TOP 243 investment banking interview questions for candidate screening in 2025

Why Investment Banking Interview Questions Can Make or Break Your Career

Finding that coveted investment banking intern isn't just about having the right grades or connections – it's about mastering the interview process. I've seen brilliant candidates stumble because they underestimated the rigor of investment banking interview questions, while others with solid preparation sailed through multiple rounds at bulge bracket firms. The truth is, these interviews are their gateway to a career that demands 80-100 hours per week but offers unparalleled financial rewards and exit opportunities.

The Four Pillars of Investment Banking Interviews

Here's something most candidates don't realize: there are only 4 types of questions they'll encounter in investment banking interviews. The good news? They can prepare for 3 out of 4 of these question types in just 1-2 days or less. However, don't let this fool you into thinking preparation is easy.

Technical questions require the most intensive preparation – you'll need to start 2-3 months in advance to get a solid grasp of financial concepts. Over 20,000+ candidates have completed comprehensive interview preparation courses, with a remarkable 92% success rate rate. These technical investment banking interview questions cover everything from DCF analysis involving 5-20 year projections to understanding that anything over 50% of Enterprise Value from Terminal Value makes your model too dependent on future assumptions.

The Numbers That Matter

The statistics are telling: 7,548 questions across 469 investment banks have been analyzed, with 21 bank-specific questions from bulge bracket firms. Your "Why investment banking?" story should be 200-300 words and delivered flawlessly during the typical 45-minute interview process.

Remember key benchmarks like the S&P 500's average P/E ratio of 15-20 times, that high-yield debt investors often demand 10-15% interest rates or more, and that premiums paid over current share price generally fall in the 15-30% range for acquisitions. These aren't just numbers to memorize – they're the foundation of how you'll think about deals and valuations throughout your career.

Your Complete Question Arsenal Awaits

Now that you understand the landscape and what's at stake, let's dive into the comprehensive collection of 243 best practice investment banking interview questions for 2024. These carefully curated questions span technical knowledge, behavioral scenarios, market awareness, and those occasional brain teasers that can catch even seasoned candidates off guard.

Because you're reading this article, you might be interested in the following article as well: Pre Recorded Video Interview: Tips for Effective Hiring.

🏆 The list of TOP 243 investment banking interview questions in 2025

Tell me about yourself / Walk me through your resume / Why are you here today? / Tell me about your experience

These opening questions are your first impression filter. They're designed to see how candidates present themselves, structure their thinking, and connect their past to the role they’re applying for. It’s not just small talk—it’s where the story starts.

Look for a clear, concise narrative that shows progression, learning, and purpose. A strong answer gives a hiring manager everything they need to know about who the person is professionally, in about 2-3 minutes.

Best practice interview tip: A great response should follow this simple format:

• Past: Where they've been—education, early jobs, key achievements.
• Present: What they’re doing now—role, responsibilities, recent success.
• Future: Why they’re applying—what they want next, why your company and role make sense.

Red flags to watch for:

• Candidates going off-track or rambling.
• Listing jobs without tying them together.
• Failing to show how they add value.

As a hiring manager, listen for passion and purpose. Does the candidate sound like they want to be here, or are they just job-hopping? This is your first chance to hear if someone truly understands the role and how they fit into it. Always give candidates room to tell their story—then dig deeper into areas that matter most for your role.

What's your greatest strength, and what's your greatest weakness?

This is a classic interview question that gives insight into a candidate’s self-awareness, honesty, and how they handle both praise and criticism. A thoughtful answer can reveal a lot about a candidate’s professional behavior and how they might fit with your team.

What to look for in a strong answer:

• A real strength that aligns with the core responsibilities of the job.
• Specific examples or short stories that back up their claim.
• Signs of self-awareness and a continued focus on growth when discussing weaknesses.

Best practice: Encourage candidates to choose strengths that directly match what you’re looking for in the role—like attention to detail in a finance position or leadership in a project manager role.

Great strength responses include:

• "My biggest strength is my attention to detail. In my previous role, I was responsible for reviewing client contracts, and my meticulous approach helped catch costly errors before they were signed off."
• "I’d say my greatest strength is my drive. I get deeply focused on goals and work hard to meet tight deadlines without compromising results."

Great weakness responses (that aren’t red flags):

• “I used to struggle saying no and would overcommit. Now, I plan my workload better and communicate early if I need to shift deadlines.”
• “I sometimes get caught up in the fine details. I’ve been working on recognizing when ‘good enough’ is good enough and delegating more.”

What to avoid:

• Vague answers like “I’m too much of a perfectionist” without any context or steps they’re taking to improve.
• Weaknesses that are major red flags for the role—like poor communication skills for a customer-facing job.

By asking this question, you’re not just evaluating their strengths—you’re seeing how honestly a candidate can assess themselves and how proactive they are about self-improvement.

What feedback did you receive from your most recent internship or job?

