IBD Mock Interview 11th January, 2016

Fit/Motivation
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Tell me about yourself / walk me through your resume.

Why are you interested IBD?
Tell me about a time when you worked with international teams and demonstrated leadership.
Tell me about an achievement you are most proud of.

Technical/Commercial
-

Tell me about a deal you are following.

Why do companies engage in M&A?
How do you value companies?
What types of sensitivity analyses would we look for in a DCF?
How do we calculate the fully diluted number of shares outstanding?
Company A has 100 shares outstanding at a share price of $10 each. It also has 10 options
outstanding at a strike price of $15. What is its fully diluted equity value?

If a company changes its method of inventory valuation from LIFO to FIFO

in an inflationary environment, what is the impact on the 3 financial
statements?

IBD Mock Interview 18th January 2016

Fit/Motivation
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Why are you interested in HSBC?

Why FIG?
Tell me about an achievement you are most proud of.
Tell me about a mistake you made. What did you learn from it?

Technical
-

What multiples would you look at when valuing a bank? P/E and P/B
Would you use a DCF to value a bank?
You mentioned the use of DDM to value a bank. Walk me through a DDM model.

1. Project out the companys earnings, down to earnings per share (EPS).
2. Assume a dividend payout ratio what percentage of the EPS actually
gets paid out to shareholders in the form of dividends based on what the
firm has done historically and how much regulatory capital it needs.
3. Use this to calculate dividends over the next 5-10 years.
4. Do a check to make sure that the firm still meets its target Tier 1
Capital and other capital ratios if not, reduce dividends.
5. Discount the dividend in each year to its present value based on Cost
of Equity NOT WACC and then sum these up.
6. Calculate terminal value based on P / BV and Book Value in the final
year, and then discount this to its present value based on Cost of Equity.
7. Sum the present value of the terminal value and the present values of
the dividends to get the companys net present per-share value.

- What are the broad trends taking place now in the banking sector?
- Tell me about a deal in the FIG sector you are following.