Investment Banking interview questions with answers
Often, if the interview lasts significantly longer than its allotted time (typically 30 minutes) it is a good sign. This is especially true if you are interviewing with a relatively senior banker. Another good sign is when the banker with whom you are interviewing ceases to ask you questions and starts telling you about the benefits of the firm. This is known as switching into “sell mode” and generally indicates that the banker thought highly of you and wants you to work there. A third potential sign of interest is if you are asked with what other banks are you interviewing and how far along you are in the recruiting process with those banks. Finally, it generally indicates a good interview when the interview feels more like a conversation than a formal question and answer session.
Generally, you will have one or two first round interviews. If you pass through the first round, you will be invited back for more interviews. You may wind up meeting with anywhere from four to twelve or more bankers in subsequent round(s).
Ok, so reading this particular post isn’t going to help you get a job. But I happen to feel strongly that asking applicants technical questions in interviews is silly (though few in banking share my viewpoint). Here’s why:
1. Banking is easy. That is to say, the knowledge that you need to be a successful investment banker is not that difficult to learn. “Banking is not rocket science.” You’ll hear that phrase thousands of times. It’s true.
2. You learn on the job. No matter how many corporate finance classes someone has taken, nobody comes into banking knowing how to value a company or do a model or put together a pitch.
Therefore, I don’t care if you’ve memorized the formula for WACC or the key assumptions of a Black-Scholes model. You need to be smart and you need to have the right attitude. Convince me of that and I’ll teach you to be a good banker.
If you have no idea about the answer to the question posed, then you should just move on. However, if you make a valid attempt, and get the answer wrong, then it probably makes sense to ask for the correct answer. You never know if you will be asked the same question again in a later interview so you might as well get it right the second time. The only time that I wouldn’t ask the interviewer for the answer is if you think the interviewer doesn’t know the correct answer (yes, bankers sometimes ask questions to which they don’t know the answer). If the interviewer doesn’t know, then he or she is just going to look stupid, and that’s never going to help your cause.
If you have no idea of the answer, say you don’t know or you don’t remember or you’d have to think about it. Technical questions are not just posed to see if you know things but also to see how you handle stress. You’ll generally score more points in an interview if you calmly, coolly and matter of factly, state that you don’t the answer than you will fumbling around for ten minutes trying to B/S your way through it. And if you know part of the answer, state the part you know, what you don’t know and move on.
No. And don’t say American Psycho either.
It is certainly true that many bankers have arrogant tendencies. But no, you should never be arrogant in an interview. Confident yes, but arrogant no. You obviously want to give the impression that you’re smart, qualified, hard working, etc. And it’s okay to confidently and explicitly talk about those traits in an interview, as long as you can back them up and as long as you do it in a respectful but not arrogant manner (regardless of the demeanor of the interviewer).
The same way you get to Carnegie Hall: practice, practice, practice. In front of a mirror, in the shower, whatever works for you. Practice walking through your resume and telling your story and practice answering some of the common interview questions, both fit and technical. And if you can, do mock interviews with friends and ideally, folks in banking. Even better, if you have the opportunity to schedule interviews with a number of firms, schedule the less desirable firms first and use those as practice. You want to get to the point where you can comfortably interview but without sounding too rehearsed in your answers.
Almost everybody, at every level who interviews is at least a little bit nervous. It’s a stressful situation. Always keep in mind that at some point, the person who is interviewing you was on your side of the table. So yes, its perfectly okay to be a little nervous. But…you can’t be too nervous. If you sweat profusely or have trouble speaking without nervous stuttering then that’s a problem. To a large extent, interviewing skills are similar to the types of skills you will need to speak to (pitch, perhaps) or be questioned by a client. Therefore, being too nervous will get held against you as it may be a sign that you won’t be able to be put in front of a client. The more practice you have interviewing, the more comfortable you will be.
You might. Personally, I’ve never been asked a brainteaser in an interview for a banking position. But I’d say it’s more common for Analyst interviews than for Associate interviews. See Interviewing – Brainteasers for some common ones.
Note that you are much less likely to get the types of analytical questions or “case studies” common in consulting interviews (e.g. “how many ping pong balls fit into the Empire State Building?” or “how many gas stations are there in the United States?).
Most interviews are scheduled for about 30 minutes and occasionally 45 minutes.
There are two general types of questions that you will likely be asked in interviews: (1) fit or qualitative questions and (2) technical questions. Sometimes you may be asked both types of questions in the same interview. In other instances, you might have multiple interviews, with one or more being purely qualitative/fit and one or more being purely technical.
The primary use of fit questions is for the interviewer to make an assessment of whether you have the right attitude and skill-set to be a successful investment banker. Most importantly, interviewers will want to understand why you want to be a banker and whether you are someone they would want working FOR them. The secondary purpose of fit questions is to assess whether you are someone they would want to work WITH. Some refer to this is the airport test. How would they feel if they were stuck in an airport with you for 4 hours? See Interviewing – Qualitative (Fit) Questions for examples of some commonly asked fit questions.
Technical questions test your knowledge of subjects relevant to investment banking such as accounting, finance and valuation. The types of technical questions will likely vary based on your background and the role for which you are interviewing. For example, students with finance or accounting degrees that are interviewing for Analyst jobs will likely get asked a greater number of technical questions than students that do not have finance/accounting degrees. Likewise, MBA students interviewing for Associate positions can expect technical questions with greater complexity and real-world application than Analyst applicants. Interviewees with banking experience should expect questions about their deal experience, which may come in addition to, or in lieu of, traditional “textbook” technical questions. See Interviewing – Technical Questions for examples of common technical questions.