Common Finance Interview Questions

Since I've gotten these requests, I'll make a quick list of general questions you should definitely be prepared to answer. You should know these regardless of your background (finance / non finance; ivy leage / state school). By the way, these questions were asked by interviewers at bulge bracket banks this past and previousd years to applicants of junior summer analyst positions.

• Why do you want to work at this firm?
• Tell me how our firm is different from our competitors.
• Why are you interested in this position? (Ex: I applied to IBD. I was asked why not Sales and Trading?)
• There are people with higher GPAs, pregtigious finance experiences, and frankly more potential. Why should I hire you?
• The most variant questions will be the technical ones. Look at this previous post for an example.
• There's a good chance you'll get case study questions. These are general situation questions, often based on the interviewer's line of work and current business deals, intended to test your business sense. Some examples:

1. "An associate asked you to compile the P/E and EV/EBITDA numbers on your first day. He wants it in half an hour. You have no finance background (Interviewee went to a target and majored in religion). How will you get the numbers and be able to explain what they mean?" (Think about what the interviwer is testing)
2. "An Associate asks you to change a few numbers on the DCF model because they don't seem to make sense. You, as an intern, check the numbers and realize that the numbers are the correct ones. The Associate still asks you to change the numbers to what he wants. How do you respond?"
3. "If a company with little cash and high debt came to you with a speculative proposition for acquiring a company with a lot of debt, what would your recommendation be?"
4. A Vice President takes out a balance sheet, income statement, and cash flow statement for Yahoo. She asks: "The current share price is about $21. Is the stock over or undervalued in your opinion?"

In many cases it helps to have studied economics/finance or worked in a bank to answer these questions. However, such a background is not necessary to answer these questions. The bottom line is to know how to answer questions even when you don't know the 'right' answer.

Also, your business intuition is what interviewers are trying to see. If you feel like you don't have the natural intuition to answer these, the good news is that you can develop the business sense if you practice thinking through finance issues and cases.

If you have the answers to these questions, feel free to share them in the comments.

WHERE you should focus your interview preparation -

When you are interested in finance and have the resources/time, buy the Vault Guide, visit popular M&A sites, look at league tables, talk to people in the industry. These sources will definitely help you. And if you have the time, interest, and background to really understand them, going through these is what you should do.

However, if you are pressed for time, you can't read everything. What should you focus your efforts on to get the maximum output under constraints? How technical should you expect the questions to be?

If you have finance experience or come from a lower ranked university, there are good chances that you NEED to show technical experience. For instance, a friend from home applied for an bulge bracket investment banking internship. Eric attended U-Texas and was in the undergrad business program. He worked in an equity research position at a middle market firm his sophomore summer. When Eric was interviewing at the bulge bracket for his junior summer, his interviewer was a banker in debt capital markets (DCM). Even though Eric had no direct experience with debt financing and LBOs (he covered consumer stocks in his previous internships), Eric received the following technical questions:

- Talk about the debt markets.

- What is the fed funds rate? (Note: applicants to IBD may receive traditional sales and trading questions)

- Gap is a hot stock now. How is their debt structure? How much cash do they have? Does Gap have enough financing if they fall short of their annual revenues? Under what conditions will Gap need to refinance? (Note: The interviewer saw that Eric covered consumers as a research intern. The interviewer randomly picked a consumer stock that was in the news, and asked Eric debt questions that not only relate to Eric's research experience but also have direct relevance to the interviewer's backgound in DCM)

- What consumer stocks would you recommend? (Note: The interviewer probably knows about the general trend in consumers. He is testing whether Eric can talk about the stocks he researched the prior summer - a person truly interested in finance would have kept up with current news on the companies.)

If you come from a leading university and with NO finance experience, the questions will be more about your background and why you are interested in the position / the bank. If you have an economics or related finance experience, be prepared to answer any and all questions about any economics-related topics. In a bulge bracket IBD position, I was asked about a theory in one of my macroeconomics classes! If you don't have any direct experience with finance (nothing at all, not even as a personal trader or with your school investment club) and wrote a winning finance resume, you will still need to prove some knowledge of both the position and the work you will do as an intern. How do you prepare for this?