This question helps reveal two important things: how a candidate handles feedback and their ability to reflect on strengths and areas for improvement. It’s a great way to assess maturity, self-awareness, and growth potential.

Best practice: Look for candidates who share both a strength and a weakness, supported by a brief story or example. This shows honesty and gives insight into how they operate in real-life situations.

Candidates who only mention positive feedback may be avoiding constructive criticism—or may lack the self-awareness to notice it. On the other hand, those who own up to a weakness but also explain how they're working to improve tend to show real growth potential.

Strong answers typically include:

• A specific strength that added value to the team or task
• A weakness acknowledged with a mindset for improvement
• A short story that gives context and credibility to the feedback

Always listen for candidates who not only received feedback but who learned from it. That’s what helps teams grow.

Can you describe a team situation where you worked with a difficult team member?

This question helps you spot how a candidate handles conflict, works in a team, and stays professional under pressure. You're not just looking for the drama—you're looking to see how they handle it and what outcomes they drive.

A solid answer usually includes a short story about a specific project. For example:

• Someone in the group didn’t want to do the work
• A team member suggested something unethical
• A colleague was skilled but couldn’t get along with anyone

A great candidate will describe how they:

• Recognized the problem without complaining
• Took action without escalating issues unnecessarily
• Focused on keeping the team and project on track

You want to hear how they gave that difficult team member a role that wouldn’t put things at risk—this shows leadership and good judgment. Best practice? Look for answers where they motivated others to support their solution while keeping the tone collaborative. Avoid candidates who blame others too much or who didn't take clear steps to resolve the issue.

You have no experience in an investment bank. Why do you think your skills are relevant to this industry?

This is a common question asked to evaluate a candidate’s transferable skills and motivation for entering a high-pressure industry like investment banking. The candidate should clearly demonstrate how their background aligns with the key demands of the role.

Best practice tip: You're not looking for investment banking experience here—you're looking for relevant strengths.

Strong answers should show:

• Ability to work long hours and handle pressure
• Strong analytical and technical skills
• Attention to detail and accuracy
• Excellent communication and client-management abilities
• A basic understanding of finance, accounting, or economic principles

When reviewing a candidate’s response, listen for real-life examples. Did they work on large, data-heavy projects? Have they supported clients or made presentations under pressure? Have they independently learned financial concepts? These are green flags.

Red flag: Vague answers like “I work hard” or “I’m good with people” without specific examples.

This question isn’t about what they’ve done—it's about what they can bring. A strong candidate will show self-awareness of their skill set and match it directly to what investment banks look for.

You already have two years of work experience. Why couldn't you get into an investment bank as an undergrad? Were you a failed candidate?

This is a high-pressure question designed to test self-awareness, resilience, and narrative control. The goal here isn’t just to hear the truth, but to understand how candidates handle potential setbacks, deflect negative framing, and maintain confidence.

Best practice: A strong candidate never admits outright failure. Instead, they reframe the situation strategically.

What to look for in a strong answer:

• The candidate avoids framing themselves as a "failed applicant."
• They might say they became seriously interested in investment banking later in the recruiting cycle, which limited opportunities.
• They potentially chose another field initially (like consulting, audit, or corporate finance) to gain foundational skills before pivoting to banking intentionally.
• They emphasize a strategic career decision rather than a lack of ability or effort.

Red flags:

• The candidate says they applied but "didn’t get in" without further reflection.
• They sound apologetic or unsure about their path.
• They blame the process or give unclear reasons for not securing a role.

This question is less about what happened in the past and more about how candidates position their story for the future. Look for control, confidence, and a clear sense of purpose.

You've changed jobs twice in the past two years, and now you're trying to switch once again. How do I know you won't just leave our firm next year?

This is a great question to assess a candidate’s long-term commitment and career motivation. Frequent job changes can be a red flag, but not always. What you want to hear is a clear, honest explanation that shows a strategic reason behind each move.

What to look for in a strong answer:

• The candidate explains that the previous moves were part of a deliberate career path.
• They highlight that working at your firm—or in your industry—has always been their long-term goal.
• They show that their job changes were not due to restlessness, but due to planned career progression.

Best practice: A great candidate will reassure you by showing that they’ve now found the right fit and are looking for stability and growth within your organization. Look for sincerity and a logical explanation that ties their past moves to where they see themselves staying longer-term.

The person in the room next door has perfect grades from Harvard or Oxford. You had lower grades and went to a state school. Why should I hire you over him?

This is a powerful question to assess a candidate’s self-awareness, grit, and motivation. A strong answer doesn't deflect the comparison — it embraces it with confidence and honesty.

Look for candidates who:

• Stay calm, confident, and humble
• Emphasize work ethic over pedigree
• Explain why they’re in it for the long haul
• Highlight their perseverance and resilience

Best practice: The candidate should make it clear that they’ve overcome more obstacles, had to hustle harder, and are laser-focused on building a career — not coasting on a brand name.

