FinClub - 57th Batch Interview Question Bank

Finance and Investments Club 57th Batch Finance Question Bank
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Foreword
Greetings!
The Finance and Investment Club of IIM Calcutta is excited to present the first edition of Finance
Interview Question Bank. Students of the 57th Batch, having secured summer internships in coveted
finance firms like Goldman Sachs, Morgan Stanley, CitiBank, Bank of America, etc. have contributed
to almost 250 questions asked from them. On this note, we would like to thank all the students who
invested their time in sharing their experiences and helped make this document.
The motive of this booklet is to present the diversity of questions that can be asked in both buddy and
final interviews. The given questions can be utilized as a guide for preparation but are in no way a list
of exhaustive questions.
We hope that we’ve been able to help you in bringing you closer to your professional goals. If you any
feedback for us, please do not hesitate in reaching out.
With this, I wish you the best!
Tanya Agarwal
(Finance and Investments Club, IIM Calcutta)
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Personal Questions
1. Why finance? (InCred Capital)
2. What would you do in an IB role? (Multiple)
3. Why are you interested in pursuing a career in Investment Banking? (Multiple)
4. You look more like a markets person, why do you want to enter IB? (InCred Capital)
5. What have you learnt in the last 3 months at IIM Calcutta? (Goldman Sachs)
6. Why do you want to intern in this firm? What do you know about the company? (Multiple)
7. Talk about three weakness and three strengths? (InCred Capital)
8. What is the biggest positive about you? (InCred Capital)
9. Why do you want to be in IB when after working for so many hours, you still might not win
the deal or get the deal closed? (Morgan Stanley)
10. How will you handle the working hours and pressures of an Investment Banking role?
(Avendus Capital)
11. Why don’t you want to go for consulting? (Avendus Capital)
12. What are the other IB firms that have shortlisted you? What is your preference order?
(Multiple)
13. Apart from IB what other roles do you want to explore in InCred if given an opportunity?
(InCred Capital)
14. Talk about a time you completed a task with limited information? (Bank of America)
15. What is something you will never do in life? (Morgan Stanley)
16. Are you a passive or an aggressive person? (Morgan Stanley)
17. Difference between PEVC and IB in my perception? (Avendus Capital)
18. Why do you want to join PE over consulting? (NIIF)
19. Why are you interested in infrastructure? (NIIF)
20. What did you learn through your internships apart from the technical aspects? (NIIF)
21. How is the role of an Audit Associate at a Global firm different from a CA firm? (Baring Private
Equity)
Sector-Specific Questions
1. Discuss some deals done by our firm recently. (Multiple)
2. Fundamentals and inter-linkage of the three Financial Statements (Citi, Morgan Stanley,
Goldman Sachs)
3. If you had to choose anyone statement of a company, which would it be and why? (Goldman
Sachs)
4. Impact of depreciation on valuation and financial statements. (Goldman Sachs)
5. Questions on ratios like Inventory Turnover Ratio, Days of Accounts Receivables/Payables etc.
(Citi)
6. Explain IFRS-16/INDAS-116, how it has changed accounting? What is the impact on valuation?
(Bank of America)
7. How will you treat leases in valuation? Tax impact of IFRS-16/IND AS-116. (NIIF)
8. Difference between nominal and real inflation? (Goldman Sachs)
9. Explain with examples, the difference between profit maximization and wealth maximization?
(JP Morgan Chase)
10. List the important ratios used for different industries with rationale? (Avendus Capital)
11. How do mergers happen? Explain the process. (JP Morgan)
12. What are the inputs required for a DCF? (Goldman Sachs)
13. How will you treat R&D in valuation? (NIIF)
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14. What are the underlying assumptions in the calculation of beta, equity risk premium and
WACC? (NIIF)
15. Explain beta to me like I am your grandmother. (Goldman Sachs)
16. How is beta calculated for private companies? (Goldman Sachs)
17. What are different ways of valuation? (Citi, NIIF, Bank of America)
18. Difference between relative and DCF valuation? Which method is preferable under what
conditions? (NIIF)
19. Can you talk about some common relative valuation metrics? Is Enterprise Value/Net Profit a
good relative valuation ratio? If yes/no, why? (Bank of America)
