TOP 5 INVESTMENT BANKING INTERVIEW QUESTIONS REVEALED

WHAT IS INVESTMENT BANKING?

The investment bank performs two basic, critical functions: acting as an intermediary for capital raising, and as an advisor on M&A transactions and other major corporate actions. As an intermediary, it connects companies that need capital with investors who have capital to spend. It facilitates this through debt and equity offerings. As an advisor, an investment bank counsels companies on such corporate actions as mergers, acquisitions, spinoffs, and restructurings.

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Q: WHY DO YOU WANT TO BE AN INVESTMENT BANKER?

Responder #1: As I have grown in my career, I have had the opportunity to work in various jobs and have been able to converse with people involved in a variety of career tracks in different fields. Among these are law, education, entrepreneurship, medicine, non-profit organizations, investment banking, and sales and trading. Based on these experiences and contacts, I decided that the most appealing field to me was investment banking.

In particular, I believe investment banking offers the best environment for growth and development in the areas of finance, economics, and accounting—all important areas for business. Banking offers a tremendous amount of training, a steep on-the-job learning curve, a competitive work environment, and talented people to work with. As a result, I believe it offers the best opportunity to enhance my skill set and apply it on a real-life and current basis. Furthermore, I enjoy situations that involve analyzing strategies, environmental conditions, structure, and future opportunities.

Source : streetofwalls

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What is the difference between commercial and investment banking?

There are many definitions, but these are some of the broader ideas that differentiate the two:

Commercial bank: accepts deposits from customers and makes consumer and commercial loans using these deposits. The vast majority of loans made by commercial banks are held as assets on the bank’s balance sheet.

Investment bank: acts as an intermediary between companies and investors. Does not accept deposits, but rather sells investments, advises on M&A, etc…loans and debt/equity issues originated by the bank are not typically held by the bank, but rather sold to third parties on the buy side through their sales and trading arms.

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Q.Let’s say you had $10 million to invest in anything. What would you do with it?

Always ask for the investor’s goals first. Are they looking to have big capital gains over 30- 40 years? Are they looking for tax-free retirement income? What types of assets interest them? Based on the response, you can give an appropriate answer. So if they’re investing over 30-40 years and going for high capital gains, a well-diversified portfolio is probably best; if they are more concerned with tax-free income, maybe you should tell them about municipal bonds

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Q. I see you have no relevant finance experience – why should we hire you over someone who’s had a previous banking internship?

Talk about how banking is about what skills you bring to the table and what kind of person you are rather than how many internships you’ve had. Discuss how you’ve worked long hours / in teams / paid attention to details before and succeeded at whatever you’ve done. If you’re feeling bold, you can also point out that although someone might have had a banking internship, that doesn’t mean he/she did well in it – and that you may be better equipped based on your own experience.