact that his attitudes/actions were not congruent with what I knew he was capable of and reminded him of his past successes. The meeting ended on an energetic note and he assured me of his commitment; he only had to be reminded of why the goal, and why working with our team with his specific expertise, motivated him. He was quickly back on track achieving A, B and C, and ended up a great person to work with. I was proud to have him on our team.”

Here’s what I would say when asked a question like “What is Beta?”:

“Well, beta is a measure of the sensitivity of a security’s return in relation to the market. If a stock has a beta of more than 1, it means that it is more volatile, or “swings more” than the market. And if a stock has a beta of 1, it is as risky as the market. If the beta is less than 1, the stock moves less than the market. But if a stock with a higher beta and therefore a higher risk would also indicate a higher return and vice versa. Basically, a stable blue-chip would have a beta of close to 1, where a volatile bio-tech firm would probably have a beta of more than 1.”

Do you see how easy it is once you have the model answers?

Here’s the secret. You don’t need overcomplicated theories that take countless hours to learn before you know how to answer investment banking interview questions [http://www.ibinterviews.com]!

All you need is some structure and a cheat sheet. So keep that in mind before you go to your investment banking interviews: it might make the difference between having a high-flying career in investment banking or on the other hand, that devastating rejection letter.

I wish you the best of luck in your interviews, and hope this article will help you answer some of the tough investment banking interview questions you will soon face. If you’d like more, be sure to check out my eBook at my website, which you can download and start reading in the next five minutes.

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You have worked very hard on your resume and have finally rewarded with an investment banking interview. Where are the interviewers looking for, and how can you bring about the best of you in an interview? Follow these 10 secrets to Investment Banking Interview Success and get your second round with ease.

#1. Observe A Star Salesman
You may wonder what this is all about – I’m not interviewing for a sales position here! Well, you have to sell yourself to the recruiters in order to get hired. Every candidate is a sales in a way and this skill is going to critical as you move on to the next rounds of interviews. The good news is, this is a learned skill and everyone can do it with diligence and practice.

#2. Listen Well
Surprised? All salesmen talk, but good salespersons listen. In order to promote your product (yourself in this case), you have to figure out what your customer (the recruiter / interviewer) is looking for.

In general, the firm asks them to look for someone with strong quantitative skills and good attention to details; but each recruiter has his/her own personal preference and it helps immensely if you can address directly to that.

#3. Look For Commonalities
If you observe and listen well you will bound to find some common points between you and the recruiter or interviewer. It could be the same gender, interests, background… it doesn’t matter what it is but the purpose is to build a relationship between you, and relationship implies trust.

At this point, you can frame your experience based on these commonalities – are you both interested in volunteering? Focus talking about your experience in this area. Maybe both of you aspire to own a business someday and you can then pull in your entrepreneurial experience in college.

#4. Prepare A Perfect Self-Introduction
90% of the time your first question would be “tell me a little bit about yourself”. This is the perfect opportunity to introduce yourself as someone relevant and valuable to the firm. How? You can do this by highlighting experiences that best represent the attributes of a good junior investment banker, e.g. a fast-learner, work well under stress, and paying attention to details.

#5. Lead Your Interview To Ask the Question You Want
This is key. Try your best to end your answer mentioning an experience that is both interesting and can highlight your strength. The trick to make it interesting is to say something positive about it.

For example: “I have a rare opportunity to take part in this project where I learn first hand to how to work under stress and deliver results on time.” The interview will most likely be interested to learn more.

#6. Pack Your Answers With Catchy Keywords
Now that you have gained your interviewer’s trust, it’s time to deliver a quality presentation. You will do yourself a big favor by throwing out good keywords throughout the interview. Classic keywords include “analysis”, “business”, “strategies” as well as the attributes mentioned above. You should also take advantage of action-oriented verbs such as “lead”, “initiate”, “build”, similar to what you have done in your resume.

#7. Frame Yourself To Fit Their Needs
Understanding isn’t enough to get you the job, of course. You should present yourself based on the experience relevant to his/her preference. A relevant internship in a bank or major corporation would be ideal. If there isn’t any, don’t stretch it – in many cases being a generally hardworking, enthusiastic and friendly person with some interesting college experience is enough to get you into the entry position as an Analyst and Associate.

#8. Ask The Right Question
In an interview or any occasion that you want to impress someone, asking the right question can help you find out more about what the person is looking for in a candidate.

Since you have already gained his/her trust through the newly established “relationship”, your recruiter will be more open to talk about what he/she really likes and dislikes. That’s THE information you need, and the easiest way to impress.

