Friday, October 12, 2007

Investment Banking Questions for Interview

Two companies: an oil/gas company and a consumer products company. How do I look at them differently in terms of debt capacity?

Where did the NASDAQ or Dow close recently?

Would I offer to buy a company at its current stock price?

What is the average P/E ratio within the S&P 500? Is Google’s P/E higher of lower? What is it? Is
Black & Decker’s P/E higher or lower? What is it? Why is that?

Lead me through a Discounted Cash Flow valuation. What is Free Cash Flow? (How is it calculated?)

If I gave you a $100,000, where would you invest your money?

What specific area of interest in banking (group/product) do you think you would be most interested in?

What do bankers/sales&trading/research analysts do?

How does your past career qualify you for a position in investment banking / sales & trading / PCS?

Rank the firms on Wall Street. Where do you fit? Who is our competition? What differentiates our firm? What are our strengths / weaknesses?

Do you personally invest in stocks? Which ones? Why?

Tell me three items on the front page of today's Wall Street Journal.

Where is the market going?

Where do you think interest rates will be 2 year from now?

Where is the Dow Jones today? S&P? NASDAQ? 20-year or 30-year T-Bonds?

Where is our firm's stock trading?

Why might a company choose debt over equity financing?

What major factors drive mergers and acquisitions?

Why would two companies merge?

When do you use a WACC versus a cost of equity?

What's a cost of capital?

How do you value firms?

What issues does XYZ Company have in entering a given industry (Porter framework)?

Discuss the effect of rising interest rates on the US economy.

If you could buy one stock today, what would it be and why?

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