Mastering Investment Banking Interview Questions 2025

Investment Banking Interview Questions: Strategies, Examples, and Process

Preparing for investment banking interview questions requires a blend of technical expertise, problem-solving agility, and polished communication. This guide breaks down the interview process, real-world examples, and actionable strategies to help candidates excel in technical, behavioral, and case study rounds at top-tier banks like Goldman Sachs, Morgan Stanley, and J.P. Morgan.

Investment Banking Interview Process

Most banks follow a structured workflow with slight variations:

1. Technical Screening (Phone/Video)

• Objective: Assess foundational finance knowledge and quick problem-solving.
• Example Questions:
  • “Walk me through the three financial statements and their interconnections”.
  • “Estimate the number of barbers in New York City”.
  • “How would you value a private company?“.

2. Onsite/Virtual Rounds

• Technical Deep-Dive:
  • Accounting & Valuation:
    • “Explain the difference between Enterprise Value and Equity Value”.
    • “When should a company issue equity instead of debt?”.
  • M&A & LBOs:
    • “Walk me through a merger model”.
    • “How does an LBO affect a company’s balance sheet?”.
• Case Studies:
  • Market sizing (e.g., “Estimate the revenue potential for an EV startup”).
  • Profitability analysis (e.g., “Diagnose a 15% profit decline in retail”).
• Behavioral Rounds:
  • “Tell me about a time you led a team under pressure”.
  • “Why investment banking? Why our bank?“.

3. Superday/Final Round

• Panel Interviews: Senior bankers evaluate cultural fit and leadership potential.
• Brainteasers & Market Questions:
  • “What’s the FTSE closing index today?”.
  • “How would you redesign an orange?”.

Common Investment Banking Interview Questions

1. Technical Questions

• Accounting:
  • “How does a $10 depreciation expense impact the three financial statements?”.
  • Answer: Reduces net income by 10(IncomeStatement),increasesaccumulateddepreciationby10 (Income Statement), increases accumulated depreciation by 10 (Balance Sheet), and adds back $10 as a non-cash expense (Cash Flow Statement).
• Valuation:
  • “Compare DCF and Comps analysis”.
  • Key Points: DCF relies on future cash flows and WACC, while Comps use market multiples (e.g., P/E, EV/EBITDA).
• M&A:
  • “What’s the impact of a stock vs. cash acquisition on EPS?”.
  • Answer: Stock swaps may dilute EPS if the target’s P/E is lower; cash deals are accretive if financed cheaply.

2. Behavioral Questions

• Leadership & Failure:
  • “Describe a time you failed”.
  • STAR Framework: Focus on lessons learned and corrective actions.
• Industry Passion:
  • “What recent deal impressed you?”.
  • Tip: Highlight a transaction the bank advised (e.g., “Microsoft’s acquisition of Activision”).

3. Market & Brainteasers

• Market Trends:
  • “What’s driving the rise in SPACs?”.
  • Answer: Flexibility for private companies, investor appetite for pre-IPO opportunities.
• Brainteasers:
  • “Two frogs double every second and fill a room in 60 seconds. How long to fill half the room?”.
  • Answer: 59 seconds (exponential growth logic).

Preparation Strategies

1. Master Core Technical Concepts

• Key Areas:
  • Financial statements, valuation methods (DCF, Comps, Precedents), M&A/LBO modeling.
  • Accounting adjustments (e.g., deferred tax, goodwill).
• Resources:
  • “The 400 Investment Banking Interview Questions & Answers”.
  • Vault Guide to Finance Interviews for multi-industry coverage.

2. Practice Case Studies & Market Sizing

• Frameworks:
  • 4P/4C Models: For product launches.
  • Top-Down vs. Bottom-Up: For market sizing (e.g., TAM × penetration rate).
• Mock Interviews: Use platforms like Pramp to simulate pressure.

3. Refine Behavioral Responses

• Selling Points: Highlight leadership, resilience, and alignment with bank values (e.g., Goldman’s “Client First”).
• Weakness Example:
  • “I sometimes overprepare—now I prioritize efficiency by focusing on high-impact tasks”.

4. Stay Updated on Markets

• Daily Habits: Track indices (S&P 500, FTSE), read Financial Times, and analyze recent deals.

Common Pitfalls to Avoid

1. Over-Memorization: Adapt frameworks to the question context.
2. Ignoring Assumptions: Explicitly state them (e.g., “Assuming a 5% annual growth…”).
3. Poor Time Management: Allocate 30% to structuring, 50% to analysis, 20% to recommendations.

Investment Banking Interview Questions

Success hinges on technical rigor, strategic storytelling, and market awareness. By mastering high frequency questions like DCF analysis and M&A synergies, candidates can stand out in competitive hiring processes. Practice relentlessly, stay curious, and align your narrative with the bank’s culture to secure your offer.