#9. Create A Good Experience For The Interviewer
In a successful interview, both the interviewee and interviewer talk a lot. The trick is to engage the interviewer into lively conversations so he/she has a good interview experience with you and thus more likely to pick you for the next round.

#10. Practice Makes Perfect!
It is quite a challenge to carry on a conversation with all these in mind, but you can only get better and better with practice. Try talking to recruiters within and outside of the banking industry. By the time you have the interviews you should have mastered the art of selling yourself.

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Investment banking interviews can be all day affairs where you interview with a dozen or more employees in many different departments of the company. Each interview will generally last 30 minutes. The interview process has been termed superday because it is not unusual for you to be at the company for 9 hours or more in one day being interviewed. The purpose of this marathon process to answer three questions: are you intelligent, can you perform the duties required of the job and does the interviewer like you. Now that you know the crux of the interview, here are 3 easy steps to follow to allow you to ace your investment banking interviews.

Step 1: Are you intelligent

The oldest brain teaser puzzle is the Sphinx’s riddle presented to Oedipus. The riddle is “What is it that walks on four legs, then on two legs, and then on three?” Everyone before him that failed to answer the riddle was killed but Oedipus gives the correct answer which is man. When you first hear that riddle you may freeze and have no clue as to the answer. That is why the question is asked. Investment bankers are daily presented with challenging scenarios that they need to resolve. The interviewer is judging whether or not you will be able to use reason to figure out the answer.

Step 2: Can you perform the duties of the job

It is possible to solve the Sphinx’s riddle but, if you don’t know how to calculate the cost of capital or a bond yield rate, you will never get a job as an investment banker. Interviewers will ask you a barrage of technical questions to see the breadth and depth of your knowledge required to succeed as an investment banker. These questions will probably take the format of a business case study. You will be presented with information on a company and then are asked multiple questions that require you to calculate the financial position or condition of the company. These questions will cover all financial calculations that you have learned at University. The interviewer is also judging whether or not you have the commitment to the long hours required in this position and that you are enthusiastic.

Step 3: Do I like you

Employees want to work with people that are like them and that they find agreeable. If your personality style is contrary to the corporate culture, it is unlikely that you will be selected for the position. How do you get the interviewer to like you? You need to have a compelling story that highlights what you do outside of work, obstacles you have overcome in life and what are your goals. This allows the interviewer to determine whether or not they want to work with you. You may be the brightest financial mind to come out of University but if you personality conflicts with the interviewer you will not be hired. Spend time putting together a short pitch about yourself that is compelling.

Follow these three steps to ace your investment banking interview.

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One of the basic tenants of economics is supply and demand. When demand exceeds supply, there is an enormous amount of competition for the item and prices increase dramatically. Investment banking is a prime example of demand greatly exceeding supply. It is not unusual for investment banks to receive 100 to 200 resumes for one vacancy. For the recent university graduate that is hired for that one vacancy, they can expect to earn a salary greater than any of their fellow students will earn. What is it that allows that one person to get hired while others are rejected? That person is able to correctly answer 5 questions in their investment banking interview. If you want to be the one that is hired, make sure you do not get the answer wrong on any of these 5 common investment banking interview questions.

Question #1: Why do you want to be an investment banker?

Investment banking is one of the most financially lucrative jobs in the world today and there are many people who are interested in entering this profession. The interviewer is judging your motivations for wanting to be an investment banker. Is it money, a desire to help people, or to make changes in other people’s financial position because of the investment advice you give? If your goal is the money, your chance of being hired is pretty much nil.

Question #2: Why do you want to work for this company?

This question is asked to see if you have done your homework and researched information about the company. If you are not aware of recent news about the company or you do not know who the CEO of the company is, the interviewer will realize that you haven’t shown enough motivation to learn about the company. If you are not motivated, they will not hire you.

Question #3: What are you expectations of the job position and responsibilities?

As an investment banker you can be working as an analyst or as an associate. The requirements for the job are different based on the position. If you are not prepared to understand the requirements of the position, the company will not hire you.

Question #4: Are you prepared to work up to 100 hours a week?

Investment banking is notorious for having some of the longest work hours of any position. The work hours usually include weekends and most bank holidays. If you are expecting to not have to work such long hours or to have bank holidays off for vacation, then investment banking is not a good fit.

Question #5: How do you value a company?

The interviewer realizes that you do not have work experience as an investment banker and therefore have never actually valued a company before. There are many methods that can be used to value a company. The recruiter is judging how many different methods you know there are and in what situation would you use one method over another.

When you apply for a position in investment banking you will be asked many questions to determine whether or not you will be hired. Your investment banking interview questions will include all these 5 questions. Failure to answer these questions correctly will derail your chance of becoming an investment banker.

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