What You Might Be Asked In An Investment Banking Interview

Before appearing for an investment banking interview, you should be aware of what the job is all about. Investment banking is different from the most commonly understood terms of banking as you would have to oversee loads of operations like building of capital through underwriting and security issues as an agent. You would have to be in the thick of mergers, derivatives and forex trading as well as a host of other services.

But you can easily sail through an interview if you can prepare in advance with model questions and practice thinking out of the box. Instead of getting bogged down with too many technical questions, you should keep your focus on fitting into the investment banking interview process with lots of vigor and enthusiasm. But be prepared to be asked about three basic types of technical questions which are about valuation or modeling, brain teasers and accounting.

With the help of multiples traded by public companies you begin to assess companies. To attempt this process, you would have to check out market data which again is not readily available.

You may not find good comparisons from companies making it difficult to assess the market data. You would be required to do precedent analysis in an investment banking interview which would be checking what buyers paid for industries with a particular financial profile.

Cash flow and balance of payments

You may be asked about the method of discounted cash flow analysis with the help of cash flows to find the present value of a particular company. It is known as the simplest and best way to value companies although future projections are hugely depended on.

You can get modeling questions that deal with company mergers like buying of a company by a private company using debt and equity.

Accounting questions like financial statements, cash flow and balance of payments are dealt with for checking the dependence of one set with another. Treatment of depreciation and cash flow statements is common as reading of balance sheets is.

You can get brain teasers that are completely different where you would have to think on your feet and out of the box. Those are meant to test your stress in an investment banking interview.