Interview Questions in Core Finance for Commerce Professionals

1. Tell us what you know about Investment Banking, Equity Research, Portfolio Mgt, Credit Risk & typical work schedule each day.
2.Why you want to join IB, Equity Research, Portfolio Mgt, Credit Risk?
3. What is Financial Modelling, do you have these skills and what pivotal roles it plays in above profiles?
4. 5C's in credit risk analysis, Limitations of credit rating agencies, can investors rely in credit rating agencies reports while investing into company.
5. Porter's 5 force model for estimating MOAT of company.
6. How to calculate Beta of stock?
7. Do you invest in stock market?
8. Give a brief overview of industry you track , companies you have in your portfolio, key risks,
key performance metrics of particular sector or industry.For instance, FMCG, or IT or Real Estate Industry.
9. Define FCFF. Differentiate between FCFF and FCFE
10. WACC and its calculation
11. Cost of other components of capital
12. EV and EV multiples
13. What is ESOPs , share repurchase and stock splits
14. What is terminal Value and ways in which Terminal value can be calculated ( Gordon Growth & Exit Multiple)?
15. Which is the best approach DCF or Relative Valuation and there definition
16 .How would an increase of 1000 units in D&A affect the three financial statements
17. How is FCFF calculated?
18. Explain the DCF valuation method.
19. Why interest is not deducted while calculating FCFF?
20. Define Enterprise Value. How to calculate it?
21. What is Market Capitalization?
22. Define excess cash. How does a company differentiate between Normal cash & Excess Cash?
23. What types of debt are included in EV?
24. Why are debt and excess cash deducted while calculating EV?
25. What are Unfunded Pension Liabilities? Why do they form a part of debt?
26. Define Minority Interest. State the reason for its inclusion in EV
27. What is EBITDA? As an investor would you consider EBITDA or Net Profit for judging a potential investment?
28.If growth is greater than ke ,how terminal value will be calculated ?
29. How to calculate cost of equity for private companies, real estate , construction , IT companies.
30.Explain the CAPM formula to calculate the cost of equity. Pros & Cons.
31. Explain Valuation methods: DCF, Relative Valuation, PE Ratio, PEG Ratio, pros and cons of DCF , Relative Valuation.
32. What excel commands frequently used in Financial modelling. How do you rate over MS Office Skills. Use of indirect , choose , pivot table, vlookup, max,
excel different charts in M&A and IB activities.
33. How to calculate NAV of mutual funds,what is treynor, sharpe ratio and Jensen alpha and what does it signify.
34. What is Du Pont Analysis and why investor is interested to apply Du Pont Analysis while investing into company.
35. Activities in IB activites : Capital raising, M& A , IPO valuation, underwriting, Different types of Due Diligence.

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