20. What are the two methods of DCF? Which one would you prefer to use for infra projects?
(NIIF)
21. Can Beta be negative? If yes, then in what scenarios? (Citi)
22. How do you find the cost of debt? (Morgan Stanley)
23. In DCF, what is the effect of taking more debt on WACC? Does WACC change proportionally?
(Goldman Sachs)
24. Should you use market weights or book value weights while calculating WACC? (Goldman
Sachs)
25. What are the factors that affect cost of equity and how? (Goldman Sachs)
26. How do you calculate the risk free rate? (Goldman Sachs)
27. FCFF vs. FCFE? How to reach the values starting from revenue and coming down the line?
(Goldman Sachs)
28. Drawback of FCFF (1+g)/ (w-g)? (Goldman Sachs)
29. How do you decide on a terminal growth rate? What are the underlying assumptions? How
many years do you consider for revenue calculations before assuming a terminal growth rate?
How do you decide this? (NIIF)
30. I have arrived at the terminal value via a perpetual growth model, how to sense check this
value? (Goldman Sachs)
31. How will you discount the terminal value calculated through EV multiple? (Goldman Sachs)
32. What is precedent transaction valuation and how do we do it? (Goldman Sachs)
33. What is diluted EPS? (Goldman Sachs)
34. Which industries have a negative working capital? (Goldman Sachs)
35. Do we add stock-based employee compensation to FCFF? (Goldman Sachs)
36. Do you watch football? How would you value a football club? Different revenue sources?
Costs? Capex? Working capital? (Citi)
37. What is EV to Equity Value bridge and minority interest? (Citi)
38. What is minority interest and how is it treated in valuation? Why? (Bank of America, Citi)
39. What is the impact of associates and minority interests on the EV calculation (Morgan Stanley)
40. How do you value a startup? (Morgan Stanley)
41. How would you value a plastic water bottle of Bisleri? (Bank of America)
42. Would you invest in gold or a gold mining company and why or why not? (Bank of America)
43. Which company have you prepared for? What advice will you give to the company’s CEO as
an Investment Banker? (Morgan Stanley)
44. If you are analysing a private company and can look at only one metric, what would it be?
(Morgan Stanley)
45. What is asset-based valuation and contingency based valuation? What are the underlying
assumptions of these two methods? (NIIF)
46. What is P/E multiple for debt? Follow-up questions on accretion dilution of a deal based on
the proportion of debt and equity financing. (Morgan Stanley)
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47. If you are calculating EV by discounting FCFF, you use EBIT (net of tax) and make some
adjustments. Right? How will you treat other income in this? (Goldman Sachs)
48. How would you value a start-up? (NIIF)
49. Explain some trading strategies? (InCred Capital)
50. What is risk management, backwardation, contango in futures contracts? (InCred Capital)
51. What is Black Scholes Model and DV01 bonds? (Citi)
52. Which financial ratio will you look at if you want to know about the health of a company?
(InCred Capital)
53. How will you value an insurance company? (Goldman Sachs)
54. Talk about two companies that you would be investing in, one from your sector and one from
the other. (Avendus Capital)
55. Where do you see the automobile industry in next five years? How do you find out the
terminal growth rate for an auto company? (Morgan Stanley)
56. What are the specific financial factors that sets Bajaj apart from competitors? Let’s talk about
numbers, ratios for Bajaj and its competitors. (Credit Suisse)
57. What is your opinion about the future of Auto Sector? What impact will EVs have? What are
the multiples these companies trade at? (Morgan Stanley)
58. A detailed discussion on the Energy market, oil prices, fundamental into the market.
Discussion on EIA outlook and OPEC reports impact by US election on energy sector? If you
have to invest in some energy firm, which one it would be? COVID impact on the Energy sector.
