Saturday, June 8, 2013

2013 Finance Job Interview Questions

If You Want a Finance Job, Have Answers to These Questions

Job interviews are stressful, grueling and often times painstaking, especially for recent master of business administration graduates eyeing six-figure jobs at investment banks, hedge funds and other top financial firms. Softball questions are often tossed aside, with most inquiries looking deeper into a candidate’s behavioral and quantitative abilities.
Part of every M.B.A. program’s curriculum is preparing students for interviews for summer internships and full-time employment. New York University’s Leonard N. Stern School of Business takes the preparation process a step further, collecting real interview questions hiring companies ask its students.
Below are some of the most interesting we’ve found. These are the questions you need to be able to answer to get a job with asset managers, commercial banks, private wealth managers and other finance firms. A few even come with answers. Up next week on eFinancialCareers: the toughest interview questions posed by consulting companies.
  1. How much did the S&P increase/decrease this year? What will the S&P be at the end of next year? Why?
  2. What will you do if the stock falls 30% after one month of your Buy recommendation.
  3. What’s your favorite investment idea right now (could be geographic or sector focused)?
  4. If you could buy one stock for the next 50 years what would it be? Answer: Coca-­Cola for example. They want to see a stock that can grow over time at a compound rate, less cyclical, less elastic to small price changes, management doesn’t matter, selling a product people are willing to pay a premium for.
  5. Tell me about a time when you persuaded a person or group to do or think what you wanted?
  6. Which ratios would you analyze to understand the liquidity, the efficiency and the profitability of a company?
  7. A long-standing corporate client decides to offer the lead role in a new debt offering to another bank. If, at all, how would you approach the client in future dealings?
  8. Who is the CEO of Global Citi Cards?
  9. How would you get somebody to invest with you if you are competing against a 15-year veteran from another company?
  10. What is the biggest misperception that people have about you that is NOT true?
  11. So you play poker? What are the odds of flopping a flush if you have two cards of the same suit? What about the turn if one of the cards on the flop is off suit? How about the river? What if there is $200 in the pot and the guy ahead of you bets 40. Do you make the bet? How many people must bet before you have good “pot odds”?
  12. Two companies in the same industry. Company A raises price and Company B increases production capacity. Which one is better?
  13. Let’s say I have two envelopes. And I tell you that one has twice as much as the other one. You open the first one and it has $100. You may open the second one but you forfeit the $100. What do you do? Answer: Open the second one. Expected value is $125.
  14. Rank the following securities in order of riskiness to the investor: Aircraft leases, tax liens, credit card receivables and sub-prime mortgage backed securities.
  15. I’m going to give you five plays in baseball and you tell me which one you would rather complete. 1. Hitting a lead-off double. 2. Completing an un-assisted double play. 3. Sacrifice bunting a runner from second to third. 4. Hitting a double and scoring the runner who was on second base. 5. As a pitcher striking out the other team’s best hitter. (Asked to a student interviewing for a sales and trading role).

Monday, May 27, 2013

Think and Grow Rich - Free Download

My blog has just stepped into the 6th year. I want to give you a little souvenir.

If you've been following my blog since 2007, you should have completed or already gone beyond the associate level.  It's time to talk about personal growth and development.

Being one of the best selling books on Personal Development and Self Help, at1970 (Napoleon Hill’s death), Think and Grow Rich had sold more than 20 million copies and by 2011 over 70 million copies had been sold worldwide.
It's definitely one of the best selling books across all categories at all time.

In case you haven’t read it yet, grab your free copy here: Think and Grow Rich – Napoleon Hill's 1937 original masterpiece, and learn the secrets of living a richer life!
About The Book 

Napoleon Hill interviewed 500 extremely successful men and, from the experience, distilled the secret of success into a simple workable formula. 

The resulting book, Think And Grow Rich, took him 20 years to produce. 

