Tuesday, March 16, 2010

15 Most Common Investment Banking & Finance Interview Questions

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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]

(ArticlesBase SC #749189)


Agustin Valecillos - About the Author

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