Investment consultant Interview Questions

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BNY Mellon
Investment Accounting Intern was asked...April 25, 2013

What is a mutual fund?

1 Answers

Mutual funds allow you to put your money together with other investors to buy stocks or bonds. This is a good option for smaller investors to diversify investments. Less

J.P. Morgan

What are the methods of valuing a company?

1 Answers

It's DCF(Discounted casfhflow) & Relative method, where FCFE(Free cash flow to Equity) is vital for equity shareholders & FCFF(Free cash flow to Firm) is vital for the company. Less

SunTrust Robinson Humphrey

What is the effect of $10 of depreciation on the three accounting statements?

1 Answers

Income Statement: Because depreciation is an expense, Operating income (EBIT) decreases by $10. Net income also declines by EBIT*(1-tax rate). Assuming a 35% tax rate, NI decreases by $6.50. Balance Sheet: Cumulative depreciation increase $10, so PP&E (Plant Property and Equipment) decreases by $10). The reduction in net income also causes a Reduction in Retained Earnings by $6.50. Cashflow Statement: Net income decreased by $6.50 and D&A increased $10, cashflow from operations increases by $3.50. Less

Cowen

Could you walk me through the cash flows statement? What are some items that would be found under each heading?

1 Answers

The cash flows statement shows cash flows from operating, investing and financing activities. In the operating activities area, for example, you would add back depreciation expense to net income (since no cash has actually left your firm). Investing activities could include money from sales of land, and financing could include receiving cash from a loan, or giving out dividends to shareholders. Less

Goldman Sachs

Suppose that you have a fair coin. You start with $0. You win 1$ each time you get a head and loose $1 each time you get tails. Calculate the probability of getting $2 without getting below $0 at any time.

6 Answers

1/3

1/3 Because if he requires 2 heads = $2, then it means he require HH out of {HH,HT ,TH,TT} We cannot consider TT because it would turn to zero. Therefore, he has 1 chance out of 3. Hence 1/3. Less

Marchov chain with 2 and -1 absorbing OR geometric series 1/4^n from 1 to inf=1/3 Less

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DC Energy

f(n) is a function counting all the ones that show up in 1, 2, 3, ..., n. so f(1)=1, f(10)=2, f(11)=4 etc. When is the first time f(n)=n.

7 Answers

besmart is close. I cheated by coding it up and 199981 is the first one after the trivial case. Less

Wouldn't that merely occur @ n = 1?

sorry, forgot to mention other than the trivial case at n=1. the answer should be around 20000 if i recall correctly (think its 19991 but need double check on that) Less

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IFC

1. Ask about your back ground? 2. Check to see how you can contribute to the role you are being hired for? 3. Why you make a good fit? 4. Case studyish questions about how you would approach this in your work at IFC

6 Answers

Hi, first of all thanks for sharing your experience. I am curious to know how long you waited to get the online test results (I mean the first psychometric test not the modeling / case study)? Cheers and congratulations! CK Less

Over a month...so you can easily forget post the first online test... After that stage things picked pace.. Less

how was the structure of the case study through webex?

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Bank of America

If someone offered you $1000 today or paid out at $100 a month over the next ten months, which would you take?

5 Answers

The answer should be the $1000...$1000 today is worth more than $1000 ten months from now or $100 every month for 10 months due to the time value of money. Less

Money loses value over time...

I think it depends largely on the market. 1000 dollars a couple years ago if put into the right fund would be nice now. With how long the market has been expanding It would be a tough choice now. Additionally, they might be checking personality on this. Do you want your money now, or do you like something steady even if the value depreciates over time? Less

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Scotiabank

Why do you have a C in acgt?

5 Answers

How do you even get an interview with a C in accounting?

Cuz its boring as hell!

They will come with all questions as in the areas you are so lacking

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J.P. Morgan

Which side of the BS is Equity on?

5 Answers

Credit side

It is a source of Fund, comes under Owner's fund

There are two types of balance sheet. 1) Acount form 2) Report form In account form Assets are on left side that is debit side. Liabilities and equity are on credit side that is right hand side. In report form everything is under one vertical line that is first is assets then followed by liabilities and owner's equity. Less

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