TOP 10

INVESTMENT
BANKING
INTERVIEW
QUESTIONS
 1

What is Investment
Banking?
Investment banking refers to a specialized
division within a financial institution that
provides various financial services,
including capital raising, mergers and
acquisitions (M&A), and advisory services to
corporations, governments, and other
institutions
 2

Differentiate Between
Buy-side and Sell-side?
Buy-side firms, such as mutual funds and
hedge funds, focus on investing and
managing clients' assets.

Sell-side firms, like investment banks,

facilitate transactions between buyers and
sellers, providing services such as
underwriting, research, and trading.
 3
Walk Me Through a
DCF Analysis?
A Discounted Cash Flow (DCF) analysis is a
valuation method used to determine the
intrinsic value of a company by estimating
its future cash flows and discounting them
back to present value.

It involves projecting cash flows, selecting

an appropriate discount rate, and
calculating the net present value (NPV).
 4

Explain the Leveraged

Buyout (LBO) Model?
The Leveraged Buyout (LBO) model is a
financial analysis tool used to evaluate the
acquisition of a company using a
significant amount of borrowed funds. It
assesses the potential returns on
investment and determines whether the
acquisition is financially viable.
 5
Describe the Three
Financial Statements?
The three primary financial statements are:
- Income Statement: Shows a company's
revenues, expenses, and net income or loss over a
specific period.

- Balance Sheet: Provides a snapshot of a

company's financial position by presenting its
assets, liabilities, and shareholders' equity at a
given point in time.

- Cash Flow Statement: Tracks the inflow and

outflow of cash from operating, investing, and
financing activities, indicating a company's cash
generation and liquidity.
 6

What is Working
Capital?
Working capital represents a company's
short-term liquidity and operational
efficiency.
It is calculated as current assets minus
current liabilities and measures the funds
available for day-to-day operations.
 7
Explain the Initial Public
Offering (IPO) Process?
The Initial Public Offering (IPO) process
involves transforming a private company
into a publicly-traded one by issuing shares
to the public for the first time.

It typically includes activities such as

selecting underwriters, filing regulatory
documents, marketing the offering, and
determining the offer price.
 8
Describe the Capital
Asset Pricing Model
(CAPM)?
The Capital Asset Pricing Model (CAPM) is a
widely-used financial model that estimates
the expected return on an investment by
considering its systematic risk.

It utilizes the risk-free rate, the asset's beta

(systematic risk), and the expected market
return to determine the appropriate required
return.
 9
What is a Merger and
Acquisition (M&A)?
Merger and Acquisition (M&A) refers to the
consolidation of two companies through
various transactions, such as mergers,
acquisitions, or takeovers.

These transactions aim to create synergies,

increase market share, or achieve strategic
objectives.
 10
Discuss the Different
Valuation Methods?
There are several valuation methods used in
investment banking, including:

- Comparable Companies Analysis: Estimates a

company's value by comparing it to similar
publicly-traded companies.

- Precedent Transactions Analysis: Determines a

company's value based on the prices paid in
previous comparable acquisitions.

- Discounted Cash Flow (DCF) Analysis: Calculates

the present value of a company's expected future
cash flows.
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