Investment banking technical interview questions

Investment banking technical interview questions full#

As an introduction, why not offer a quick definition of interest rates, along with a couple of points on why they're so important on a macroeconomic level? Start by defining what each one is, then explain how it relates to interest rates, before concluding by outlining what effect rising interest rates would have on it. To answer this question, you must demonstrate that you understand each of its components. Then the trick to answering this question correctly is applying your knowledge effectively.Д¬onsider the economy as a finely-poised house of cards, with interest rates as its volatile foundation. As you prepare for investment banking interviews, you should try to learn about this topic. In order to grasp the importance of interest rates to our economy, you need to understand monetary policy: the actions a central bank (in the case of the UK, the Bank of England) takes to manipulate the amount of money circulating in an economy. What is the effect of rising interest rates on the following: Corporate valuations? Bond prices? Exchange rates? Inflation? Economic growth? How does trading work? Which shares do you think are attractive investments right now? In particular, make sure you're able to talk about the area for which you're interviewing. Interest in and a basic understanding of banking You don't need to be a mathematics graduate, but your mental arithmetic should be top-class. Technical questions will test your competency with numbers. Remember that banks are as interested in how you think as what you know. For our worked example, for instance, anyone who understands what interest rates are should be able to logically deduce how they impact other areas of finance. While you need a basic level of understanding in order to answer technical questions, many of them can be answered using logic. Technical questions challenge your applied thinking - a huge part of banking.

Investment banking technical interview questions full#

It's not enough to have a head full of knowledge - you need to be able to apply it correctly. You need to demonstrate a knowledge of how it works and what impact change has upon it. Technical questions are designed to gauge how aware you are of the business world. Doing so will put you in the analytical, evaluative frame of mind required to be a banker and should stand you in excellent stead come your interview. Probe behind the story: look at the current economic climate and ask why an event is happening and think about the economic theory behind it. Once you've got the basic theory down, then you should be able to read the financial press in a different way. We heartily recommend All You Need To Know About the City by Christopher Stokes as a starting point. Most people have some knowledge of the ongoing Greek debt crisis, but how many people know why it's happened? In order to get this kind of basic theory it may be worth reading a couple of introductory books. So if a merger is postponed due to market conditions, you should be able to explain why. It's essential that you're able to explain the theory behind events. The Gateway tackles the same topics as the mainstream press, but in a more instructive, accessible manner.Д«ut keeping up with the news will only get you so far. For the latest financial news, keep abreast via the Economist and the Financial Times. If not, then it's important to do some research. So where to get the basic knowledge you'll need to sail through the interview stage? If you've studied economics A-level, a lot of it may be familiar to you already. Given that one of the main functions of an investment bank is to advise its clients on the wisest way to invest their money, it's imperative that bankers know the economic landscape inside out. The slightest change in the government's economic policy or the nation's economic position can have a big impact on investors' behaviour and thus, the fortunes and operations of investment banks. It's impossible to separate banking from economics. After all, if you've got no understanding of how banking and the economy at large works then how can you know that it's the right career for you?Д®xpect to be grilled on the markets (be able to talk about a company which you think is a good investment), business basics (you should know about the techniques bankers use to value a company, for instance), banking fundamentals (the typical issues that come up on an M&A deal), and macroeconomic theory - which is what we're going to tackle here. That said, you do need to have a certain level of technical knowledge. When you get to the interview stage for an investment banking role, nobody expects you be a technical whizz - that comes after you've got the job, where your first few months of intense learning may make you feel like you're back at university.