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Top 20 Investment Banking Interview Questions and Answers

Everyone has its own significant career objective, and they hope to accomplish in the future. A lot of applicants are looking to achieve their short-term and long term career plan or dream job with the help of a specialization degree.

Do you have a question in your mind - why do we need to choose investment banking as a career?

Here's why? Investment bankers help their customers fund-raise in capital business sectors by giving obligation or selling value in the organizations. Most commonly, As a front office Invest banking Job, the employee has to deal with trading on behalf of clients, analyzing products, conducting research, and analysis projects, acquisition, etc.

It also helps to enhance professional skills when we work on various levels of profiles.

Let's see what are the vital questions, which will be asked by the employer - when you go for an Interview for the Invest banking profile.

We have also discussed the sample answers for your references, which will help you and make the interview much easier, and increase the more chances of success.

Q.1. what excites you the most about Investment banking?

Sample Answer - According to my Investment banking is a dynamic and challenging industry. It helps to demonstrate more work knowledge related to the financial markets. Investment banking gives tremendous riches and energizing vocation. It also provides intelligent, proficiency skills in day-to-day financial knowledge.

Q.2. Kindly tell, what do you mean by investment banking?    

Sample Answer - Investment banking is a financial administration organization or corporate part that engages in advisory-based. In simple wording, it is a branch of banking that helps businesses for generating capital. Here the businesses may be private, public, corporate, government sectors. Investment banking consultant help to various organizations in the trend of stocks market investment term plan.

Q.3. what do you know about the major services offered by investment banks?

Sample Answer - There are the major services are offered by investment banks such as they provide deal securities, special issues, obligation placement, acquisitions, account, and value, etc.

Q.4. What according to you are the major responsibilities of an Investment Banking Analyst?

Sample Answer - An Investment Banking Analyst help to the client on their task, and increment the money related esteem, and propose for benefit. All-time they do significant analyst reports for the client work and discuss with the divisional of the department. Moreover, they deal with monetary modules and screen the valuations of associations. They also do the analysis of various divisions such as market trends, finance, and manufacturers, and client product.

Q.5. According to your which of the following do you think is higher? - Cost of Equity or Cost of debt.

Sample Answer - You can say the Cost of Equity is higher because the cost of fact is taxed one. Likewise, the equity specialists are paid at the last and they are not ensured fixed installments during liquidation.

Q.6. Please tells, what are the vital foremost financial documents for an Organization?

Sample Answer - At almost, every organization has its vital finance documents such are, Balance sheet documents, financial sheet documents, financial cash activity statement documents.

Q.7. Please confirms, what are the vital skills for Financial Analysts?

Sample Answer - Financial Analyst the skills are as following -

Q.8.Through which processes you can carry out the valuation of an organization?

Sample Answer - As there are various methodologies to evaluate the organization - doing discounted cash flow structure, products approach valuations, and finding the fair market value assets and transnational approach valuations.

Q.9. what do you mean by unlevered beta?

Sample Answer - With the unlevered beta we can measure the market risk. It is otherwise known as asset beta which is a risk estimation instrument that compares the risk of an organization with no obligation to the risk of the market. In simple wording, we can say that it is a beta of a company when you don’t consider a debt.

Q.10.Which tool is used in the financial analysts in investment banking?

Sample Answer - As there are many software applications that are available in the market for financial analysts, are Microsoft spreadsheets, Bloomberg terminals, PowerPoints, etc.

Q.11. Please tell me, what is the purpose of unlever beta?

Sample Answer - With the help of it, you can compare the market situations. In the event that you unlever beta it eliminates the obligation structure in the capital structure which lets you notice the risk of an organization's value compared with the market.

Q.12. please tell us about LBO and what is its purpose?

Sample Answer - The LBO stands for (leveraged buyouts). At whatever point an organization needs to make huge acquisitions and they don't need to submit for a great deal of capital around then leveraged buyouts are utilized.

Q.13. What according to you are the major skills required to succeed in this profession?

Sample Answer - If you want to succeed as an investment banker you need some of the fundamental aptitudes for example excellent mathematical and explanatory abilities. You ought to likewise have good presentation skills both written and oral. You ought to have excellent information on records, finance, and matters.

Q.14. May I know how LBO is different from mergers and acquisitions?

Sample Answer - There is an essential difference between LBO and mergers and acquisitions is that in LBO you accept that the purchaser would sell the target off in the future and in case of mergers and acquisitions the purchaser would not sell the objective off in the future.

Q.15. Can you describe the situations where we cannot use discounted cash flow (DCF) in the valuation?

Sample Answer - The interviewer intentionally asks this question to check if you are aware of discounted cash flow (DCF) or what it is exactly. So you can answer in this format as whenever a company has an unstable or unpredicted cash flow at that time you cannot evaluate the company on a DCF basis. If you cannot predict the cash flow and if the cash flow is also an unstable one it is risky to use DCF in valuation.

Q.16. what is the meaning of the price-earnings to growth (PEG) the ratio in investment banking?

Sample Answer - As here the price to Earnings ratio will show us how fast the earning per share (EPS) for the company will grow. If the organization has a higher PEG proportion then the stock worth is developing quickly.

Q.17. Please tell your opinion, do you think Goodwill is an asset or a liability in investment banking?

Sample Answer - Yes. I think Goodwill is an important asset that cannot be indicated like financial assets on the balance sheet. However, a goodwill gesture is a non-tangible asset which can be a brand name, customer loyalty, etc. So, we need to provide to the customer.

Q.18. Do you know some of the benefits a company gets while listed on an exchange?

Sample Answer - Indeed, there are significant advantages after listing on an exchange is that the estimation of your organization gets increased. With the help of listing the organization, easy can do an exchange of access capital. It also gives branding to the company and adds to the corporate value.

Q.19. Please tell, if you decide to buy back shares by issuing debts what happens to the earning per share of the company?

Sample Answer - When we decide to Buy Back Shares by issuing debts then the number of shares in the market reduces. However, here the gaining per share is lowered. So, in the long run, it is very risky for the organization's point of view.

Q.20. Please tell me, what are your views on a good financial model?

Sample Answer - According to my, the great budgetary model must be a sensible one. he/she ought to be able to cope with the changing market conditions and flexible enough to deal with the same. It ought to be easy to understand to the client as well as to the banker.


The above article is about an investment banking interview guide and with the help, you would get to know about the investment banking process and some of the terms associated with it. Here we have tried to cover the various types of investment banking, mergers, and acquisitions, a leveraged buyout (LBO) and its purpose, etc, that might be asked during the interview.

We hope that the above-covered questions will help you at the hour of the Interview.


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