A standout response might sound like this: "I'm sure they’re brilliant. But I had to fight harder to get this opportunity. I worked multiple jobs, kept my grades up, and actively pursued internships just to be taken seriously. I didn’t come from privilege, and that’s made me hungrier, more prepared, and more committed to succeeding in this field."

This kind of answer shows self-belief, drive, and a deep appreciation for the opportunity — qualities that often predict long-term success far better than a fancy diploma.

> Pro tip: You're not hiring a resume. You're hiring someone who will show up every day and actually do the work.

Can you describe what a banker does in an IPO or M&A deal?

This is a strong question to assess a candidate's understanding of financial transactions and their role in complex business deals. It helps you evaluate whether the applicant has relevant expertise or is just using buzzwords on their resume.

What to listen for:

• Clear explanation of Initial Public Offering (IPO) and Mergers & Acquisitions (M&A) processes
• Specific responsibilities such as valuation, due diligence, deal structuring, and client communication
• Mention of collaboration with legal teams, auditors, and company executives

Best practice: Ask follow-up questions like “Can you walk me through a deal you worked on?” to evaluate real experience versus theoretical knowledge.

A well-informed candidate should be able to:

• Explain how bankers help companies go public or merge with another firm
• Describe tasks like drafting pitch books, negotiating terms, managing confidential information
• Show an understanding of regulatory compliance, market dynamics, and financial modeling

Candidates who've directly worked in investment banking or corporate finance should stand out here. Be attentive to those who show a mix of technical knowledge and communication skills—which are both vital in these transactions.

Tip: Review current articles and case studies on IPOs and M&A deals to validate and explore the role of bankers more in-depth.

Why do you want to be an investment banker?

This question helps employers understand a candidate’s motivations, career goals, and whether they truly understand what the role involves. You're not just looking for a canned answer like "I love finance" — you're looking for a story, a journey, and a clear connection between their background and this career path.

Best practice response:

Look for candidates who explain what first sparked their interest in investment banking, how they’ve actively pursued this interest, and what specific aspects of the role excite them. The journey should feel genuine and focused. For example:

• What personal experience or exposure led them to finance?
• Have they taken steps (internships, courses, networking) to explore investment banking?
• What keeps them interested in this high-intensity, high-reward field?

What to watch for:

• Generic answers – If the response sounds rehearsed or vague, dig deeper.
• Mismatch in values – If their motivations don’t align with the demands of the job, that’s a red flag.
• Lack of exposure or understanding – Investment banking has rough edges. They should know what they're getting into.

As a recruiter, treat this less as a standalone question and more as the natural conclusion of the candidate's story. If they’ve told their story well throughout the interview, their answer here should reinforce and wrap it up.

Why our bank, specifically?

This question helps you understand if the candidate has done real homework or is just applying blindly. You're looking for answers that show awareness of your bank’s strengths—not just generic praise.

Strong candidates will reference:

• Specific past deals or client successes
• Your bank’s reputation in a particular market or niche
• Recent news, awards, or growth initiatives
• Alignment with their own skills or career path

Best practice: If the role is at an investment bank, they should mention key sectors or specific transactions. For a retail bank, they might point to innovation, digital tools, or customer service awards.

If a candidate doesn’t offer anything unique to your bank, that’s a red flag. It either shows lack of preparation or lack of genuine interest. Look for those who tie your bank’s strengths to their motivations and goals.

Tell me about a recent deal / Tell me about a deal our bank worked on recently / Tell me about a company you're interested in / What makes Market X interesting to you?

This question is designed to test a candidate’s research skills, commercial awareness, and genuine interest in the role and industry. It’s especially important in investment banking, private equity, M&A, or financial services roles where strong market knowledge is critical.

Best practice: Candidates should be ready to discuss:

• 1 recent deal the bank was involved in during the past six months
• 1 in-depth deal they can explain well (even if not connected to the bank)
• Up to 2 deals they’ve personally worked on (if applicable)

They should include:

• Background and parties involved
• Strategic rationale behind the deal
• Key financial details (e.g. deal size, valuation multiples, financing structure)
• Their opinion on the outcome or broader market relevance

What to look out for:

• Can they clearly explain the deal in layman’s terms?
• Is their understanding surface-level or do they grasp the strategic and financial implications?
• Are they giving a thoughtful perspective or just repeating news headlines?
• Do they link the deal to the broader market trends or bank’s strategy?

Red flags:

• Vague or outdated deal examples
• Lack of industry-specific knowledge
• No personal opinion or insight
• Struggling to explain basic finance terms

This question separates candidates who are truly prepared from those who just read a few headlines. Strong candidates will show curiosity, initiative, and commercial thinking.

How much would you pay for a company that generates $100 of cash flow every single year into eternity?

This question is meant to test a candidate’s understanding of valuation concepts—specifically the perpetuity formula. The correct formula here is:

Value = Cash Flow / Discount Rate

So, if the company's cash flow is $100 every year forever, and the discount rate is 10%, the company would be worth $100 / 0.10 = $1,000. If the discount rate is 20%, then the valuation would be $100 / 0.20 = $500.

