Investment banking interview questions for students

The stages, from application to final round

Most banks start with an online application and some short tests, then a recorded video interview, then a final round of several interviews, sometimes called a superday or an assessment centre. Goldman Sachs, for example, describes a video interview of about 30 minutes and then a series of final round interviews; Barclays describes two short interactive assessments and then an assessment centre, in person or virtual, of two or three stages including a motivational interview; and J.P. Morgan says its interviews are held by video.

Spring weeks, or spring insight programmes, are short programmes for first-year students (or second-years on a four-year course), usually around the Easter break, as Lancaster University’s careers team describes them. J.P. Morgan describes its spring insight as information sessions, networking, skills activities and simulated work, and says participants may be considered for its summer internships, which is why spring week interviews are worth taking seriously. You do not need to study finance: Goldman Sachs, J.P. Morgan and Morgan Stanley all say they recruit from any academic background.

Motivation: why banking, why this bank, why this division

These come up at every stage, and they are where a lot of candidates sound alike. A good answer to “Why investment banking?” names something you have actually done or read: a society’s stock pitch, a deal you followed in the news and why it interested you, a conversation with somebody in the industry. Then it says what about the work suits you, such as the pace, the analysis or working on a small team on something that matters to a client.

“Why this bank?” needs something specific to it, such as a division it is known for, a deal it advised on, its training or what people you met from it said. “Why this division?” needs you to know what the division does day to day: the difference between advising on mergers in corporate finance, selling and trading securities in markets, and researching companies in equity research.

Competency questions and markets

Expect the usual competency questions (a time you worked in a team, led something, made a mistake, managed competing deadlines) answered with STAR, as in our guide to competency questions. Morgan Stanley says its interviews could be competency, strengths, skills based or technical, and that it does not always expect the right answer, only to see how you work through a scenario.

For markets, Morgan Stanley’s advice is to stay up to date with financial news. Pick one or two stories you can talk about for a few minutes: what happened, why it happened, who gained and who lost, and what you think happens next. A recent deal question is the same: who bought what, why, how it was paid for, and whether you think it was a good idea.

The technical questions, with answers

Spring week interviews rarely go deep into technicals: Lancaster’s careers team says the questions are more about you and your motivation than financial markets, and Standard Chartered says no prior banking knowledge is required for its insight programme. For internships and graduate roles, these are the questions that come up most, with the kind of answer an interviewer wants.

“Walk me through the three financial statements.” The income statement shows revenue, costs and the profit for a period. The balance sheet shows what the company owns (assets) and owes (liabilities) at a moment, with shareholders’ equity making up the difference. The cash flow statement starts from net income and adjusts for non-cash items and changes in working capital to show how cash moved, split into operating, investing and financing activities. They link because net income flows into retained earnings on the balance sheet and starts the cash flow statement, and the cash at the end of the cash flow statement is the cash on the balance sheet.

“If depreciation rises by 10, what happens to the three statements?” Assume a tax rate of 25 per cent. On the income statement, operating profit falls by 10 and, after tax, net income falls by 7.5. On the cash flow statement, net income is down 7.5 but depreciation, a non-cash cost, is added back, so cash rises by 2.5 because less tax is paid. On the balance sheet, cash is up 2.5 and the value of fixed assets is down 10, so assets fall by 7.5, matched by retained earnings, in equity, falling by 7.5.

“What is enterprise value, and how do you get to it from equity value?” Equity value is what the shares are worth, the share price times the number of shares. Enterprise value is the value of the whole business to everybody who has a claim on it, so you start from equity value, add debt (and items such as preference shares and minority interests) and take away cash. “Walk me through a DCF” asks how you value a company from its future cash: forecast its free cash flows for a few years, estimate a terminal value for the years after, discount both back at a rate that reflects the risk, and add them up to get enterprise value.

What not to bluff

If you do not know a technical answer, say what you do know and reason towards it, which is what Morgan Stanley says it is looking for anyway. It is usually obvious when somebody is reciting a definition they do not understand, and a follow-up question about it is the quickest way for an interview to go wrong. The same goes for a deal you claim to have followed: only mention ones you could talk about for five minutes.

With an account, cookie’s Interview prep runs a mock interview for the job you name with an AI interviewer, one question at a time, follows up on what you say the way a real interviewer would, and writes a report at the end on each answer. It uses credits and shows an estimate first.