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111 top banking interview questions and how to answer them

Banks aren’t known for being easy to get in to.

But if you’re young, smart, charming, ambitious… Whatever else, finance is one of the world’s best places to be. Or, at least, one of the in-demand places to be.

The benefits of a career in high finance are mostly self-evident. There is an enormous amount of prestige, dynamism, and compensation involved in the industry. And most (although not all) careers in finance – whether you end up working at a hedge fund, private equity firm, or asset manager – start in an investment bank.

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Getting into that first job, however, is easier said than done. Banks are fussy, to say the least. We have an extensive article here on the application process, but in a nutshell: it’s very long, starts in your second year of university (or your first, potentially), requires multiple applications, interviews, and internships. We have lots of resources on applications and internships. Check out the tab at the top of the page that says “student” – you’ll be surprised how deep the rabbit hole goes.

In terms of interviews, welcome. We’ve compiled the longest list we can of questions we know have appeared in bank interviews, all for junior applicants (for summer interns and post-university graduate programs). These come from interviews for Goldman Sachs, JPMorgan, Morgan Stanley, Barclays, Deutsche Bank, UBS, and other banks around the world.

We can’t promise you that you’ll get a job anywhere, of course. But if you know how to answer the questions on this list, you may just have a chance.

The “Why?” questions banks ask

Banks will work you hard, and they want to make sure you’re capable of working that hard. They also want to make sure that the people angling to work there know what they’re getting in to, too; that means researching your future (prospective) employer. A keen attention to detail will go as far in your application process as it will in your career, really.

Banks also want you to show off your knowledge of the industry (although this isn’t really their main way of finding this out about you). You’ll even be asked about what the job you’re applying to is. That being said, however, one day in the future you’ll have to explain it on a date, so might as well practice now.

It’s probably worth pointing out that you’re applying to a job in which you’re working for over 70 hours a week as a basic requirement, and probably closer to 100 when it comes to crunch time. You have to be a pleasant person to be around – or at the very least, tolerable. 

  1. Why you?
  2. Why investment banking?
  3. What is investment banking?
  4. Why [this bank]?
  5. Why this program?
  6. Why this group?
  7. Why do you want to start your career here?
  8. Why should we hire you?
  9. Why would you be a good fit for this job?
  10. Why did you decide on your particular university?
  11. Why did you choose your major/degree?
  12. What attributes would you bring to [this bank]?
  13. What projects are you currently working on?
  14. How do you embody the valuables of [this bank]?
  15. How do you imagine life here to be like?
  16. What are [this bank]’s ESG policies?
  17. Tell me something about you that isn’t in your CV.

The Brainteaser questions banks ask

There’s much more to banking than just hard graft. That’s a lot of the experience, don’t get us wrong, but there’s more to it. You have to think on your feet, come up with solutions, and think outside the box. In many of the questions below, the focus on your response will be sharing your thought process, as opposed to finding a correct answer.

  1. If you look at a clock and the time is 9:45, what is the angle between the hour and the minute hands?
  2. What are some other uses for a coat rack?
  3. Given that printer A, B, C and D are working at a certain rate, and that D could only work one hour after C has worked, give which printer can be used at which moment. Assume that no printers can work together.
  4. How would you invest one billion dollars?
  5. If 5 students use 18 pencils in 9 days, how long at the same rate will 66 pencils last for 15 students?
  6. You have a bag with 100 identical golf balls in it. Each ball is labeled by a number between 1 and 100. By paying $1 per draw, you can pick one ball from the bag. Then you can either stop, and you will be paid an amount in $ equivalent to the number on the ball, or you can reinsert the ball in the bag and extract again. What is the optimal strategy to maximize the gain?
  7. How many chickens are there in the United States?
  8. How many pigs are there in China?
  9. How many ping pong balls could fit in a [Boeing] 747?
  10. What percentage of doors open inwards vs outwards?
  11. In your opinion, what’s the best TV advert of all time?
  12. The lilies in a pond double in size every day, and at day 7 they cover half the pond, at what day will the lilies completely cover the pond?

Answer: Day 8.