What you’re really looking for in the candidate’s answer is:

• Do they understand time value of money?
• Are they familiar with basic finance or business math?
• Can they explain their reasoning in a clear and simple way?

Best practice: Ask the candidate to explain their thought process while answering. A strong candidate might mention why the discount rate is important, how it reflects risk, or how it affects valuation.

Red flag: If they don't consider the discount rate at all or guess a random number without rationale, it’s a sign they lack core financial understanding.

How much would you pay for this company?

This is a great question to ask when you're trying to evaluate a candidate's financial modeling and valuation skills. You're testing their ability to apply the Gordon Growth Model (also known as the Perpetuity Growth Model), which is a common method used by investors and analysts.

Correct approach:

They should recognize the formula: Company Value = Cash Flow / (Discount Rate – Growth Rate)

With the given numbers: $200 / (0.10 – 0.04) = $3,333.33

What to look for in an answer:

• Do they understand the structure of the formula?
• Can they apply it without needing a calculator?
• Do they question or clarify terms like cash flow, growth rate, or discount rate?
• Bonus: Do they reference other methods or considerations (like risk or industry factors)?

Best practice tip: Use this question not just to check math, but to see how the candidate explains their reasoning. A good candidate should walk you through the logic in simple terms.

What might cause a company’s Present Value (PV) to increase or decrease?

When interviewing candidates for finance or investment roles, asking about Present Value (PV) changes is a simple but powerful way to check their understanding of core valuation concepts. Use this question to assess their grasp of how future income streams impact current valuations.

Comment:

A company’s PV reflects the value today of its expected future cash flows. It might increase if:

• Expected future cash flows go up
• The growth rate of those cash flows accelerates
• The discount rate applied to value those future cash flows decreases

On the flip side, PV might decrease if:

• Cash flow projections drop or turn uncertain
• The growth outlook weakens
• The discount rate increases—maybe due to higher interest rates or greater risk

Best practice: Candidates should explain how both cash flow and discount rate variables affect PV. Strong candidates will also mention how market conditions or internal company performance can drive these changes. You’re looking for someone who connects financial theory to real-world business scenarios.

What does the internal rate of return (IRR) mean?

This question is great for finance roles, especially in investment analysis or corporate finance. It helps gauge a candidate’s understanding of financial modeling and investment evaluation.

What to look for in a good answer:

A strong candidate should say something like:

• “The internal rate of return, or IRR, is the discount rate that makes the net present value (NPV) of a project zero.”

They might also mention:

• It's used to evaluate investment profitability
• IRR represents the project’s expected annualized rate of return
• It’s commonly compared against a hurdle rate or cost of capital to decide if an investment is worthwhile

Best practice tip: Listen for candidates who put it into context. For example, “If a project's IRR is higher than the company’s required rate of return, it’s considered a good investment.”

Red flag answers might confuse IRR with ROI or fail to connect it to decision-making. If they can’t explain it simply or accurately, it may show limited financial insight.

How do the 3 financial statements link together? Assume the Indirect Method for the Cash Flow Statement.

This question is a great way to evaluate how well a candidate understands financial fundamentals and the relationships between the core financial statements. A correct and detailed response indicates strong analytical and accounting skills—especially important for finance, accounting, and FP&A roles.

Comment: The best practice is for the candidate to start with Net Income, which is the bottom line of the Income Statement, and use it as the starting point on the Cash Flow Statement (Indirect Method). From there:

• Adjust for non-cash items like Depreciation and Amortization
• Account for changes in working capital by assessing current assets and liabilities from the Balance Sheet
• Include cash flows from investing and financing activities, such as capital expenditures or loan repayments
• Finally, tie the ending cash balance to the Balance Sheet's cash line, making sure the Assets = Liabilities + Equity

A strong candidate will be able to explain the flow clearly and confidently, highlighting that all three statements are interconnected. Look for structure, clarity, and logical flow in their response.

A company runs into financial distress and needs cash immediately. It sells a factory that's listed at $100 on its Balance Sheet for $80. What happens on the 3 statements, assuming a 40% tax rate?

When screening candidates for finance roles, this question helps test their understanding of how an asset sale affects all three financial statements. It's a great way to gauge practical knowledge of accounting principles and workflows.

Expected Answer:

• Income Statement: The company recognizes a loss of $20 on the sale ($80 - $100). This reduces pre-tax income by $20. At a 40% tax rate, the net income decreases by $12.

• Cash Flow Statement:
• Start with Net Income, which is down by $12.
• Add back the $20 non-cash loss (since it’s an accounting loss, not real cash outflow).
• Show the $80 cash proceeds under Cash Flow from Investing.
• Overall, cash increases by $88 (-$12 + $20 + $80).