Read the Wall Street Journal, the NYTimes Dealbook, and be ready to talk about major current issues. A bulge bracket banker once told me that if you can explain current economic debates and your take on them with intelligent insights (give your opinion and back it up with evidence), you can go really far in the interviews (assuming that interviewers agree with your opinions or see that you have done your homework). Bankers don't have all the time in the day to read everything about the markets and the entire financial landscape, so if you can say something that is illuminating, it sticks with the interviewers. You will come off as intelligent, well-read, and truly interested in finance. Interviewers don't remember people because of their GPAs, schools, or sometimes even finance experience - they remember you because of the mental horsepower you demonstrate.

If you have any burning interview questions, post them in the comments section or send them here for finance and here for consulting.

Some Common Mistakes on Finance Resumes

The resume review response has been overwhelming! Thanks for participating. We noticed many common errors and hope that these tips can help all those tweaking their resume writing.

What to avoid:

- Merely describing what you did

- Adding awards without explaining them

- Not demonstrating how non-finance activities translate into skills necessary for finance

- Not having attention to detail (spacing, general look)

Most undegrads do not have bulge bracket finance experience before junior summer recruiting or even full time recruiting in senior year. But if you think like a banker/trader/consultant in describing your past experiences, it comes through that you understand the nature of the job. Recruiters will be confident that you've done your research and will know how to add value to the team from day one. Writing this type of resume tremendously increases your chances of getting an interview.

A college friend, Tom, was looking for a junior summer internship in investment banking. He encountered problems getting an interview because his resume had the common mistakes mentioned above.

Tom had a 4.0 GPA at a target, biology major, no finance internships. Despite an impressive academic background, he did not receive any interview offers in his junior year. When he called alumni to understand why he did not make the interview cut, they said that alumni and recruiters did not see a real interest in finance with his resume.

After he re-wrote his resume from a banker's point of view, he avoided the common mistakes above. Tom was a research officer for an investment club. He included numbers and ratios demonstrating how his stock selections had a 37% annual return (above the 20% average of the fund). He completely made his resume finance material, even though he didn't have professional finance experience. He added value and could talk confidently about his contributions off his resume in the interview, which helped him land the job.

Lessons from this:

- An impressive academic background alone will not guarantee you an interview selection.

- You need to demonstrate genuine interest in the field SOMEHOW. You don't need to be a economics/finance major, but you need to show involvement and enthusiasm for the position you are applying for. You cannot just be a participant in 10 activities and not know how to speak about how they relate to finance.

- Use finance-speak and terminology in describing your activities. This shows that you are familiar with how bankers think and communicate. It becomes implicit that you know what position you're applying for.

How Recruiters review finance resumes

Everyone knows that recruiters spend less than 1 min reviewing a person's resume.  Commonly, your own university alumni will be the people deciding who gets an interview and who doesn't.   Most other resume help websites cater to those with 3.9s from Harvard and Wharton.  The truth is that a full-proof and impressive resume in some cases can overcome a lower-than-average GPA or non-target school.  Your resume needs to show that you are a good fit for the firm and that you are best capable for the job.  

GPA is an important component but not the only one.  When firms ask alumni or recruiters to sift through a pile of 500 resumes, the resume reviewers have a sheet that asks them to check off whether a candidate meets the standard for Academics (GPA/SAT/Rank), Business Sense (interest in and knowledge of the industry), Leadership, and Ability to work in a team.  Recruiters then rank the candidates to determine who fills the 10 or so interview slots in the first-round.

A friend who now works at Goldman Sachs had a 3.3 GPA at a large public university (non-target).  Perhaps he didn't meet the Academics baseline.  He was not a finance whiz, but he did know how to boil the ocean.  He was the only student representative on the university endowment and student manager of an investment fund - demonstrating both community leadership and business sense (an interest in finance).  He also won a nationwide student entrepreneurship competition - demonstrating teamwork.  As a result, he received several offers and despite a lower than average GPA nad non-target school status, now works in Sales & Trading at Goldman.

As you review your resume, keep in mind that recruiters will be weighing you against your peers in these four respects.  Work on the content of your resume in these four buckets!

 

Finance and Consulting Resume Reviews

So I've been getting requests to look at resumes. I'll be making a helpful post on how to make a polished resume.

The first five people to e-mail me at chasingconsultants@gmail.com for consulting resumes and breakingbankers@gmail.com for banking/finance will receive a free resume critique.

This is how it works:

- feel free to take out your personal info, anything you'd like to keep confidential.