The "13 steps" listed in the book are:

  1. Desire
  2. Faith
  3. Autosuggestion
  4. Specialized Knowledge
  5. Imagination
  6. Organized Planning
  7. Decision
  8. Persistence
  9. Power of the Master Mind
  10. The Mystery of Sex Transmutation
  11. The Subconscious Mind
  12. The Brain
  13. The Sixth Sense
Investment Banking Resume - Free eBook

Monday, May 20, 2013

2013 Investment Banking Interview Questions

Want an investment banking job?  Answer these questions first.

Working at an investment bank may not be as prestigious and high-paying as it was years ago, but competition remains fierce, for internship and full-time roles alike. Investment banks are famous for asking some of the most difficult or even weird interview questions you’ve ever heard.

Here’s some of the more interesting questions recently asked of M.B.A. graduates and prospective interns from New York University’s Leonard N. Stern School of Business.

Some questions may be simple and without a definite right/wrong answer.  If you had to answer these questions at an interview, be sure to demonstrate your logic of thinking and ability of analyzing.  Test your skills and post your answers in the comment section.

Don’t assume all questions are banking related.   

  1. How do you think you’ll handle the hours? Tell me about a time you’ve worked overtime?
  2. What does F9 do in Excel?
  3. On a football field, how are the different valuation ranges going to show up?
  4. If I were to ask your parents what they thought about you going into banking, what would they say?
  5. In a regular market, what is more expensive debt or equity? Explain your thought process.
  6. If the yield for a one-year bond is 10% and the yield for a two-year bond is 15%, what is the forward rate for the second year?
  7. How do changes in interest rates impact duration?
  8. Does company-specific risk impact Beta? Why or why not?
  9. In a declining interest rate environment would you rather hold interest-only or principal-only?
  10. Why is free cash flow called “free” cash flow? What does “free” signify? 

Need help to answer IB interview questions, check out the IIB website.  You can even sign up to gain instant access to A-grade sample banking resumes, mock interview transcripts and more.

Saturday, May 4, 2013

How to Get an Investment Banking Job at J.P. Morgan

You’re just out of school and aiming to get a job at a top bank. Like most Wall Street operations, J.P. Morgan wants graduates with good grades, a strong GMAT score and applicable work experience. It also wants candidates with strong analytical skills who can think on their feet.

Here are some tips on how to nail down an investment banking job, directly from Joanna Lee, an investment banking MBA recruiter at J.P. Morgan.

What’s the best way to answer questions from the recruiter?
Present your answers in a short and compelling narrative. Briefly explain the background or situation; what action did you take and what was the outcome. If you are asked to assess a business situation, walk the interviewers through your thought process and how you arrive at that conclusion.

What mistakes do investment banking candidates make during an interview?
A common mistake among candidates is not being able to connect their past experiences and backgrounds to the role for which they are interviewing. As a candidate, it’s important to think through why you are a good fit for the role before walking into the interviewing room. Candidates should emphasize how they can add value to the firm and highlight the transferable skills that will help them succeed as an investment banker.

Are there cover letter and resume errors that often you see?
Keep your resume and cover letters to one page each. Avoid unexplained employment gaps, and/or a missing GMAT score on your resume since leaving details off your resume can raise questions. For example, if you took a year off to focus on other personal goals, you should include that experience in your resume.

What kind of questions should the interviewee ask the interviewer at the end?
Overall, a candidate should demonstrate a genuine interest in the firm, the group and the specific role. Asking about a group’s recent deal or next phase in the interview process reinforces an individual’s eagerness and enthusiasm. To keep the interviewer engaged, ask about their experiences at the firm. Be sure to ask for the interviewer’s contact information so you can follow up with a thank you note as another way to reiterate your interest.

How important are grades when assessing an investment banking candidate?
Academic excellence is an important factor in a candidate’s evaluation. However, we don’t focus solely on grades, especially since many business schools have grade nondisclosure policy. So we look for other qualities of academic excellence and achievements such as GMAT scores and Dean’s List recognition.