A small discussion on BPCL disinvestment and Vedanta delisting. (InCred Capital)
59. What is unique about the working capital in retail industry? (InCred Capital)
60. Talk about Reliance future retail deal. (InCred Capital)
61. What are the five ratios you would choose to judge a manufacturing firm? (Citi)
62. Calculate the PE ratio for Telecom industry. Empirically prove that it is the average of all the
PE ratios and not the addition of all prices divided by the addition of all earnings. If the PE
ratios of Airtel, Jio and Vodafone are 36, 40 and 4 respectively, then what will be the industry
PE. Price Jio for its IPO. Say you are the head of an Asset Management Company, would you
invest In Jio IPO or hold Airtel? Why? (Goldman Sachs)
63. Can you give a short term, medium term and long term opinion of the industry that you've
prepared for in the Indian context? (Goldman Sachs)
64. Which industry has seen massive growth in the last year particularly due to COVID? (Goldman
Sachs)
65. I am the CFO of Dmart and you have to give me a fairness opinion. Let us have a conversation
on how to value Dmart. (Goldman Sachs, Bank of America)
66. Is Dmart overvalued? What assumptions have you taken in valuation and why? What would
be the terminal EV/sales in your assumptions? (Citi)
67. Do you know what EV/sales Apple trades at? (Citi)
68. Any recent financial news (I said Wipro Buyback). What is buyback, why do companies do it,
effect on P/E ratio, why not use the cash for some investment? (Goldman Sachs)
69. What is stock split, why is it done and its impact? (Goldman Sachs)
70. Impact on the three financial statements if depreciation increases by INR 10? (Goldman Sachs)
71. My cash flows are -100, 50, 30, 20 at t = 0, 1, 2, 3. What is IRR? (Bank of America)
72. You have 2 investment opportunities. Physical gold expected to give 50% return in your
horizon and gold mining company stock with P/E 10. Where would you invest? (Bank of
America)
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73. Suppose, a company issues shares for $10mn. How will this impact EV and Equity value of the
company? And what if, I utilize the money for purchasing PPE, how will this transaction impact
the both? (Credit Suisse)
74. If you have to advise the government on a project then what all metrics will you use, how will
you decide whether to take debt or not, how will you check the repayment capacity?
(Goldman Sachs)
75. Why is the vaccine news affecting global markets? (Goldman Sachs)
76. What all do you include in a pitch book? (Citi)
77. Pitch a start-up in which Gaja can invest and also value it. (Gaja Capital)
78. How would you value a portfolio company? (Gaja Capital)
79. What factors do you look for while making an acquisition/ investment? (NIIF)
80. What is the deal lifecycle of a PE fund? (NIIF)
81. How do you incorporate subsidiaries and vested interests in other companies into your
model? (NIIF)
82. How do you get an estimate of revenues and costs? (NIIF)
83. Which ratios would you use to build a relative valuation model for a company in this sector?
Where do the various companies in this sector stand currently in terms of their KPIs? What is
the drawback of the relative valuation method? (NIIF)
84. How do you decide if you should give credit to a particular company/ invest in it? List the
factors and explain. (Baring Private Equity)
85. How do you determine the credibility of a company or an individual? (Baring Private Equity)
Miscellaneous Questions
1. Have you talked to any PGP2 interns about their experience? (Bank of America)
2. How proficient are you with MS Excel? (Citi)
3. Market cap of HDFC Bank and few other random large-cap companies. (Avendus Capital)
4. If the ice melts in a glass half-filled with water, will the level of water change? (Avendus
Capital)
5. How, out of 8 coins, will you find three one with less weight using a balance 2 times? (Avendus
Capital)