- tell me what position(s) and firm(s) you're applying for; that way I can help you make a tailor made resume

- I'll do a line for line edit and give overall advice

- we can converse back and forth

Riding on the Finance Train

If you attend an Ivy League or another leading institution, it's hard not to know what investment banking is. As a freshman, I was surprised to find career fairs filled with investment banks and financial firms (over 80% of firms at the fair). Though I didn't know what ibanking was before college, I soon realized that it was the thing everyone wanted to pursue, regardless of one's interest and fit for the job. So because of peer pressure and an overachieving environment, I also considered banking and ultimately found myself on the finance track (yes, I know many will call that toolish).

I was lucky in that a huge percentage of alumni at my school pursue finance, and many firms come here to recruit. Although I didn't attend firm presentations nor network at my school, I do have the opportunity to make connections with alumni and upperclassmen. Even religion and sociology majors at my schoool have opportunities to work in finance.

My interests were in hard science and chemistry research, which many consider to be a disadvantage relative to finance and economics concentrators. But from a recruiting standpoint, after getting an interview, the most important thing is to get along with the recruiters, alumni, and interviewers at firms and give a story about one's background - why I would fit in the industry and what I could offer over all other candidates. In the end, I snabbed five offers in Investment Banking, Equity Research, and Fixed Income Trading all at bulge bracket firms (and within the last year - generally considered the worst market for undergraduates and especially for finance in recent times).

What I had going for me:

• attending a top school
• having a quantitative background
• having good scores and grades
• pursuing activities and taking classes that I enjoy - which translated into enthusiasm and intellectual curiosity during my interviews

But I also did not have any "extra" advantages or special ways into finance:

• I don't have any alumni or family connections
• I am far from a market maven or business whiz (I didn't even know the difference between Sales and Trading and Investment Banking in my interviews)
• I did not even consider finance until the middle of sophomore year
• I did not pay for formal business preparation from professional websites
• I haven't taken any accounting or finance courses
• I have not purchased Vault guides or industry books
• I don't belong to business-oriented associations at my school (where many of my peers have leveraged contacts to getting internship positions)

Every student in college will have a different background. Since completing my internship, I have realized that my recruiting experience was not the most common one, but it also was not uncommon. There are many small but significant tricks behind the resume and interview process that can help students, from any background, land an internship or full-time offer.

In my experience, most students who have pursued internships or full-time jobs in finance tend to think narrowly about what one needs to do in order to get in the door: network with the right people, take finance-oriented courses, take on many leadership roles. I am not saying that these are bad or unhelpful in one's finance application - these traditional paths work for many. Yet unconventional times calls for unconventional approaches. Instead of prescribing a "right" way to snab a dream job, my experience encourages potential bankers (and consultants) to carefully assess their suitability for the position, and then strategize a plan of attack to be successful in the resume, interview, and internship process.

In the following posts, I will go in-depth into my own experience - from the writing of my resume to what I have been doing after the internship. Stay tuned!

How to Boil the Ocean and Land on the Beach

So who wants to be a management consultant or investment banker? Whatever your motivations--genuine interest in the field, money, prestige, a challenging work environment, lucrative exit options--summer analyst and analyst-level positions at major firms are dwindling. By sheer numbers, the pool of qualified candidates far exceeds the number of opportunities.

Chasing Consultants, Breaking Bankers gives an insider perspective on what summer or full-time positions entail and how to break into these competitive industries for college students.

How is Chasing Consultants, Breaking Bankers different from what's already out there?

• We are undergraduates or recent graduates of leading universities. Each of us has worked at both bulge bracket investment banks and global management consultancies. We give the scoop on the tradeoffs between the banking and consulting lifestyle / worklife.
• Most sites are "catch-all" resources - offering general interviewing or resume tips for all industries and for high schoolers to career changers. We offer advice specifically targeted at helping college students!
• We break down common misperceptions on what recruiters are really looking for in their undergraduate recruiting.
• We have gone through the recruiting processes at top firms, including elite firms such as Goldman Sachs and Morgan Stanley as well as Bain and The Boston Consulting Group.
• We will detail our experiences at various firms in both industries, and can give a personal compare and contrast (whereas other sites are purely for finance or consulting, and thus can't speak fairly and anecdotally to the differences).
• We are a one-stop place for resume, interview, and internship tips for undergraduates. We seek to give the most realistic insight possible for the entire recruiting process.
• We stay current on the industry trends and therefore give the most up-to-date advice for undergraduates.
• Most importantly, we will teach you how to Boil the Ocean and Land on the Beach.

Stay tuned for more posts!

In the mean time, please feel free to send your consulting queries to chasingconsultants@gmail.com and finance queries to breakingbankers@gmail.com.