Top 28 Investment Banking Interview Questions & Answers

In this video on Investment Banking Interview Questions, here discuss the tips to answer the Investment banking interview questions on accounting, valuations, modeling, pitch-book, M&A, IPO, Leveraged buyouts and others.
𝐓𝐨𝐩 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐬 (𝐚𝐧𝐝 𝐀𝐧𝐬𝐰𝐞𝐫𝐬)
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#𝟏 - 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐢𝐧𝐠 - 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧
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If you have the chance to determine the company's financial viability which statement would you choose and why?
Answer :-
It would be the statement of the cash flow. The reason is that it gives a true picture of the actual amount of money that the company produces.
#𝟐 - 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐅𝐢𝐧𝐚𝐧𝐜𝐞 - 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧
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What is the formula for calculating WACC?
Answer :-
WACC formula is represented as below -
WACC = Cost of Equity * Proportion of Equity + Cost of debt * Proportion of debt (1-tax rate).
#𝟑 - 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧𝐬 - 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧
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List the most common multiples used in a valuation
Answer:-
Below are the multiples valuation used in valuation
EV/Revenue
EV/EBITDA
EV/EBIT
P/E
P/BV
#𝟒 - 𝐌𝐞𝐫𝐠𝐞𝐫𝐬 𝐚𝐧𝐝 𝐀𝐜𝐪𝐮𝐢𝐬𝐢𝐭𝐢𝐨𝐧𝐬 - 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧
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Define synergies and its types?
Synergies are where the purchaser earns more value than is expected by the financials.
Types of Synergies
#1 - Revenue Synergy
#2 - Cost Synergy
#𝟓 - 𝐈𝐧𝐢𝐭𝐢𝐚𝐥 𝐏𝐮𝐛𝐥𝐢𝐜 𝐎𝐟𝐟𝐞𝐫𝐢𝐧𝐠𝐬 (𝐈𝐏𝐎) - 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧
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What are the advantages of a company getting listed on an exchange?
Answer:-
1 - It is an important step in achieving liquidity for a company.
2 - It helps the company to establish a recognized price for its stock, which could also help the company to use stock for acquisitions instead of cash.
To know more about the 𝐓𝐨𝐩 𝟐𝟖 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐬, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- www.wallstreet...
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