6. There are two identical companies in terms of operations, profitability, and everything else.
One company is having more cash and receivables, and also lesser payables than other
company. Which one would you prefer? (Avendus Capital)
7. You have fifty white balls and fifty black balls, how will you distribute these 100 balls in two
containers so that the probability of choosing white ball is maximum? (Avendus Capital)
8. What do you feel about the company presentation? (InCred Capital)
9. What would you do if you have been given a task, you don’t know anything about it but all
your seniors are busy? (NIIF)
10. What do you think about solar energy? Do you know how our firm is structured? Which
projects are allocated in which fund type? (NIIF)
11. How is the credit profile different from the private equity profile? (Baring Private Equity)
12. I mentioned about my role in auditing the expenses of an airline company. Was required to
explain the procedure taken up and what other methods could have been considered to audit
it. Similar case with the audit of Brexit and COVID uncertainties for clients. (Baring Private
Equity)
13. Prospects of becoming an IR. (Baring Private Equity)
14. How flexible are you with working hours? (Baring Private Equity)
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Personal Questions
1. What interests you towards markets? (Multiple)
2. Do you invest in markets? (Multiple)
3. What is your investment thesis? (Edelweiss)
4. Why did you leave Futures First? (Bank of America)
5. Tell me something unique about you? (Bank of America)
6. What are your strengths and weaknesses? (Bank of America)
7. Three things you really liked and hated at your last job? (Bank of America)
8. What is the biggest quality of a trader according to you? (Bank of America)
9. Who is your role model and why? (Citi)
10. What is the motivation in your life? (Citi)
11. Talk about the major accomplishments in your life. (Citi)
1. What is the reason behind a very high P/E ratio of NIFTY in today's time? (Edelweiss)
2. How does the future of the telecom industry of India look like? (Edelweiss)
3. What is the gamma of an ATM option with a high IV? (Edelweiss)
4. What is Quantitative Easing? (Bank of America)
5. Why are there talks of inflation again? (Bank of America)
6. What will be the effect of Biden’s victory on the markets? (Bank of America)
7. Why doesn’t US have inflation after so much Quantitative Easing during the COVID-19
pandemic? (Bank of America)
8. General questions related to OFD and strategies. (Bank of America)
9. Talk about the response of the United States to COVID-19 in terms of their monetary and fiscal
policy. (Bank of America)
10. How is a bond priced? What is duration? What is limiting bond price? (Bank of America)
11. What is Dove trade? (Citi)
12. What is a spread trade? (Citi)
13. Any trade idea that you would like to share in any instrument and for any time horizon and
why? (Citi)
14. What are your views on current pandemic of COVID-19? (Citi)
15. Do you have any trade idea?
1. How is the Indian economy doing and what do you think about its future prospects?
(Edelweiss)
2. There are two players A and B tossing a glass coin 10 times. If head turns up more number of
times, then A wins. If tails turn up more number of times, then B wins. If the number of heads
and tails are equal, then it's a draw. The winning player wins 200 rupees and in case of a draw,
this amount is divided equally. After 7 throws, when the glass coin is tossed, the coin breaks.
At this moment player A is leading with 4 heads and 3 tails. How would player A and B divide
the amount? (Edelweiss)
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Personal Questions
1. Why Finance? (Multiple)
2. Why this company? (Multiple)
3. Have you done any certifications or courses in finance? (Standard Chartered)
4. What is your biggest mistake? (AB InBev)
5. Explain the leadership part in your CV? How did you prepare to handle it? (Hindustan Unilever)
6. Any criticism you faced in life and how did you handle it? (Hindustan Unilever)
7. What was your biggest failure? (P&G)
8. Talk about one time you received constructive criticism. (P&G)
9. Situational questions and ethical dilemmas. (P&G)
1. What is Investment Banking? (Standard Chartered)
2. Latest news in the banking sector which will have a significant impact on Banks? (Standard
Chartered)
3. Basic questions on Capital Budgeting (AB InBev)
4. What is your outlook on the Indian Taxation System? (AB InBev)
5. What kind of work would you get to do in your internship at HUL? (Hindustan Unilever)
6. What are the different methods used for valuation? (Hindustan Unilever)
7. How are startups valued? How are other companies valued? (Hindustan Unilever)
8. How was the valuation for HUL GSK merger done? Why was DCF not used? (Hindustan
Unilever)
9. What are the disadvantages of DCF over the multiple method? (Hindustan Unilever)
10. Why do we need IFC? What is the difference between IFC and internal audit? (Hindustan
Unilever)
1. What does the Finance club do in IIM Calcutta? (Standard Chartered)
2. In the current scenario (pandemic and lockdown), if I, as a leader of a union come to you and
say that the workers won’t come to work unless they are given a 30% raise. You can't afford
such a raise. What will you do? How would you approach/communicate and resolve the issue?
