What are the Common Questions for Investment Banking Interviews?

Before going to an investment banking interview, it would be important to be prepared. Better research on what the interviewer will ask so you will know what to answer. If the interviewer asks something and you are suddenly speechless, that will lead to your downfall. It would be useless to stall time and say “uhh..” for a few seconds. Here are some common investment banking interview questions to keep in mind:

What is the formula for the cost of equity?

It is one of the most common questions in interviews for an investment banking position. However, a lot of people still get this wrong no matter how simple it is. There is actually a few formulas and all of them are correct.

Is the cost of debt higher than the cost of equity?

This is one of those trick questions that you should not answer immediately. Better give it a few thoughts before giving a smart answer. No matter how you look at the two costs, the cost of equity will always come out higher. The interviewer will give you a strange look if you answer the cost of debt is higher. For more in-depth info about investment banking interviews, check out Wall Street Mastermind.

What is your perception of a company with poor cash flow?

The immediate answer here would be the company is not doing good. Better do better than that and tell the interviewer what type of approach would be necessary. Remember, an investment banker would answer the question differently from a normal person.

For a revenue multiple, what is normally the numerator?

The purpose of this question is for the interviewer to find out whether you know the difference between enterprise value and equity value. If you know the difference between the two values, you will most likely realize the answer to the question is enterprise value. Of course, it will be the other one if you’re not familiar with the difference.

Can you tell me something about yourself that’s not in your CV?

This is one of those common questions that is not only asked in investment banking interviews but in other interviews too. The interviewer wants to know your background more. This is not the time to tell her that you like watching comedy movies and playing football. Those are not related to the job you’re currently applying. Better tell her things that will lead to you getting accepted for the job.

What are your strengths and weaknesses?

This is a question that looks like a trick question but it is not. Better answer it with all your honesty. Of course, be careful to not say too much in the weakness category or you’ll end up putting down yourself.

All the above questions may look hard at first. However, they’re all asked in investment banking interviews. Thus, better master them so you will move on to the final interview for the job.