Investment banking analyst Interview Questions in United States

Investment banking analyst Interview Questions in United States

Investment banking analyst Interview Questions in United States

Investment banking requires superb analytical skills and a commitment to client engagement. As you prepare for an interview for an investment banking analyst position, you'll want to identify examples from your professional career that demonstrate your ability and confidence to make research-based decisions.

5,657 Investment Banking Analyst interview questions shared by candidates

Top Investment Banking Analyst Interview Questions & How to Answer

Here are three top investment banking analyst interview questions and how to answer them:

Question #1: Why did you choose to work as an investment banking analyst?

How to answer: This open-ended question is designed to determine your reasons for becoming an investment banking analyst. Your answer should demonstrate that you know what the job entails and have a passion for investment banking. Comment about the skills required for the job, the hierarchy involved, the long hours of work, and your excitement for learning and working with high-profile deals.

Question #2: What are the required skills and qualities of an investment banking analyst?

How to answer: This open-ended question allows you to demonstrate your knowledge base of the basic skills required to be a successful investment banking analyst. Include strong analytical skills, superior attention to detail, solid work ethic, management skills, positive attitude, and time management skills. Investment banking analysts also need excellent communication skills, verbal and written. In your answer, you can share that a successful investment banking analyst is someone who can think outside the box.

Question #3: Can you describe a risk you've taken in life?

How to answer: This open-ended question is used to determine your decision-making skills and your ability to calculate risk and demonstrate analytical thinking. Highlight your logical assumptions made during the risk you describe. Rational analysis underlies investment banking. You should explain this ability by sharing how you assessed any risk you took.

Top Interview Questions

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J.P. Morgan
Investment Banking Summer Analyst was asked...July 11, 2012

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

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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Goldman Sachs

If I stacked pennies from the ground to the top of the Empire State Bldg, would they all fit onto a floor of the building?

3 Answers

1. Yes on the terrace. 2. Conver pennies into Dollers on better brokerage and get it fit into a bag. Now you can more money fit at any floor. Less

The Empire state building is approximately 1200 ft. I'm guessing there are 100 floors. This means 12 ft of single stack pennies per floor. 100 of them. I think we can fit 100 stacks of pennies on any floor in New York City. Less

Yes. 1) break coins into stacks in relation to each window/floor (gives height of floor) 2) highly likely sum of stacks is less than the square of the floor height I'm sure there's another way to answer this as per Vault, though I like to come up with diff answers instead. Less

Deutsche Bank

What is the probability of you walking out of this room and seeing someone without the average number of legs.

2 Answers

100% Average will be just under 2

so it should be 0% not 100%. )

Guggenheim Partners

Why do you add minority interest to enterprise value?

3 Answers

To find the complete value of the company. Even though the income has an already adjusted amount (adjusted to the percentage of the majority interest) you must still see the complete value. Less

Sorry, confused my answer a little. You add back the minority interest just like you add back preferred shares because it is essentially a form of equity financing and since its consolidated, the owner of the company in question will have to compensate the minority interest for their equity investment. Less

There are three ways to account for an investment in a company. The first (if less than 20% ownership I think) is a a straight investment and gets recorded as an asset in short term investments on the balance sheet. The second (20-50%) is the equity method meaning the company includes just their share of earnings (essentially their equity) in the P&L. The final (50+% ownership) is the consolidation method meaning the company controls the subsidiary and so needs to consolidate its earnings. However, if it doesn't own 100%, then they cant claim 100% of earnings. This is accounted for by subtracting out minority interest on the P&L. That takes care of earnings but enterprise value is not based on earnings, its based on balance sheet metrics. So since the company doesnt own the entire company but has consolidated the entire sub on its balance sheet, minority interest needs to be removed from the value of the company. Less

Guggenheim Partners

in a LBO, if a PE borrows $10 million to buy out the company and sold the company with the same multiple that it originally purchased for. Assuming that the pe did not pay down any debt during the 5 years, wha'ts the IRR?

3 Answers

I think the internal rate of return with be negative the interest rate at which the firm borrowed the $10 million. Anyone else? Less

I believe this question is flawed. A company's value can grow despite its multiple (P to E) staying at the same level. Less

Read last sentence... :Theoretically, a stock's P/E tells us how much investors are willing to pay per dollar of earnings. For this reason it's also called the "multiple" of a stock. In other words, a P/E ratio of 20 suggests that investors in the stock are willing to pay $20 for every $1 of earnings that the company generates. However, this is a far too simplistic way of viewing the P/E because it fails to take into account the company's growth prospects. Less

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