Tell us generally about your hiring plans. Any sectors you are targeting?
At J.P. Morgan, we continue to invest in our MBA investment banking summer internship as we fill most of our full-time positions from our Summer Associate class. Our summer program allows MBA candidates to gain first-hand experience early on in their career – challenging and meaningful work, access to senior management and clients, training and development programs and networking opportunities. Our program is designed to determine if the firm is a right fit for candidates and vice versa. If the fit is right, then Summer Associates are well positioned to be considered for our full-time associate program.

Source:  eFinancialCareers

Saturday, April 6, 2013

8 Tips to Networking Without Being Fake

As investment banking is a business of people. Whoever is good at networking will have a better chance to succeed. I come across this video which is really impressive. Whether you are a skillful networker or a starter, you'll find this video inspirational. Enjoy it and feel free to share it with your beloved.

8 Tips to Networking Without Being Fake

Friday, January 25, 2013

Best Wall Street Cover Letter

There is a highly viral investment banking cover letter this January.  I have clipped it to share with you. 

I am aware it is highly unusual for undergraduates from average universities like (BLOCKED) to intern at (BLOCKED), but nevertheless I was hoping you might make an exception. I am extremely interested in investment banking and would love nothing more than to learn under your tutelage. I have no qualms about fetching coffee, shining shoes or picking up laundry, and will work for next to nothing. In all honesty, I just want to be around professionals in the industry and gain as much knowledge as I can.

I won't waste your time inflating my credentials, throwing around exaggerated job titles, or feeding you a line of crapp (sic) about how my past experiences and skill set align perfectly for an investment banking internship. The truth is I have no unbelievably special skills or genius eccentricities, but I do have a near perfect GPA and will work hard for you.

From a hungry student looking for an intern job at an investment bank, this cover letter has been named ‘the best cover letter’ by some readers.  There is lots of feedback from the internet with likes and dislikes.  While many candidates are doing everything to boast about their skills and experiences, this is certainly a very ‘refreshing’ approach.  My suggestion is, no matter what strategy you use, do spell check and avoid typos!  An attention to details is a basic requirement of any IB job. 

Unconventional humble approach may attract interviews.  But the interviewer may simply want to see how this ‘funny guy’ looks like rather than interviewing for hiring.  

I would say a professionally well written cover letter is an ever lasting winning tool.  Need help to write?  View this free cover letter video from Jimmy Sweeney’s Amazing Cover Letters.

Sunday, January 6, 2013

Credit Suisse Interview Tips

If you are serious about landing an investment banking job in 2013, here's a very insightful article to read.  This short article doesn't only talk about interview tips but a lot of information you need to know about landing an IB job.

In a nutshell it covers these points:
  • About the author
  • Why IB
  • Special Attention / Keywords for Investment Banking Resume
  • Interview Preparation
  • Questions I Would Ask a Prospective Investment Banker
  • Dos and Don'ts in the Interview
  • Selection Criteria
  • Life as an Investment Banker 