• Balance Sheet:
• Assets: Cash increases by $88, but PP&E (the factory) decreases by $100.
• Equity: Retained Earnings go down by $12 due to the drop in net income.
• So the assets side is down $12 net ($+88 - $100), and equity is down $12 – both sides balance.

Best Practice Tip: Look for candidates who don’t just throw numbers but explain the chain reaction logically — from loss recognition to cash adjustments and ending balance sheet impact. Always make sure they connect the dots cleanly across all three statements.

What do Equity Value and Enterprise Value mean, intuitively?

When you're screening candidates for finance or investment-related roles, this question helps assess how well they truly understand valuation—not just definition memorization. You're not just looking for textbook answers, but for intuition and clarity in their thinking.

Best Practice: Focus on how clearly and simply the candidate explains this. Great candidates won’t confuse you with jargon—they will make it easy to follow.

What to listen for:

• Equity Value is the value of everything the company owns (total assets), but only what’s left for equity investors, after debts and other obligations.
• Enterprise Value includes the value of the core business, but to all stakeholders—this means both equity holders and debt holders, sometimes even preferred shareholders.

Strong candidates may give analogies—like thinking of a house:

• Equity Value is what the homeowner owns (house value minus the mortgage).
• Enterprise Value is the full price someone would pay to buy the house, including taking over the mortgage.

This question is a great check on whether someone can walk into a pitch meeting or client call and actually explain things clearly. If they can’t explain it simply, they probably don’t understand it well enough.

How do Equity Value and Enterprise Value change when a company issues $200 million in new shares, and then uses $100 million from the proceeds to pay Dividends?

When evaluating candidates for finance roles, especially in investment banking or corporate finance, this technical question is a great way to test their understanding of valuation metrics and capital structure concepts.

What to expect in a strong answer:

• The candidate should clearly differentiate Equity Value and Enterprise Value
• Understand how cash impacts Enterprise Value
• Explain step-by-step what happens in both actions: issuing shares and paying dividends

Key points:

1. Issuing $200 million in new shares:

• Equity Value increases by $200 million. Why? Because the company raises cash by issuing new shares, which is an inflow to common shareholders — it boosts the value attributable to them.
• Enterprise Value remains unchanged. The cash coming in increases total assets, but since Enterprise Value subtracts cash from the formula (EV = Equity Value + Debt - Cash), the rise in both Equity Value and Cash offsets each other.

2. Paying $100 million in dividends from the proceeds:

• Equity Value decreases by $100 million. Paying dividends to shareholders is a direct reduction in retained earnings (a component of Equity), so it lowers the Equity Value.
• Enterprise Value still does not change. Although cash is going out, Enterprise Value already excludes cash, so the subtraction of cash and Equity Value reduction cancel out.

Best practice tip: When screening candidates, look for clear structure in answers and understanding of how non-operating assets like cash influence Enterprise Value. Candidates who handle this smoothly often have strong technical foundations.

Ideal response structure from a candidate:

• Brief definition of both Equity Value and Enterprise Value
• Step-by-step breakdown with numbers
• Clear logic behind why Enterprise Value remains static through both actions

This kind of question is very effective for spotting candidates who go beyond textbook answers and really understand how valuation metrics behave in real-world scenarios.

Walk me through an Unlevered DCF.

This is a great question to test a candidate’s understanding of valuation. It requires strong financial modeling skills and attention to detail. The best candidates will structure their answer clearly and logically, showing strong technical knowledge.

What to listen for:

A solid response should include the following steps:

1. Project Unlevered Free Cash Flows (UFCF):

• The candidate should start by forecasting company revenue, operating expenses, and capital investments for the next 5-10 years.
• They must calculate UFCF as:

EBIT (1 - Tax Rate) + Depreciation & Amortization – CapEx – Changes in Working Capital.

2. Discount UFCFs to Present Value:

• Using the Weighted Average Cost of Capital (WACC), candidates should discount each of the projected UFCFs back to present value.
• Emphasize that UFCFs reflect the cash flow available to both debt and equity holders, making WACC the right discount rate.

3. Estimate the Terminal Value:

• They should confidently mention two standard methods:
• Gordon Growth Method (perpetual growth)
• Exit Multiple Method (based on trailing EBITDA or EBIT)
• Make sure they can justify the choice with reasonable assumptions.

4. Discount the Terminal Value to Present Value:

• The candidate should discount the terminal value using WACC, just like the UFCFs.

5. Calculate Enterprise Value:

• Add together the present value of projected UFCFs and the discounted terminal value.
• This sum gives the Enterprise Value of the company.

6. Compare Implied vs. Current Enterprise Value:

• A great candidate may mention that comparing this implied value to the market’s current valuation helps gauge whether a stock is overvalued or undervalued.

Best Practice Tip: Look for clear communication and confidence in explaining assumptions. If a candidate is guessing or overly vague about components like WACC or terminal value, they may not be ready for advanced modeling tasks.

Walk me through a merger model.

