Asha Kiran

Posts Tagged ‘Investment Banking’

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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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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The Green Investment Bank has been formed in order to fund renewable energy and low-carbon projects. The bank will raise equity for green investing in wind turbine farms, smart grids and other such renewable energy projects. The GIB is focusing on green technologies which are set to provide an increasing number of jobs and related businesses in the UK. The UK is behind its international rivals, and must take action fast. Could green investment banking be the answer to the UK’s needs?

Pro – The green technologies and services market is worth more than $3 trillion per annum. Currently the UK has only around a 5% share of this market. Germany and France have double the market share of the UK. Brazil has created half a million new jobs in green ethanol promotion, and nearly quarter of a million work in Germany in the green investing sector. Green investment banking will help the UK economy recover, and help the UK to move towards a low carbon economy, and meet its responsibilities to the Kyoto treaty.

Pro – Ultimately, if funded properly from the beginning, the GIB will pay for itself many times over. It is an amazing opportunity to raise the funds for projects that are desperately needed in order to tackle climate change.

Pro – There are way too many sources of green funding from the government, which do not coordinate between each other, such as the Carbon Trust, the Energy Technologies Institute and many more. The Green Investment Bank will solve this by consolidating projects and public funds.

Con – There are many unresolved issues with the Green Investment Bank, such as where the funding will come from. The government was going to give 1 billion pounds, with the private sector matching this, but this is now in doubt. Perhaps it will be funded by green bonds and ISAs, and by adding a tax to energy bills. This funding and structuring problem needs to be solved before the bank can function properly.

Con – Until the ideas for the GIB are brought into fruition, investors are not making any moves, but rather just waiting to see how things will work out. The bank has not been clear in what its exact objectives are. It could even become just one more public fund with capital that is under-deployed. The business model of the Green Investment Bank as it stands means that it will unlikely be able to deliver large-scale investments. The bank really needs to align itself with other providers of financial services, and then it will be able to give assistance to high-risk, high-gain green projects that are so far not proven.

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Just like most other corporate companies, banks too receive loads of resumes and letters like investment banking cover letters on a daily basis. The truth is, with the bulk of things they receive, they don’t really have time to go through each and every letter from cover to cover. So how do you make them read yours? Here are some tips.

Keep it short

Investment banking cover letters are not entries to an essay writing competition, so don’t put any unnecessary things there that will only make your letter too lengthy to read. Include only the important things in such a way that the meat of the letter can be read within the first 30 seconds. Chances are, if the people reading your cover letter lose interest from the beginning, they won’t even finish reading the whole thing. Get to the point – who you are, what you’ve done, and why we should pay attention to you.

Follow a structure

Plan how your letter is supposed to look and sound like. Just like any sound composition, the elements in your investment banking letter should be coherent. Regardless if the points you want to convey are present, they won’t make a good argument if they are not presented logically. Readers of your finance cover letter have little time. Don’t expect them to have lots of patience.

Include only Relevant Information

Select the items relevant to the point you’re making. What the investment is about? How profitable do you expect it to be? There’s no need to layout the history behind the concept or even the brainstorming that led to the idea of the investment. These things you can discuss in person. They have no space in an investment banking cover letter.

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