(Hindustan Unilever)
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Personal Questions
1. Why finance? (Multiple)
2. Why this company? (Multiple)
3. Why this role? (Multiple)
4. What would you choose among finance and consult? (Goldman Sachs – Marcus)
5. How does an MBA help you in realisation of your career goals? (Goldman Sachs – FICC
Structuring, White Oak)
6. Tell me something about you that I won't find on your CV. (Citibank Corporate Banking)
7. Tell me about your family. (Citibank Corporate Banking)
8. What is your alternate career choice? (Citibank Corporate Banking)
9. Why do you want to work in banking? (Citibank Corporate Banking)
10. Do you love to win or hate to lose? How important is winning to you? (Citibank Corporate
Banking)
11. Are you passionate or pragmatic? (Citibank Corporate Banking)
12. What was your biggest failure and how did you recover from it? (Citibank Corporate Banking,
Amazon Financial Analyst)
13. Why do you want to get into asset management and not continue with management
consulting? (International Asset Reconstruction Company)
14. Briefly tell us about all the significant decisions that you have taken till now. You may start
from your childhood. (White Oak)
15. Why do you want to get into a buy-side firm? (White Oak)
16. Where do you see yourself in the long run? (White Oak)
1. How will you decide price of iron ore? (Arga Investment)
2. How will you measure a company's health? (Arga Investment)
3. What are the most important financial ratios? (Arga Investment, Amazon Financial Analyst)
4. Few questions about Indian equity market. (Goldman Sachs - Strats)
5. Views on how COVID effected markets. (Goldman Sachs - Strats)
6. What are the risk metrics for a bundle of loans from SBI? (Goldman Sachs – FICC Structuring)
7. How can you assess the loans which are not delinquent but do not lead to any revenue for the
bank as they up early? (Goldman Sachs – FICC Structuring)
8. What are derivatives, payoffs and spreads? (D.E. Shaw)
9. Talk about the negative oil prices. (D.E. Shaw)
10. How effective are fiscal and monetary policies? (D.E. Shaw)
11. What are the latest developments in the stock market (IPOs, SPAC)? (D.E. Shaw)
12. What are some of the tools to measure credit risk? (Goldman Sachs – Credit Risk)
13. Why do you think GS needs to measure credit risk? (Goldman Sachs – Credit Risk)
14. How do forbearance program help in loss mitigation for credit card portfolio? (Goldman Sachs
– Marcus)
15. What are some of the metrics for risk assessment of a customer? (Goldman Sachs – Marcus)
16. What is the risk appetite framework? (Goldman Sachs – Marcus)
17. How would you deal with the gamer population for COVID-19 assistance programs? (Goldman
Sachs – Marcus)
18. How would corporate clients be different from retail banking clients? (Citibank Corporate
Banking)
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19. What was the impact of COVID on the economy? Was the response of the Indian government
to COVID adequate? (Citibank Corporate Banking)
20. Any recent economic development you found interesting. (Citibank Corporate Banking)
21. A skill spreadsheet was circulated where you have to indicate your expertise on a 10 point
scale on certain financial and legal topics. Some of the parameters were:- Financial modelling,
Valuation, Statistics & probability, IBC etc. Questions were asked based on your indicated
expertise on those topics. (International Asset Reconstruction Company)
22. What parameters do you see when investing in a company? (International Asset
Reconstruction Company)
23. Should you hold, sell or buy more of a company’s stock if it is currently showing loss in your
account. (International Asset Reconstruction Company)
24. What is the difference between sunk and opportunity cost? (White Oak)
25. How do you diversify a portfolio? How do you measure risk? What are the drawbacks of using
standard deviation? (White Oak)
26. What is the difference between financial and operating liabilities? (White Oak)