How To Become An Investment Banker At Credit Suisse

About Myself
I graduated from a top undergraduate business school. I did a summer internship with Credit Suisse and spent nearly two years there after graduating from undergrad. I worked in the Los Angeles office and was focused on leveraged finance and M&A. I spent the bulk of my time working on deals for many of the largest private equity firms in the world. After my time at Credit Suisse I decided that I wanted to complement my finance skills with strategy capabilities. I joined one of the leading management consulting firms, rising to the position of Senior Case Team Leader. I completed my MBA at one of the top programs and I now work at a leading middle market private equity firm, a role which combines both my finance and strategy skills.
Why I Chose Investment Banking
Skill set development is extremely important to me. In business I consider finance and strategy the two paramount capabilities requisite in rendering strong business decisions. Unequivocally the best training out of undergraduate and MBA studies to develop a financial skill set is investment banking. It enabled me to become fluent in everything from financial statements to valuation to investment logic to transaction execution. This is a skill set that can only be achieved through the experience of doing deals. Furthermore, investment banking allowed me at a very young age to have deep exposure to the senior executives of Fortune 500 corporations. These exposures were both stimulating and great learning experiences. Investment banking also enables varied exposures. I worked on industries spanning energy, entertainment, health care, industrials, manufacturing and more. I also worked on product groups spanning equity raises (IPOs), bank and bond raises, leveraged buyouts, dividend recapitalizations, and strategic acquisitions. It is very rare in business to have such varied exposures so quickly and this breadth of experience meaningfully motivated me to banking. More than anything though was that I knew it was a very respected profession that would be a great springboard to whatever I ultimately decided I wanted to pursue in business.
Special Attention / Keywords for Investment Banking Resume
  • Transaction experience: If you have ever been involved in deals like any of those I noted above, be sure to make mention of them in your resume and explain your role in those deals in your interviews as well as at a high level in your resume.
  • Attention to detail: Investment bankers have a tremendous attention to detail. No comma can be in the wrong place, no extra spaces, everything must be accurate and aesthetically appealing. So too is the case for the resumes reviewed by investment bankers. If there is an error in the resume then the odds are the candidate will not have the requisite attention to detail. Make sure your resume is thoroughly reviewed so it is accurate.
  • Financial Designations: If the candidate has any significant designations, such as a Series 7, CFA, etc. be sure to note this in the applications. Languages: Investment bankers often work on deals internationally. If you speak any other languages make sure to note this.
  • Extracurriculars: Too often when I reviewed candidate resumes at Credit Suisse people failed to list their extracurricular achievements. Investment banks are highly social institutions and seeing lots of good extracurricular roles suggests that the candidate can fit in. If your leadership roles were elected, you can put “(elected)” in brackets after your title for the role, this is further proof that you are well-liked and can fit in.
  • Job Locations: This point is particularly important for bank offices outside of New York. These offices will want to know that you have a link to the area. Therefore, if you have ever worked in or near that city be sure to list the location of your jobs on your resume. At a minimum, if you are applying for a role in Charlotte make sure your cover letter indicates why you want to work there.
Interview Preparation
  • Read a few investment banking culture related books like Monkey Business and Liar’s Poker, it will give you something casual to discuss with the interviewer and most everyone in the industry has read these two books.
  • Make sure you are deeply familiar with the principles of valuation: accretion/dilution analysis; equity and debt comparables analysis; comparable transaction analysis; leveraged buyout modeling; discounted cash flow analysis (make sure you know what weighted average cost of capital is and be able to explain it in granular terms). Be sure to understand each of these analytical tools, when and why they are used and what they tell you.
  • Know your metrics. Know how any why to calculate: EBITDA (earnings before interest, taxes, depreciation and amortization); total enterprise value / EBITDA; the difference between trailing (aka LTM – last twelve months) and forward multiples; free cash flow (aka FCF); EBIT (earnings before interest and taxes); maintenance versus growth capital expenditures; debt ratios like total or net debt to EBITDA; covenants; have a broad understanding of reps and warranties in deals.
  • Know stock market index numbers especially: where the DOW, NASDAQ, S&P, oil, gold, LIBOR, and if applicable the stock of the investment bank you are meeting with are trading at. Also know key currency exchange rates (US versus pound, euro and Canadian dollar).
  • Have researched a minimum of two companies and be able to discuss why they would or would not make good investments. How they are viewed by analysts in the market. What they are trading at (overvalued or undervalued in your estimation and why). What are their growth prospects? What geographies do they serve? What is their revenue mix? What are their greatest risks?
  • Have at least 3 questions in hand to ask them about working at their firm. Some good ones: How are deal teams structured here? What is the mix of pitching to live transactions? What is the typical path for Analysts/Associates? What separates a good from a great Analyst/Associate (they really like ambitious people so this type of question so long as you do not come off as arrogant is valuable)?

Questions I Would Ask a Prospective Investment Banker
  • Name one company you would invest in and why? Name one company you would not invest in and why? [Expect numerous follow-up questions on these so know these companies cold].
  • Explain to me what happened in the most recent financial crisis. Expect this question in most interviews and have a very detailed, thorough understanding.
  • Why do you want to work at this firm? Be prepared to discuss how you think they differ from their peers – do your homework on them as well.
  • What is the best and worst pieces of financial advice you have ever been given?
  • Describe to me the time when you worked as hard as you ever have. Investment bankers, especially junior ones, work grueling hours (often as much as 100 per week), showing you are willing to do this and demonstrating you have worked hard in the past will be important.
  • What is free cash flow? Why is it important? How does it differ from EBITDA?
  • You may also be asked a question that requires you walk them through the debit and credits resulting from a situation.