A merger model is used to analyze the financial profile of two combined companies, typically in the context of an acquisition. It's a common interview question in finance roles but also a great way to assess a candidate’s technical understanding and attention to detail.

A good answer should include these major steps:

1. Project financials: Estimate future income statements for both the Buyer and the Seller. 2. Estimate the Purchase Price: Calculate how much the Buyer will pay—typically a mix of cash, stock, or debt. 3. Determine Sources & Uses: Create a Sources & Uses of Funds schedule to outline where the money is coming from and how it’s being spent. 4. Purchase Price Allocation: Allocate the purchase price to assets and liabilities, including goodwill. 5. Combine the Balance Sheets: Reflect all transaction-related adjustments, like new debt or goodwill. 6. Merge the Income Statements: Include synergies (cost savings or increased revenue) and financing costs. 7. Analyze the impact: Calculate Pro Forma EPS, compare it to standalone EPS, and clarify accretion (increase) or dilution (decrease).

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What to listen for:

• Clear structure and logical flow
• Understanding of key terms like “goodwill,” “synergies,” and “accretion/dilution”
• Ability to explain both the technical steps and the reasoning behind them

Best practice: The candidate should tailor the level of detail depending on the role. For junior finance roles, depth and clarity in modeling are crucial. For non-technical roles, a high-level overview with clear logic is acceptable.

Walk me through a leveraged buyout model.

This is a highly technical question that helps determine a candidate’s financial modeling skills and understanding of private equity deal structures. A solid candidate should be able to walk you through the entire LBO process clearly and logically. Here's how a strong answer should generally be broken down:

1. Assumptions

• Begin with key assumptions such as:
• Purchase price
• Debt and equity split (typically a mix based on historical deals)
• Interest rate on debt
• Revenue growth
• Operating margins and exit multiple

Best practice: Candidates should explain the logic behind their assumptions, not just throw out numbers.

2. Sources and Uses Schedule

• Outline where the money is coming from (sources) and how it’s being used (uses).
• Include details like:
• Amount of debt raised
• Equity contributed
• Transaction fees
• Any cash on the balance sheet used in the deal

3. Balance Sheet Adjustments

• Adjust the post-deal balance sheet with:
• New debt added
• Removal of cash used
• Any goodwill or intangibles created after the acquisition

Look for candidates who understand the mechanics of purchase accounting here.

4. Financial Projections

• Project 5–7 years of the company’s income statement, balance sheet, and cash flows.
• Emphasize key factors like:
• Revenue growth
• Cost structure
• CapEx and working capital changes
• Debt principal repayments and interest coverage

Best practice: Outstanding candidates will highlight debt paydown schedule and forecast the effect of leverage on equity returns.

5. Exit Assumptions and Returns

• Assume an exit after 5–7 years at a certain EBITDA multiple.
• Calculate:
• IRR (Internal Rate of Return)
• Cash-on-cash return

Candidates should explain how these returns are impacted by entry and exit multiples, operational performance, and financing structure.

What to look for: Strong candidates walk through each step systematically, highlight practical assumptions, and connect financial modeling to investment returns. Weak answers may skip steps or get too vague—watch for clarity and structure.

Walk me through the 3 financial statements.

This is a classic interview question, especially for finance, accounting, and investment roles. It helps measure the candidate's technical knowledge and how well they understand the core financial reporting framework. Look for a clear, structured answer that shows not just memorization, but true understanding.

Strong candidates will explain:

• Income Statement: Shows a company’s performance over a period of time — includes revenues, expenses, and results in Net Income.
• Balance Sheet: Represents a snapshot of the company at a specific date. It shows Assets = Liabilities + Shareholders' Equity.
• Cash Flow Statement: Links net income to actual cash flow. It breaks down into three sections — Operating, Investing, and Financing activities — and ends with the net change in cash.

Best practice: Look for candidates who understand how these statements connect — for example, that Net Income from the Income Statement flows into both the Balance Sheet (through Retained Earnings) and into the top line of the Cash Flow Statement.

If a candidate can walk through this clearly and in logical order, chances are they know their financial basics well.

How do the 3 statements link together?

This question checks if the candidate truly understands the relationship between the Income Statement, Balance Sheet, and Cash Flow Statement—a crucial concept in finance and accounting roles.

Comment:

Great candidates should clearly explain how the three core financial statements connect:

• Net Income from the Income Statement ties into Shareholders' Equity on the Balance Sheet via Retained Earnings.
• Net Income also begins the Cash Flow from Operations section of the Cash Flow Statement.
• Changes in working capital (like Accounts Receivable or Inventory on the Balance Sheet) show up as adjustments in the Cash Flow Statement.
• Investing and financing activities—like buying equipment or issuing debt—impact PP&E, Debt, and Equity sections of the Balance Sheet and also appear in the Investing or Financing sections of the Cash Flow Statement.
• Finally, the Cash balance on the Balance Sheet is updated by the net change in cash at the bottom of the Cash Flow Statement.

