The Top 20 Most Frequently Asked Investment Banking Technical Interview Questions
A guide to the most common technical questions to help you as you prepare for your investment banking interview + sample answers and other free resources.
Posted March 12, 2024
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Investment Banking Technical Interviews
The technical interview is one part of the investment banking application process. Bankers are required to have quantitative skills, as their main role involves helping their clients raise money, and this interview is a test of those skills. Most of the questions will revolve around valuation and accounting. The firms want to see if you are able to think quickly on the spot, analyze problems effectively, and understand basic financial concepts.
IB Interview Tips
1. To get an interview, you need to network and build a connection inside the bank.
Many firms will only review the resumes that come with a reference, rather than through the hiring portal. Find a connection and try to cultivate a relationship. Not only will this help you land an interview, but they can help answer questions on the firm’s culture, deal flows, and other details that you wouldn’t be able to learn from a job posting.
2. Know why you want to work at a specific firm.
All banks are not the same and the interviewer will want to know that you appreciate the differences. Why do you want to work at the bank you’re interviewing for? Do you prefer a big bank or a small/regional one? Do you want to work within a specific industry or city? Whatever your preferences, it’s important to understand this before going into the interview. Be able to convey this fit to the interviewer.
3. Get experience, and quality is better than quantity.
The more relevant experience you have, the better. From looking at your resume, the interviewer should clearly be able to see why you are pursuing a role in investment banking. Having one or two meaningful work experiences, where you made an impact and learned a lot, is usually better than having four or five mediocre experiences.
4. Be friendly and smile.
At the end of the day, investment banking is a very people-oriented business. It’s important that you’re able to pass the “Would I want to sit next to this person on a plane for 2 hours?” test. Don’t get so nervous that you’re not able to relax and communicate. Body language cues are just as important as what you say!
Read more about acing the IB interview at A Guide to the Investment Banking Interview: Tips from an Expert.
20 Most Common Technical Interview Questions
Here are some of the questions that you are likely to encounter. As always, the best way to prepare is to practice! Our investment banking coaches have experience at firms like Lazard, Morgan Stanley, Goldman Sachs, and others and are happy to do mock interviews to help you prep. Browse them all here.
1. What is the appropriate discount rate to use in an unlevered discounted cash flow (DCF) analysis?
2. How do you value a company?
3. How would you value a company with a negative historical cash flow?
4. How do you calculate WACC?
5. When would you value a company using EBITDA versus a revenue multiple?
6. What is a company’s beta and how do you calculate it?
7. What is typically higher: the cost of equity or debt, and why?
8. How do you calculate the cost of equity?
9. What is a leveraged buyout and how does it work?
10. What is the appropriate numerator for a revenue multiple?
11. There are two companies that have the exact same growth prospects, leverage, ROC, risk, and earnings. The first is trading at 7 P/E multiple, while the second is trading at 12 P/E. Which one would you choose to invest in?
12. How do you calculate unlevered free cash flows for DCF analyses?
13. When would it be appropriate for a company to issue debt instead of equity?
14. What are the three most important financial statements and why are they significant?
15. How are the income statement and balance sheet connected?
16. How would you go about valuing a company in an industry that you are unfamiliar with?
17. Tell me some recent trends or updates in the market.
18. If a company’s depreciation expense increases by $200, how would it affect the different financial statements?
19. What does it mean when a company has an enterprise value in the negative?
20. What is an accretion and dilution analysis?
In addition to these technical questions, there are three behavioral questions that you should also be able to answer well.
1. Why do you want to work in investment banking?
2. Why do you want to work at this firm?
*Bonus: How to Nail the Second Most Common Investment Banking Interview Question
3. Can you walk me through your resume?
Top 10 Free Investment Banking Resources
Resume: Zety’s Investment Banking Resume Guide & Template
Question Bank: Wall Street Prep’s Top 10 Investment Banking Interview Questions
Accounting: CFI’s Free Accounting Fundamentals Training
Excel: CFI’s Free Excel Fundamentals
Fixed Income: EDX’s Fixed Income Portfolio Management
Presentations: Udemy’s Investment Banking Pitchbooks
Stock Market: Udemy’s How to Invest in the Stock Market
Financial Models: Macabacus Financial Model Template
Videos: Skill Share’s Investment Banking Video Classes
Resource Library: Wall Street Mojo's Templates, Guides, and Courses
Where Can I Start?
Applying for investment banking interviews can be daunting, but have no fear because Leland is here! Read these articles for more free tips and tricks as you navigate the IB interview process.
- An Expert’s Guide to Resumes: Five Tips to Make You Stand Out
- 37 Free Resources to Break Into Investment Banking
- What Do Investment Banks Actually Do?
- The Comprehensive Guide to Investment Banking–What to Do From Freshman to Senior Year
- The Best MBA Programs for Investment Banking
- How to Answer the "Why Investment Banking?" Interview Question
Coach Recommendations
Here are several of our expert investment banking coaches who can help with any part of the application, recruiting, and hiring processes. See our full list of world-class IB coaches here.
Final Note
Leland provides you with the content, community, and coaching that you need to build your dream investment banking career and accomplish other ambitious goals. Sign up today to gain access to additional free resources, community events, small group classes, world-class coaching, and more.
