You've either just graduated or are about to graduate with a degree pointing you toward an investment banking career. One of your first steps in that direction will be a series of interviews that will test your motivations for working in the industry, your financial sector know-how and your mental agility.
The best defense is to be prepared.
To help you prep, we’ve picked four examples of the core types of interview questions that students tell us they have encountered this year at various investment banks, plus the answers they gave.
We then asked two independent experts to tell us what answers they should have given.
Barclays,Trading and Structuring
Question: There’s a revolver with two bullets in two chambers next to each other, and the remaining four chambers are empty. The policeman spins the revolver, points it at you and pulls the trigger, but nothing happens. Suppose that you don’t want to die, would you prefer the policeman to spin the revolver again before the next shooting or shoot again directly?
Question type: Brainteaser – how’s your math?
Student’s answer: “Spin again: the probability of getting a bullet is 2/6=1/3. Do not spin, just shoot: the probability of getting a bullet is 1/4. Hence do not spin.”
Expert view: “This is a correct and succinct answer; the candidate should say just this and nothing more,” says Peter Harrison, a former Goldman Sachs investment banker and now founder and CEO of Harrison Careers.
“I would give the candidate more brainteasers to test them further, to satisfy myself they are smart enough. Maybe they had prepared for the question or just got lucky. Or I might see if the candidate understood the conditional probability nature of the question: would they want a re-spin if offered before any shot had been fired?”
Credit Suisse, Investment Banking
Question: Why our bank?
Question type: Motivational – have you bothered to research the bank or the division you’re applying to?
Student’s answer: “Because it’s a multinational organization that operates in more than 50 countries and it has a very multicultural environment. That fits with my values.”
Expert view: “This is too vague and incomplete as an answer. It is only part of a good answer and it could apply to too many organizations,” says Guy Ballantine, RSM Tenon consultant and former investment banking graduate recruiter. “Banks want you to identify which division you want to work for, so it’s good to be specific, say M&A or capital markets. Mention a deal they have done recently, pick out a strength the bank has, like a number one ranking in the league tables. Definitely do not go for stock answers, demonstrate your knowledge and massage their egos – it is never a bad thing.”
Morgan Stanley, Investment Banking
Question: Why should we not give you the job?
Question type: ‘Fit’ question – you have little experience of finance, what else you can offer?
Student’s answer: “I don’t come from a business administration or finance background. However, I can learn quantitative skills. I believe that I have the aptitude.”
Expert view: “This answer is lightweight and not good enough,” says Harrison. “I would require an acknowledgement that the candidate understands this is a genuine weakness, along with specific steps they are taking to fix the problem. In my seven years at Goldman Sachs I interviewed around 1,300 candidates and I asked this question in 30% of interviews. I was looking for an honest character evaluation. I often rejected candidates because I either did not believe their answers or they were not talking from the heart, and it made me distrust them.”
BNP Paribas, Technology
Question: What do you think of bonuses?
Question type: Technical: What do you really know about the industry?
Student’s answer: “The media and therefore the public seem to take a very aggressive dislike to bonuses for bankers only. For example, no one seems to care about the excessive bonuses that some top lawyers, hedge fund managers, footballers, high-profile television presenters and others receive. Saying that, however, there do seem to be cases where the bonus is unjust and not really based on performance, which I think is wrong. In an ideal world, everyone should get rewarded, but they should only get a bonus if they performed exceptionally well during that period”.
Expert view: “This is a good answer, because it links performance and reward,” says Ballantine. “It can be expanded by making it more personal, by mentioning how good the bank is at incentivizing people. I always like it when people say what motivates them: I would like a bonus but I also want to be treated fairly and work in a good environment; often a big bonus is an excuse for not treating people very well. It also depends what division you are being interviewed for: if for a trading role, then it is good to say you are motivated by money, but in other divisions it may be less acceptable.”