Best practice: Look for candidates who see the interdependence of all three statements and can explain the flow of financial information confidently. It shows they're grounded in accounting fundamentals and can think analytically.

If I were stranded on a desert island, only had 1 statement and I wanted to review the overall health of a company – which statement would I use and why?

This question is a favorite among finance and accounting recruiters because it shows financial literacy, critical thinking, and business sense. The best answer is:

"The Cash Flow Statement"

Why? Because it gives a clear picture of how much actual cash a company is generating — which is essential when evaluating its financial health. Income statements and balance sheets can show profits and assets, but cash is king. Even a profitable business can go under if it runs out of cash.

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Comment:

Cash flow tells you whether a business can survive. It shows how a company manages its operations, pays its debts, invests, and funds growth. We look for candidates who understand that real cash flow — not just net income — drives stability and scalability. When someone selects the cash flow statement and explains the "why" behind it clearly, it's a strong sign they understand financial fundamentals. That's a best practice mindset.

How does Depreciation going up by $10 affect the financial statements?

Asking a candidate this question is a great way to test their understanding of how the three core financial statements—Income Statement, Cash Flow Statement, and Balance Sheet—are connected. It also checks their attention to detail and ability to explain financial concepts in a simple and logical way.

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Best practice tip: Look for clear, structured answers. Strong candidates will walk you through the impact step by step, not just give an end result.

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Here’s what a strong candidate response should look like:

• Income Statement:

Depreciation is an expense, so Operating Income goes down by $10. Assuming a 40% tax rate, Net Income drops by $6.

• Cash Flow Statement:

Net Income at the top is down by $6. But because Depreciation is a non-cash expense, it's added back under operating activities, increasing cash by $10. So overall, Cash Flow from Operations increases by $4. There are no other changes, so Net Cash increases by $4.

• Balance Sheet:

On the Assets side, Cash is up by $4 (from the cash flow impact), but Property, Plant & Equipment (PP&E) is down by $10 due to the depreciation. Net change in Assets is - $6. On the Liabilities & Equity side, since Net Income is down by $6, that flows into Retained Earnings, reducing Shareholders’ Equity by $6. Both sides balance.

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Pro tip: The best responses also include the logic behind why depreciation adds back to cash flow and show a full-picture understanding of cause and effect throughout all three statements.

What are the 3 major valuation methodologies?

This is a great question to ask when screening candidates for roles in finance, investment banking, private equity, or any job where company valuation is key.

Comment:

The three major valuation methodologies candidates should know are:

• Comparable Companies Analysis (Comps) – This method looks at how similar companies are valued by the market. It’s based on key metrics like P/E ratio, EV/EBITDA, and more. It’s often used because it’s quick and based on real market data.

• Precedent Transactions – This method analyzes the prices paid in past M&A deals for similar companies. It provides a range based on what other buyers have paid in real-world cases. It’s especially helpful in strategic acquisition decisions.

• Discounted Cash Flow Analysis (DCF) – This method calculates the present value of a company’s future cash flows, adjusting for risk through a discount rate. It’s more technical and relies on solid financial modeling. It’s often seen as the most “pure” form of valuation.

Best Practice Tip:

Look for candidates who not only know the names of these methods but can also explain when to use each one—and the pros and cons of each. A strong answer shows depth, not just memorization.

Walk me through a DCF.

This question is a favorite in finance interviews because it shows how well a candidate understands valuation fundamentals. A strong candidate should walk you through each step clearly and logically, without too much jargon.

A good answer would start with how a Discounted Cash Flow (DCF) values a company based on the Present Value (PV) of its future cash flows. The candidate should mention:

• Projecting financials: Estimating revenue, margins, expenses, and changes in working capital over 5–10 years.
• Calculating Free Cash Flow (FCF): Showing how to get FCF from those projections.
• Discounting each year's FCF: Using a discount rate, typically the Weighted Average Cost of Capital (WACC), to bring those future values into today's terms.
• Determining Terminal Value: Either via the Gordon Growth Model or an exit multiple method at the end of the projection period.
• Discounting Terminal Value: Bringing that back to present value using WACC.
• Summing both values: Adding the present value of cash flows and the present value of the terminal value to get the total Enterprise Value.

Watch out for candidates who are too vague or skip steps. The best responses tie each part together smoothly and may even mention how changes in assumptions (like WACC or growth rate) impact valuation. That shows critical thinking, not just memorization.

How do you calculate WACC?

WACC stands for Weighted Average Cost of Capital, and it's a key concept in corporate finance. It helps companies understand the average rate they’re paying for their capital from various sources—like equity, debt, and preferred stock.