The market knowledge questions banks ask

Banks need to know that you know what you’re doing. You’ll be asked about the market as it stands, the broader economic trends going on in the world, and that sort of thing. You’ll need to be up to date on industry-specific news, as well as your general knowledge, to answer these questions effectively. 

  1. What is the Dow Jones/FTSE/S&P 500 as of today's opening bell?
  2. What would a trader have to do to buy and or sell to hedge a digital option?
  3. In your own words, explain what happened in the markets during the last quarter.
  4. What industry or company are you currently following?
  5. Where do you see the price of bitcoin in a year?
  6. What two companies should merge? Why?
  7. Is the economy heading in a recession if we are not in one already?
  8. To which company would you lend money and why?
  9. What is [interviewing bank’s] stock price?
  10. How do you see the market?
  11. What is the most important metric on a company's balance sheet?
  12. How do you keep up to date with current financial trends?
  13. Would you purchase stock or bond Y?
  14. Pitch me a stock.
  15. Tell me about today’s economy, globally.
  16. Explain the Russo-Ukrainian war. What consequences has it had on the economy?
  17. What’s the sell-side? What’s the buy-side?
  18. Tell me about a recent deal involving [interviewing bank].
  19. What is the current value of [interviewing bank]?
  20. How do you see AI impacting the workforce?
  21. What is one major current event happening in the world right now, and how might it impact the markets and the role you’ve applied for?
  22. What is the most important type of risk that banks face?
  23. Tell me about a news article you recently read.
  24. What does “finance” mean to you?
  25. What does an inverted yield curve imply?

The Experience-based questions banks ask

These are about you, and for banks to get to know you. You’ll be expected to show why you’re a good fit culturally with a bank, as well as the profession, with personal anecdotes. We strongly recommend answering these questions using the S.T.A.R. Technique, a tried and tested method, which we’ve outlined in an article here.

  1. Explain a tough decision you made on a previous job.
  2. What’s your experience working with clients?
  3. Where have you showed leadership?
  4. What has been the hardest career choice you have had to make?
  5. Describe your background in finance.
  6. What did your last job entail?
  7. Tell me about a challenge you’ve faced at work.
  8. Think about a time when you needed to learn a new skill for an assignment. What steps did you take and how did you apply them?
  9. What have you done in your university time?
  10. Tell me about a time you managed to persuade someone to take your point of view.
  11. How does your experience align with the position?
  12. Talk about a time when you had to adapt to a difficult scenario.
  13. What would you do if your team is behind a deadline?
  14. Describe a situation when you had to resolve a work-related problem.
  15. What was a time you challenged an authority figure in one of your roles?

The Technical questions banks ask

Interviewing for an investment banking job doesn’t mean you come on as an apprentice. You’re expected to know at least the very basics of what an investment banker does technically, and that means knowing a lot of the jargon and acronyms used in the industry. You don’t have to be an expert by any stretch of the imagination, but you have to know at least the basics. These are the sort of things most commonly asked for:

  1. What’s an LBO?

A leveraged buyout (LBO) is when a company is acquired using predominantly debt funding. The acquirer is usually a private equity firm which will invest a small amount of equity and use debt to finance the rest of the acquisition. The private equity fund relies upon the company's cash flow and/or asset sales to finance the debt. The value of the company is therefore the amount the private equity fund can afford to pay and still finance this debt.

  1. Walk us through the key line items of an LBO to get to FCF.
  2. Walk us through a DCF.

A DCF proposes that the value of a productive asset equals the present value of its cash flows. You’ll also need to talk about relative valuation multiples, in which you value a company similar to its peers based upon measures like enterprise value/revenue, enterprise value/EBITDA, and the price/earnings ratio.

  1. What happens to net debt if a bond is issued?
  2. What are the components of the net debt that are put in the bridge?
  3. What happens with an asset acquisition?
  4. How would you do the valuation of a car washing business?
  5. How do you get from equity value to enterprise value?
  6. What is the formula for EV [Expected Value] and equity value?
  7. What is a yield curve?
  8. Define Beta.

