Investment Banking (IB) Domain -
- Frequently Asked Technical Interview Questions

Average CTC: 8 to 13 LPA (approx.)

Technical Questions :

• How would you differentiate between investment banking and commercial banking?
• What do you think is the best way to raise funds? Equity or Debt?
• Give any one unique valuation multiple you think will help in valuing a real estate company like DLF Ltd.
• Case study – Indigo recently acquired a stake in Spicejet and the management of Spicejet approaches you as they are afraid of a hostile takeover in near future and they are seeking advice from an investment banker. What would be your advice?
• Is the PEG ratio better than the PE ratio to value growth stocks?
• value is a private company for which we have its detailed historical financial statements and have to value it using DCF Valuation. However, the management has provided no projections and you are supposed to find out its Free Cash Flows, how would you do it?
• The CEO of a fast-food chain is considering hiring your firm for a multi-million-dollar IPO but first, they want to ensure that they want to be sure you have the ability to understand their business. As a new investment banker, you have been asked by your managing partner to develop a presentation detailing the current store performance for the CEO. The presentation can only be six slides and must be easy to read and communicate the information at the CEO level. To help you in your presentation, you are allowed to ask the company database excerpt for six and only six areas of your choice. List down the six areas of information and develop a rough six-slide presentation.
• Throw some light on economic profit valuation, how to calculate economic profit and what does it help to assess? Is it better than accounting profit?
• Suppose you are valuing a company using the DCF method to value it. You are supposed to adjust the valuation for risk. How would you do it? (Adjusting cash flows for risk or discount rate and why?)
• In what case, would an asset-based approach be suitable to value a company?
• When does a company check for Goodwill impairment?
• A company has Negative Operating Cash Flow, Positive Financing Cash flow, and negative Investment Cash flow. Is it a good situation to be in for the company?
• What asset class do you think might have a negative Beta with Equity markets? Bonds or Gold?
• What is the difference between the Best efforts method & firm commitment to underwriting?
• Can a firm commitment create a conflict of interest for the Banks?
• Why would two companies merge?
• How to calculate beta for a specific company?
• What is the difference between enterprise value and equity value?
• If you have the chance to evaluate the company’s financial viability, which statement would you choose and why?
• Briefly explain the process of a buy-side M&A deal.
• Given a situation where a company with a low P/E acquires a company with a high P/E in an all-stock deal, will the deal likely be accretive or dilutive?
• What are the benefits of a company getting listed on an exchange?
• What is in a pitch book?
• When buying a company why do private equity firms use leverage?
• What are the most common ratios used to analyze a company?
• What is Financial Modelling, and how is it useful in Equity Research?
• How do you do a Discounted Cash Flow analysis in Equity Research?
• What is Free Cash Flow to a Firm?
• What is Free Cash Flow to Equity?
• What’s the earning season? How would you define it?
• How do you do a Sensitivity Analysis in Equity Research?
• What are the most common multiples used in valuation?
• What is the difference between Trailing PE and Forward PE?