27. What is the difference between financial and operating lease? What is the impact of this
differentiation on the financial statements? (White Oak)
28. What is your strategy when you are investing in the markets? (White Oak)
29. Name some stocks that you have invested in? What was the research that you did? (White
Oak)
30. How many annual reports have you read before? How much time does it take to read an
annual report? How do you analyse these reports? (White Oak)
31. Since you have invested in stock X, can you explain the rationale behind it? What insights into
the future growth of the company did you get from its annual report? (White Oak)
32. What are the different types of valuation? (White Oak)
33. How do you project revenue for DCF valuation? What other approaches could be taken?
(White Oak)
34. Should you capitalize R&D? How will it impact the valuation? (White Oak)
35. How is the terminal value calculated? What are other ways of calculating it? (White Oak)
36. What is sensitivity analysis on growth rate and discount rate? How does it impact the overall
valuation? (White Oak)
37. Why didn’t certain companies in India switch to the new regime of corporate tax (25.17%)?
What all benefits will they have to let go? What number will make more sense in the DCF
model? (White Oak)
38. How to calculate the cost of debt? (White Oak)
39. What premium do you use on risk-free rate? (White Oak)
40. Explain CAPM to me as if you are explaining it to a layman. (White Oak)
41. How do we go from EV to equity value? What is the fundamental meaning of EV? (White Oak)
42. How do we make depreciation schedule? (White Oak)
43. How will you forecast Capital Expenditure? (White Oak)
44. What is present in the tangible and intangible assets of the chosen company? What are the
current margin (gross, operating, EBITDA)? What are they in year 5? Explain the difference
between them based on company’s perception. (White Oak)
45. Pitch a merger in your preferred sector (had multiple follow-up questions based on my
answers). (White Oak)
46. Explain the deal life cycle. What all risks are involved in the deal? (White Oak)
47. What is ROE, ROCE and ROIC theoretically? (White Oak)
48. What is LIFO method of inventory valuation? (White Oak)
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49. What is the link between all the financial statements? (White Oak)
50. What is the importance of management commentary in an annual report? (White Oak)
1. Puzzles on probability and game theory. (Goldman Sachs - Strats)
2. Which subject did you enjoy the most in first term? (D.E. Shaw)
3. Questions on 2008-09 financial crisis. (Goldman Sachs – Credit Risk)
4. There are two firms, Firm A and Firm B. Frim A can increase the price by 5% with no change in
sales and Firm B can increase sales by 5% without changing the price. Which company would
be a better choice? (International Asset Reconstruction Company)
5. There are two identical boxes. One box has double the amount present in the other box. If the
first box is opened and it has $1000. Will you open the second box, given that if you choose
to open the second box, you have to accept that amount? (International Asset Reconstruction
Company)
6. You have to choose one of three doors. One of the doors hides a prize and the other two doors
have no prize. You state out loud which door you pick, but you don’t open it right away.
Suppose you open one of the other two doors, and there is no prize behind it. At this moment,
there are two closed doors, one of which you picked. The prize is behind one of the closed
doors, but you don’t know which one. Do you want to switch doors? (International Asset
Reconstruction Company)
7. Compare the online and offline modes of interaction. (Citibank Corporate Banking)
8. Monte Carlo Simulation. (FinIQ)
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FinClub - 57th Batch Interview Question Bank

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