Financial Strategies

15 Most Common Investment Banking & Finance Interview Questions

Some of the most common banking interview questions for an investment banking interview include (some are a bit on the tough side but they DO come up very often, increasingly as a means of trimming down the candidate lists as the finance graduate job market gets harsher):

How many degrees (if any) are there in the angle between the hour and the minute hands of a clock when the time is a quarter past three?

[Typically asked during investment banking interviews for entry level investment banking graduate jobs]

Find the smallest positive integer that leaves a remainder of 1 when divided by 2, a remainder of 2 when divided by 3, a remainder of 3 when divided by 4, … and a remainder of 9 when divided by 10

[Typically asked during investment banking interviews for quantitative investment banking finance jobs]

Two standard options have exactly the same features, expect that one has long maturity, and the other has short maturity. Which one has the higher gamma?

[Typically asked during investment banking interviews for bank derivatives trading jobs]

How do you calculate an option’s delta?

[Typically asked during investment banking interviews for derivatives trading jobs]

When can hedging an options position make you take on more risk?

[Typically asked during investment banking interviews for trading jobs]

Are you better off using implied standard deviation or historical standard deviation to forecast volatility? Why?

[Typically asked during investment banking interviews for quantitative finance jobs]

Describe “duration” and “convexity”. Describe their properties and uses

[Typically asked during investment banking interviews for graduate investment banking jobs]

Two players A and B play a marble game. Each player has both a red and a blue marble. They present one marble to each other. If both present red, A wins $3. If both present blue, A wins $1. If the colours do not match, B wins $2.

Is it better to be A or B, or does it matter?

[Typically asked during investment banking interviews for quantitative finance or derivatives jobs]

How do you “value” yourself? Here “value” means in financial terms

[Typically asked during investment banking interviews for MBA finance jobs or experienced banking hires]

What distinguishes you from other candidates we might hire?

[Typically asked during investment banking interviews for graduate investment banking vacancies]

If you could go on a cross-country car trip with any three people, who would you choose? Why?

[Typically asked during investment banking interviews for corporate finance / mergers & acquisitions banking jobs]

Tell be about a stock you like or hate and why

[Asked by investment banking job interviewers for any accounting, finance or investment banking job!]

What is the difference between default and prepayment risk?

[Typically asked during investment banking interviews for credit jobs / risk management jobs]

How would you move mount Fuji?

[Typically asked during investment banking interviews for consulting jobs or graduate accounting jobs]

Estimate the annual car demand for car batteries

[Typically asked during investment banking interviews for corporate finance jobs, mergers & acquisition banking jobs or consulting jobs]

The current rough state of economy doesn’t mean that there will be absolutely no finance jobs. It just means that the finance jobs will be fewer, and the competition for them will be steeper. So if you are a finance professional, and happen to be looking for a finance job in these tough economic times, here are three steps, which if properly taken, can push you ahead of the pack in the competition for the few finance jobs available.

1.     Update Your Skill Set. Unique circumstances call for unique skills, if one is to sail through them successfully. Most professionals looking for the top finance jobs right now are equipped with skill-sets which were adequate for the better times, but which might be considered inadequate for the current circumstances. Simply put, to beat your competitors in the search for top finance jobs, you will need to have skills that they don’t have. Having a unique skill-set gives an employer a reason to consider you for a job in preference to another candidate. And this applies whether you are looking for the top finance jobs in the financial sector, the middle office finance jobs in governments and non-profit organizations or even for the more ordinary commerce and industry accounting jobs.  The unique skills in question need not be anything really fancy. Having, for example, a certificate in project management (which you can earn in a couple of weeks) puts you ahead of another candidate without such a certificate, even if you have the same basic qualification. Similarly if you are looking for commerce and industry accounting jobs, you might be well advised to approach the potential employer armed with at least some basic understanding of the workings of the business or industry you are considering working in. Armed with such a basic understanding of the underlying industry or business puts you at least one step ahead of another equally qualified finance expert who lacks such understanding.

2.     Work on Your Resume. The presentation of your resume can make a great difference in your search for top finance jobs, and is likely to have an influence on the employer, even before they get to look at its contents.  You might consider enlisting the help of a professional resume service, to help with the presentation of your resume. Remember the number of otherwise qualified candidates who get otherwise shoved out of the recruitment process simply because of poor resume presentation is huge – ensure you don’t fall for the same trap.

3.     Consider enlisting the help of a finance recruitment agency. In a bid to reduce the workload involved in the recruitment process, many employers are increasingly turning to recruitment agencies for their staffing needs. This is especially true for executive jobs, like the top finance jobs, whose recruitment process might involve some level of head-hunting, and which employers might feel uneasy doing themselves, preferring to delegate it to recruitment agencies instead. Many employers are also increasingly turning to these finance recruitment agencies even for jobs which don’t necessarily involve head-hunting, like commerce and industry accounting jobs and other middle office finance jobs. This means that anyone looking for any sort of finance job is best advised to at least deposit their resume with the one of the major finance recruitment agencies. These finance recruitment agencies usually charge very nominal fees for their services, and the services they provide are very often worth what they charge.