Saturday, February 6, 2010

Ace eight common technical questions for finance

In preparation for those interviews, here's a list of the more technical questions you should know how to hit a home run on. These were actual questions asked at numerous bulge bracket investment banks in the past two years.

Especially if you had a behavioral / all fit first round interview, you can bet that the second round will have more technical curve balls. These were asked in both sales and trading and investment banking positions.

Share your mock answers in a comment, and we'll critique them.

1. What are the ways to value a company? Which method generally offers the highest valuation for companies?

2. How have deals in the industrials [or any other] industry been financed in the last two years? How do you predict that financing will change in 2010?

3. Explain the percentage of debt and equity used in a current M&A deal. What valuation did the target have? Do you think this was a reasonable valuation? What changes to this valuation would you have made? Why?

4. Which industry would you go long on for 2010? Short on?

5. What omissions on the financial statements led investors to believe that Lehman Brothers, Bear Stearns, and other firms were not only illiquid but insolvent?

6. What is the difference between a firm that is illiquid and one that is insolvent? Which problem was more prevalent in late 2007? Which problem is more prevalent in 2010?

7. What will be the Fed's response to continued weakness in the economy in early 2010?

8. What are regulatory problems governments are trying to resolve with impending legislation?

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