Beta tells you how much the price of a given security moves relative to movements in the overall market. A Beta of 1 means that if the market moves, the stock moves in unison with the market. A Beta < 1 means that if the market moves a certain amount, the stock will move less than that amount. A Beta >1 means that if the market moves a certain amount, the stock will move more than that amount.

  1. Give an example of a company with a high Beta, a low Beta, and a negative Beta?
  2. How do you calculate a company’s Beta?
  3. What is the relationship between a bond’s yield and its valuation?
  4. What’s WACC? How do you calculate it?
  5. What is accretion and dilution?
  6. If two companies are trading at the same trailing P/E multiple, are they also trading at the same trailing EV/EBITDA multiple?
  7. What is working capital?

Working capital is the amount of liquid assets a company has on hand. It amounts to current assets and cash minus current liabilities.

  1. What is DDM?
  2. Which is higher - the cost of equity or the cost of debt, and why?
  3. Why should a company prefer equity finance to debt finance?

Equity financing is less risky (you won't have to pay it back). You'll have more cash on hand. You won't have to channel profits into loan repayment. Your equity investors will have a longer term view. Your company will have more credibility. And you might get to tap your investors' network to help you develop the business.

  1. How do you account for stock-based compensation when valuing a company?
  2. How do you account for convertible bonds when you're calculating enterprise value?
  3. Give me the net present value of $1 with a 10% discount rate over 10 years.
  4. How will an increase in the financial reserve be adjusted in a financial statement?

The Culture-based questions banks ask

This is a further part of who you are and whether you fit at a bank. Although investment banking culture is broadly consistent, banks have their own unique cultures – and they want to make sure you’ll contribute (both what exists and what they want to exist) to that effectively. This overlaps a lot with the first section about why you want to work at a particular bank, but there are some differences – mainly that the focus is on you, as well as how you approach an ethical dilemma.

  1. What is the most unique thing about you?
  2. What are you looking for in this position?
  3. What are your hobbies?
  4. Walk me through your CV.
  5. What does [this bank] stand for?
  6. What value do you add to this company?
  7. Describe your strengths and weaknesses.
  8. Where do you see yourself in five years’ time?
  9. Tell me something unique about you.
  10. What do you usually do in your free time?
  11. Define success and failure in your own words.
  12. What would you be able to bring to this role?
  13. How does this role fit in with your career goals?
  14. What are your greatest strengths and weaknesses?
  15. Your manager wants you to give a presentation, but you don't feel prepared. What are the most and least effective responses?
  16. Are you good at working under pressure?
  17. What are your strengths and weaknesses?

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Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)

author-card-avatar
AUTHORZeno Toulon
  • J
    J
    15 September 2017

    "24. A lily pad doubles in size every minute, it takes one hour for the lily pad to cover an entire pond. How long did it take for the lily pad to cover only a quarter of the pond?

    The answer is 27 days."

    ???

    It takes one hour for the lily pad to cover the entire pond, and it doubles in size every minute. At 59 minutes the lily pad covered half the pond, and at 58 minutes the he lily pad covered a quarter of the pond.

  • Ka
    Kannan
    24 July 2016

    The working capital is the money required by the company to go through at least one cycle of cash to cash,ie., from buying raw material, processing it, making finished goods, selling it and collecting sales proceeds.. . Adjustments can be made if raw material is available on credit. , etc. The variable overheads for power, wages, etc also need to be factored in..

    I am a Career Banker having financed hundreds of firms & companies.

  • gu
    gui63
    13 June 2015

    Proposed answers to questions 48 and 50 are wrong.

    On 48, DCFs is not necessarily the maximum value a company is worth. In fact, transaction comps usually yield a higher value than DCFs, because they include synergies premiums / and some acquirers may have overpaid because of a bidding war. However, if synergies are factored in the DCF, the values should in theory be close.

    On 50, working capital does not include cash. The idea of working capital is "how much cash does the business need to fund its ongoing operations ?". This means that arguably, you could include the minimum cash balance the company is required to keep on its books (though in practice, you never know that), but definitely not the whole amount of cash outstanding on the balance sheet.

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