Dos and Don'ts in the Interview
  • Dress nicely. Appearance matters.
  • Do all the preparation noted above, you will be surprised how much of it and more is asked of you over the course of the interview process.
  • Truly ask yourself if you can handle the great stress and hours of the job and have a deep interest in finance and deals. If you honestly say you can and do, then go for this job with full fervor, they will see this in the process and want you as well. If you do not, this is not an industry to take lightly and I have been exposed to too many people unwilling to do this before and they were very unhappy in banking and soon left.
  • Learn as much as you can about finance and accounting in school and research, this will both help you in the interviews and separate you in the job.
  • Send thank you notes after the interviews. This diligence is noticed and appreciated.
  • If there is a question you really mess-up they will appreciate it if you email them shortly after with the answer. Do not over apologize for the error, you have lots to learn and the job will provide that. They will notice the diligent effort.
  • In the interview itself DO NOT come off as arrogant. That is the kiss of death. Confident but not arrogant.
  • I would caution against disagreeing with the interviewer unless you are certain you are correct. Unlike consulting interviews, investment bankers view the process as less of a date than a right and wrong answer. Bankers are proud people that generally do not take well to being questioned.
  • DO NOT fake something in your interview. For example do not just pass off that you think the deal will be accretive without knowing what that word means and how to calculate it. Bankers can smell weakness and will likely pounce on it asking follow-up questions that uncover your lack of understanding. Thus, study hard and choose your words and areas of conversation carefully.
  • Do not discuss compensation. The job pays well, you already know that.

Selection Criteria
  • Grades: Generally each bank has certain target schools that most of their candidates come from. Applications are generally read by those who went to those schools and know good from average grades there well. In particular focus is on accounting, finance, economics and management science courses.
  • Extracurriculars: See notation above, emphasis here is on if the candidate has had leadership roles and if the experiences suggest a level of socialism and friendliness.
  • Job Experience: Related is better, but the more impressive the better. Bankers are a capable bunch and expect high levels of accomplishment from applicants. If an applicant received top tier ranking in their annual reviews, be sure to note this in your resume as that is an important metric for bankers themselves at their annual bonus reviews.
  • SAT , GMAT, GRE test scores are secondary, if you have a great score put it on your resume, it will only help.

Life as an Investment Banker
Work generally starts at 8:30am or 9:00am and it is rare for an Analyst or Associate to leave work before 10:00pm. Many days are well beyond midnight, especially if you are in the midst of a live transaction. The busier the group you are interviewing for the longer the hours generally. Smaller shops with smaller and less frequent deals generally have lower hours but also generally lower compensation. The hours for junior bankers tend to get busier after lunch as the Directors and Managing Directors spend the morning generating work for the junior bankers. Travel is frequent but far less than consulting. In general expect a day trip every two weeks at the Analyst level and one day a week at the Associate level (note this fluctuates meaningfully by office geography and firm). The type of work you will be doing will generally take the form of the different types of analysis I noted already above (such as leveraged buyout modeling, equity comparables, etc.). You will spend a great deal of time with those in the class you enter the firm with, especially those in your group. They are going through the exact same hardship as you and you get very close as a result. The good news about banking is that life gets easier at the Vice President level and much easier beyond that point. You then get more control over your hours and what you are working on. However, be prepared for some grueling years before that point.  Article source:

Inside Investment Banking (IIB)
If you are eager to apply for investment banking roles, visit the IIB website. It is authored by five young investment bankers who all succeeded to break into investment banking without a degree from Harvard and without an internship from Goldman. They’ve created the IIB website to share their experiences and help others to do the same. Click here to visit Inside Investment Banking