Fragen im Vorstellungsgespräch: Investment banking analyst

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Fragen aus Vorstellungsgesprächen für „ Investment Banking Analyst“, von Bewerbern geteilt

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Bank of America
Investment Banking Summer Analyst wurde gefragt...7. Februar 2014

If someone offered you $1000 today or paid out at $100 a month over the next ten months, which would you take?

5 Antworten

The answer should be the $1000...$1000 today is worth more than $1000 ten months from now or $100 every month for 10 months due to the time value of money. Weniger

Money loses value over time...

I think it depends largely on the market. 1000 dollars a couple years ago if put into the right fund would be nice now. With how long the market has been expanding It would be a tough choice now. Additionally, they might be checking personality on this. Do you want your money now, or do you like something steady even if the value depreciates over time? Weniger

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Scotiabank

Why do you have a C in acgt?

5 Antworten

How do you even get an interview with a C in accounting?

Cuz its boring as hell!

They will come with all questions as in the areas you are so lacking

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J.P. Morgan

Which side of the BS is Equity on?

5 Antworten

Credit side

It is a source of Fund, comes under Owner's fund

There are two types of balance sheet. 1) Acount form 2) Report form In account form Assets are on left side that is debit side. Liabilities and equity are on credit side that is right hand side. In report form everything is under one vertical line that is first is assets then followed by liabilities and owner's equity. Weniger

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Goldman Sachs

If I stacked pennies from the ground to the top of the Empire State Bldg, would they all fit onto a floor of the building?

3 Antworten

1. Yes on the terrace. 2. Conver pennies into Dollers on better brokerage and get it fit into a bag. Now you can more money fit at any floor. Weniger

The Empire state building is approximately 1200 ft. I'm guessing there are 100 floors. This means 12 ft of single stack pennies per floor. 100 of them. I think we can fit 100 stacks of pennies on any floor in New York City. Weniger

Yes. 1) break coins into stacks in relation to each window/floor (gives height of floor) 2) highly likely sum of stacks is less than the square of the floor height I'm sure there's another way to answer this as per Vault, though I like to come up with diff answers instead. Weniger

Deutsche Bank

What is the probability of you walking out of this room and seeing someone without the average number of legs.

2 Antworten

100% Average will be just under 2

so it should be 0% not 100%. )

Guggenheim Partners

Why do you add minority interest to enterprise value?

3 Antworten

To find the complete value of the company. Even though the income has an already adjusted amount (adjusted to the percentage of the majority interest) you must still see the complete value. Weniger

Sorry, confused my answer a little. You add back the minority interest just like you add back preferred shares because it is essentially a form of equity financing and since its consolidated, the owner of the company in question will have to compensate the minority interest for their equity investment. Weniger

There are three ways to account for an investment in a company. The first (if less than 20% ownership I think) is a a straight investment and gets recorded as an asset in short term investments on the balance sheet. The second (20-50%) is the equity method meaning the company includes just their share of earnings (essentially their equity) in the P&L. The final (50+% ownership) is the consolidation method meaning the company controls the subsidiary and so needs to consolidate its earnings. However, if it doesn't own 100%, then they cant claim 100% of earnings. This is accounted for by subtracting out minority interest on the P&L. That takes care of earnings but enterprise value is not based on earnings, its based on balance sheet metrics. So since the company doesnt own the entire company but has consolidated the entire sub on its balance sheet, minority interest needs to be removed from the value of the company. Weniger

Guggenheim Partners

in a LBO, if a PE borrows $10 million to buy out the company and sold the company with the same multiple that it originally purchased for. Assuming that the pe did not pay down any debt during the 5 years, wha'ts the IRR?

3 Antworten

I think the internal rate of return with be negative the interest rate at which the firm borrowed the $10 million. Anyone else? Weniger

I believe this question is flawed. A company's value can grow despite its multiple (P to E) staying at the same level. Weniger

Read last sentence... :Theoretically, a stock's P/E tells us how much investors are willing to pay per dollar of earnings. For this reason it's also called the "multiple" of a stock. In other words, a P/E ratio of 20 suggests that investors in the stock are willing to pay $20 for every $1 of earnings that the company generates. However, this is a far too simplistic way of viewing the P/E because it fails to take into account the company's growth prospects. Weniger

BMO Capital Markets

How do the balance sheet and income statement relate?

3 Antworten

BS flows to next BS through IS

BS shows what you have as snap shot in time IS shows what you did with it over a period of time Weniger

net income flows to the balance sheet as retained earnings

Goldman Sachs

What are the three ways of evaluating a company?

3 Antworten

1. DCF 2. Precedent transaction (mult) 3. Publicly traded comparables (mult)

Asset Approach - used to estimate enterprise and equity value. Start with the balance sheet, Identify unrecorded assets and liabilities. Market Approach - how these pricing multiples are determined. Income Approach - Net operating income (I) ÷capitalization rate (R) = value (V) Weniger

1: Total Net Worth 2: Earning potential 3: Number of employee

Credit Suisse

If a company acquires another company with a lower P/E ratio, is the deal accretive or dilutive?

3 Antworten

why

It depends, a low P/E ratio means the company being acquired has a higher yield. If the yield is higher than the acquirer's weighted cost of the purchase, the deal will be accretive and vice versa. Weniger

Accretive

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