27 Interview Questions That Weed Out the Weak on Wall Street

Published: May 15, 2013

Topics: Finance Interviewing Workplace Issues

If you're preparing to interview for a position in investment banking, sales and trading, or investment management, it's likely you've already practiced answering a host of interview questions, including: What are your strengths and weaknesses? Why do you want to work for this firm in particular? How do you value a company? Can you walk me through a DCF? Can you pitch me a stock I should buy? Can you tell me about a time when you worked on a team? Why are you interested in finance? What gets you out of bed in the morning? What is WACC? And what is EBITDA?

However, you might not have prepared for the below 27 questions, which are meant to separate the men and women from the boys and girls on Wall Street. In other words, the following are the questions that can make or break an interview. (Note: the questions have been arranged from easiest to most difficult. Also note that all questions come directly from responses to Vault's latest Banking Survey, which is being administered now to professionals at the top investment banks in North America, Europe, and Asia. If you work in investment banking, click the link if you want to take the survey.)

27. Which is greater: 17% of 34 or 34% of 17?

26. What's going on in the economy?

25. If [x data] was announced, which five trades would you make?

24. Do you think Apple is a good buy?

23. If I handed you $1 million and asked you to generate some alpha over the next six to 12 months, what would you do/how would you trade?

22. What can a firm accomplish in Chapter 11 that it can't accomplish out of court?

21. What could be the reasons for two companies operating in the same industry trading at different EBITDA multiples?

20. Why would a creditor elect to receive equity via a restructuring process as opposed to debt?

19. Walk me around the world and tell me about the markets as you go.

18. Four asset classes: gold, oil, U.S. 10-year interest rates, and the S&P. Pick one, tell me where it has been, where it is now, and where you see it going in the next six months and why.

17. Tell us about a deal that we've done that interests you and why it interests you.

16. Explain quantitative easing to me.

15. Talk to me about the shape of the yield curve.

14. How do you value a mining company? What multiples are most appropriate?

13. Where is the world headed?

12. Describe a few instances where you have failed.

11. Describe the major transactions that have happened this year in the X industry.

10. Assume you're an investor and you come across a family-owned business for sale. What are the first things you'd do or want to know in order to determine what you're willing to pay for the business? How would you think about valuing the business?

9. Sell me this water bottle.

8. Tell me about something you recently read in the news that you think will have a positive or negative implication for the U.S. or global equity markets.

7. Once you receive offers from a number of firms, what will be the most important factors to you as you think through which one to accept?

6. I want to sell you a hot dog stand. How much are you willing to pay for it? Why?

5. Describe a macroeconomic trend you're observing and an investment thesis grounded in this development.

4. Tell me about a time when you had to make a difficult decision for an organization (company, school, etc.) and there was a possibility that the decision was in breach of policy. How did you manage the situation?

3. If you walk in tomorrow morning and the U.S. has defaulted, walk me through what's happening in all the major markets (stocks, credit, rates, FX, etc.) and why.

2. In under four minutes, explain to me what's happened in the economy and markets in the past five years.

1. Tell me a joke.

Follow me on Twitter: @vaultfinance.

***