The basic formula is:

WACC = (E/V Re) + (D/V Rd (1 - Tc)) + (P/V Rp)

Where:

• E = Market value of equity
• D = Market value of debt
• P = Market value of preferred stock
• V = Total market value of the company’s financing (E + D + P)
• Re = Cost of equity
• Rd = Cost of debt
• Rp = Cost of preferred stock
• Tc = Corporate tax rate

This breaks down to:

• Cost of Equity × % Equity
• Cost of Debt × % Debt × (1 – Tax Rate)
• Cost of Preferred Stock × % Preferred

Comment:

This question helps test if a candidate understands one of the most fundamental financial formulas. Ask them not only for the formula but to break it down. A strong candidate should explain what each term means and why it matters. Bonus points if they can talk about the business context—like how WACC helps evaluate investment decisions or company valuation.

Best practice: Follow up by asking them to walk through an example using numbers. It helps check their practical understanding and whether they can apply theory to real scenarios.

💡 Remaining 213 questions...

The online article only includes the first 30 questions to keep it digestible, but we’ve put together an ebook for you with all the questions we gathered through our extensive research.

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Real-World Success Stories in Investment Banking Recruitment

When it comes to screening candidates for investment banking interview questions, several industry leaders have paved the way with proven methodologies and impressive track records.

Patrick Curtis, CEO of WallStreetOasis and former Private Equity Associate at Tailwind Capital, brings invaluable experience from his time as an Investment Banking Analyst at Rothschild. His approach to candidate evaluation has helped countless professionals break into the industry. Curtis emphasizes the importance of technical competency combined with the ability to handle high-pressure situations during interviews.

Rohan Arora, an experienced private equity investment professional with experience at Evercore, has developed comprehensive frameworks for assessing technical skills in investment banking candidates. His methodology focuses on real-world application of financial modeling and valuation techniques that directly translate to on-the-job performance.

The expertise doesn't stop there. WSO user @geoffblades, a former investment banker at Goldman Sachs and investor at the Carlyle Group, has contributed advanced interview techniques that help identify top-tier talent. His insights on controlling interview flow and demonstrating genuine passion for the field have become industry standards.

Brian DeChesare, Founder of Mergers & Inquisitions and Breaking Into Wall Street, has built a remarkable track record. His Wall Street Mastermind program has helped students secure offers from every bulge bracket and elite boutique bank on Wall Street. The program's success rate speaks volumes about effective candidate screening methods.

Learning from Market Failures: The eBay-Skype Case Study

One particularly telling example used in investment banking interview questions involves the eBay/Skype deal. This case study perfectly illustrates how poor valuation analysis can lead to devastating financial consequences.

eBay paid an enormous premium and extremely high multiple for Skype, creating excess Goodwill & Other Intangibles on their balance sheet. The deal seemed promising on paper, but the integration challenges and overvaluation became apparent quickly. eBay later had to write down much of the value, resulting in a large quarterly loss that shocked investors.

This real-world scenario has become a staple in bulge bracket bank interviews because it tests candidates' ability to:

• Analyze acquisition premiums
• Understand goodwill accounting
• Recognize red flags in M&A transactions
• Evaluate post-merger integration risks

CA Yash Jain from Bain & Co., who has trained over 5,000 students in Investment Banking, FRM & CFA, uses this case study extensively. His comprehensive approach to investment banking interview preparation emphasizes learning from both successes and failures in the market.

Innovative Training Programs Making a Difference

Forage has revolutionized how candidates prepare for investment banking interviews through practical simulations. McKayla Girardin, a NYC-based writer with Forage, has highlighted several game-changing programs:

• Latham and Watkins Mergers and Acquisitions job simulation
• JPMorgan Investment Banking job simulation
• Bank of America Investment Banking job simulation

These free resources allow candidates to experience real investment banking scenarios before facing actual investment banking interview questions. The hands-on approach helps recruiters identify candidates who can hit the ground running.

Why Video Screening Software is Revolutionizing Recruitment

The recruitment landscape has shifted dramatically in recent years, and video screening software is leading this transformation. Here's why smart recruiters are making the switch:

Time Efficiency: Traditional phone screens can take 30-45 minutes per candidate. Video screening allows recruiters to review responses on their own schedule, dramatically reducing time-to-hire.

Better Assessment Quality: Video responses reveal communication skills, confidence levels, and cultural fit in ways that resumes simply cannot. When screening for complex roles requiring strong investment banking interview questions, visual cues become incredibly valuable.

Consistency and Fairness: Every candidate answers the same questions under the same conditions. This eliminates interviewer bias and ensures a level playing field for all applicants.

Scalability: Whether you're hiring one analyst or fifty, video screening scales effortlessly. Large recruitment drives become manageable without sacrificing quality.

Remote-First World: With distributed teams becoming the norm, video screening bridges geographical gaps seamlessly. Top talent isn't limited by location anymore.

Cost Reduction: Reduced interview rounds, fewer scheduling conflicts, and streamlined processes translate directly to lower recruitment costs and faster placements.

Ready to Transform Your Hiring Process?

The evidence is clear: video screening software isn't just a trend—it's the future of efficient, effective recruitment. From investment banking interview questions to technical assessments, the right platform can revolutionize how you identify and hire top talent.

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