Types of Investment Banking Interview Questions

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Toby Van Dyke
Toby Van Dyke
Team GradAustralia
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The stakes are high in the world of investment banking - and that’s true even in your preliminary job interview. So to help you make a strong first impression, we’ve assembled a list of sample questions that you can use to prepare and practice.

A job interview is often a nerve-racking experience, and this might be especially true of questionnaires at investment banks. Suited up, in an intimidating corporate environment and possibly facing by a panel of experts, it’s only natural that you should feel a little nervous. But the good news is that you needn’t be - by reviewing the following questions, you can prepare yourself to enter the interview with confidence, charisma and every chance of success.

As you review them, bear in mind that you might be faced with different variations of them, and you should be prepared to adapt your responses as necessary.

Typical interview questions about your background/CV

  • Tell me about yourself
  • Talk me through your CV
  • Why did you choose your university?
  • Why did you choose your field of study?

These are the most predictable questions, and, for that reason, often the most revealing. A candidate who isn’t prepared to discuss their skills and experience with confidence and authority will likely be seen as unserious or, even worse, incompetent.

The trickiest of these preliminary questions is the oft-used “tell me (or us) about yourself”. This provides you with a valuable opportunity to share important details of your CV, and also demonstrate your personality. However, it’s vital that you keep your response relevant and concise. For example, it’s fine to discuss your passion for karate if you also emphasise how it’s taught you self-discipline and the ability to perform well under pressure.

Typical questions about your career choices

  • Why do you want to work in investment banking?
  • Why have you applied to this bank?
  • Why have you applied to this division?
  • Why do you want this internship?

Investment banking is a popular career choice and it’s not hard to see why. It’s a prestigious occupation with perks ranging from travel to ritzy client lunches, and the salary, even for graduates, can be enormous. In their first year on the job, graduates can earn between $90,000 and $100,000, not including bonuses. By comparison, the overall median starting salary of bachelor degree graduates in 2015 was closer to $55,000 (according to GradAustralia’s surveys).

For all these reasons, investment bank positions are hotly contested, and recruiters are free to select only those graduates whose skills and talents are matched by a genuine passion for the job.

Questions about your career choices are designed to gauge how serious you are, and get some sense of whether or not you’re willing to make a genuine long-term commitment to a company that will invest significant time and resources in training you.

Your answer to a typical question like “why did you apply to work for us?” should reveal your in-depth knowledge of specific opportunities within the company. It should also show that you’re familiar with the bank’s primary clients, current deals or major objectives. Finally, recruiters are often impressed by candidates who have taken the time to reach out to current and former employees, and can show how this has influences their choice of graduate program.

Typical job-related interview questions

  • What do you understand the job role you’ve applied for to be?
  • What does this division do?
  • What qualities do you need to be successful in this division?

Life in an investment bank can be intense - the stakes are high, the clients are demanding and every day brings new opportunities to make, or lose, enormous sums of money. Before they can be confident that you have the temperament for the job, recruiters will want to ensure that you understand exactly what it entails.

This section of the interview provides you with a great opportunity to discuss your experience, and how it proves that you’ve got what it takes to make it in the banking sector. It will also reveal to recruiters whether or not you’ve researched the specific position for which you’re applying - so make sure that you do!

Typical industry questions

  • Tell me about a recent development at this bank
  • What differentiates us from other banks?
  • How has the financial crisis affected this bank?
  • Tell me about a recent piece of news affecting our bank that interested you
  • If you had to choose one place, where would you invest your money right now?

Investment banking recruiters have observed that many candidates apply for roles with insufficient knowledge of the bank and the industry. Don’t make the mistake of underestimating the complexity of investment banking! Instead, be prepared to answer general questions about both the industry and the specific responsibilities of your role.

Typical questions about your personal suitability

  • Why do you believe you are better for this role than others?
  • Why should we hire you?
  • Why do you think you will fit in at this bank?
  • How can you add value at this bank?

It’s simply not enough to have a strong academic record or a list of internships - most of the your fellow candidates will boast similarly impressive CVs, which means that it’s on your temperament and personal suitability that recruiters will place the most importance.

Think about how best to answer the questions above and also consider what you might introduce as your own ‘unique’ competitive edge. For example, if you’ve studied French, you might talk about your potential to excel in the analysis of European financial matters by liaising directly with colleagues abroad.

Typical questions about your interests and achievements

  • What do you do in your free time?
  • What is your greatest achievement?
  • Who has influenced you?
  • What kind of person are you?

Reading through the questions so far, you might have begun to worry that recruiters aren’t interested in your personality outside of how it fits within investment banking. In fact, nothing could be further from the truth. Well-rounded candidates with diverse interests are highly prized by recruiters, who see them as having something ‘special’ to offer the organisation beyond their generic skills. Furthermore, many investment banks are keen supporters of hobbies, sports and cultural activities, frequently investing in programs designed to keep their workers fresh and happy.

Typical competency questions

  • Have you ever failed to meet a deadline – how did you handle that?
  • Tell me about a time when you introduced a new idea to a group
  • Tell me about a time when you had to deal with a new situation and you had very little information to work with
  • Tell me about a time when you faced a challenging situation
  • Tell me about a time when you had a conflict with a manager or superior – how did you handle that?
  • Tell me about a time you showed resilience or motivation

In this section of the interview, recruiters will be looking for evidence of how you’ve handled challenges and opportunities in the past. The more specific your examples, the better. It’s also a valuable chance to show that you’re somebody who learns from experience and thinks about how to things even better the next time around.

Typical technical questions

  • How do you calculate a WACC?
  • What are the advantages of raising funds through bonds vs. equity?
  • What message does it send to the industry if a company’s PE ratio is higher than the industry average?
  • Why would investors be willing to pay more for one company than for another?
  • What is risk?
  • How would you advise a client looking to buy shares in X product?
  • Tell me about the opportunities for financiers in a financial downturn?
  • What are swap points and why can they be negative?

The first trick to acing technical questions is to familiarise yourself with the job and its specific duties. For examples, if you’re going for a research analyst position, you can expect questions about data aggregation and modelling. Similarly, if you’re hoping to be a trader, you’ll need to know the precise differences between futures, bonds, risks and a range of other financial products.

It’s a good idea to also review your general financial knowledge. Perhaps the best online resource for doing this is Investopedia, which covers everything from junk bonds to the differences between market capitalization and market value of equity.

Brainteasers

  • How many weddings are performed in China each month?
  • If you were shrunk to the size of a pencil and put in a blender, how would you get out?
  • How many blue cars are there in Victoria?
  • How many cars travel across the Sydney Harbour Bridge each day?
  • Why is the earth round?
  • How would you reverse the course of the Murray River?
  • Will you stay dryer if you walk in the rain or if you run?

There’s no guarantee that you’ll be faced with a brainteaser, but it helps to be prepared because recruiters do love throwing a curveball from time to time. The key to answering oddball questions like those above is to remember that it’s more about your process than your answer. Recruiters want to see that you can approach an unfamiliar challenge with determination, creativity and logic. You can show this by carefully considering the question, asking any clarifying questions of your own and sharing the steps you’d take to solve the problem.