Example investment banking interview questions
Your palms are sweating. Your head is racing. Your investment banking interview is only days away. Worry not – a few hours mulling over typical questions and drafting considered responses will most definitely calm your nerves and increase your chances of progressing to the next round.
Bear in mind that although these questions have previously been asked by investment banking interviewers, there’s no guarantee that they’ll be put to you. So, use them to direct both your research and the examples that you choose. For employer-specific interview questions, visit TARGETjobs employer hubs.
Typical interview questions about your background/CV
- Tell me about yourself
- Talk me through your CV
- Why did you choose your university?
Questions about your background or CV, such as ‘tell me about yourself’, are icebreakers and are usually asked to ease you into the interview. It’s crucial that you prepare for them, as rambling, waffling or winging it will do you no favours.
‘Tell me about yourself’ is slightly deceptive, however, as it gives the impression that you’re being invited to talk freely about any aspect of your life. But, the interviewers will not want to hear that you’re an avid scuba diver unless you can relate it to the role. Perhaps your scuba diving experience has improved your ability to follow instructions and work closely with people – qualities you’ll need as a graduate or intern recruit.
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?
Graduate and internship positions at investment banks and fund management firms are hotly contested, with the Association of Graduate Recruiters reporting more than 100 applications per vacancy in its 2015 winter survey. It's likely that some of those 100+ applications are from applicants who are applying to more than one bank to increase their chances of getting hired.
Investment banks ask questions about your career choices, at both application and interview stage, to find out how serious you are about working for them. The only way to provide solid answers is to research the bank, division and role, and find out what makes them different. More information on the type of research and preparation you should do can be found here.
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?
Simon Taillefer, an associate at Nomura, indicates that a proper understanding of the position and the division to which you have applied will set you apart from the competition. He told TARGETjobs City & Finance: ‘I think I stood out from the crowd because I was determined and knew about the job I was applying to.’
Experience and knowledge gained through internships, spring insight programmes or other events, schemes and fairs are good ways to develop a real understanding of the job and division. But, there’s also a lot of information online. For instance, TARGETjobs Finance explains the different roles in investment banking.
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. To ensure you don’t make the same mistake, spend a good amount of time before the interview on your chosen bank’s website. There you’ll find a wealth of useful information. For example, the ‘Inside RBS’ section of Royal Bank of Scotland’s careers website contains videos about the latest market events.
Typical questions about your 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?
Most applicants will, like you, have a sterling academic record, related work experience and some of the specific skills that are sought by the bank. Note these down, but also think about your competitive edge.
Take Ellen Richardson, a senior executive at First State Investments, for example. She told TARGETjobs City & Finance: ‘I think what helped me most was having worked every summer since I was 16, starting as a waitress.’
Ellen then did two summer internships in her first and second year of university, with Fidelity Investments and Macquarie respectively, and then took on a full-time job at the latter when she graduated before moving into her current role.
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?
Investment banking careers aren’t only glitz and glamour and fat pay cheques. A lot of hard graft and long hours are involved. And this working culture doesn’t kick in when you make it to executive level; it begins in your internship.
This could be why banks ask questions such as those above to find out if you’ll be a cultural fit. To prove that you will be, choose examples and facts that connect to the requirements of the position to which you have applied.
If asked, ‘What kind of person are you?’, for instance, explaining that you’re motivated and tenacious, which is evidenced by your 50-mile run for WaterAid, would probably go down a storm. Banks look for those qualities and support many charities.
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 you showed resilience or motivation
Investment banks want tangible evidence that you have demonstrated the competencies that they’re looking for, not just claims. Competency-based questions such as those above will give them that.
Use examples from education, work, interests and your extracurricular activities, and deliver a structured answer by employing the CARE (Context, Action, Result, Evaluation) or STAR (Situation, Task, Action, Result) technique.
Typical technical questions
- How do you calculate a WACC?
- 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?
- What are swap points and why can they be negative?
Above is a sample of technical questions that candidates have been asked in the past, and they’re not reserved for those vying for a graduate role – prospective interns are often asked technical questions too.
To ace them, your first step is to know the job and the specific duties. For instance, graduates typically start out as analysts, where they will collate and integrate data into presentations and reports.
Also brush up on your financial knowledge. Ways of doing this will differ for graduates and interns, owing to their different levels of work experience. Some investment banks, such as Bank of America, have an investment terms glossary. TARGETjobs Finance has a glossary also. Read these.
Other investing education sources, such as Investopedia, and financial publications, including the Financial Times, Investor’s Business Daily and The Wall Street Journal, will help you to contextualise investment banking terms.
Brainteasers come in ‘maths problem’, ‘logic puzzle’ or ‘oddball’ varieties
- If you were shrunk to the size of a pencil and put in a blender, how would you get out?
- If you rolled three dice, what is the probability of getting the same number on each one?
- If a clock shows the time as 09.30 am, what is the angle between the two hands? (NB the answer is not 90 degrees.)
Candidates are rarely asked bizarre interview questions, but they do crop up. Mitsubishi UFJ Securities and Goldman Sachs International have slipped the odd ‘off-the-wall’ question into an interview to challenge candidates who were performing particularly well, or to test their analytical and problem solving skills.
To prepare, practise answering the questions above and others you can think of. Follow these three steps when doing so: 1) carefully consider the question, 2) ask clarifying questions and 3) verbalise the steps you’d take to resolve the problem.
Follow us on Twitter @TjobsFinance.