Today we’re going to cover the types of “business sense” questions that are asked in investment banking interviews.
The below example questions and categories were based on an analysis of real interview questions that were reported on Glassdoor by candidates who recently interviewed for analyst roles at Goldman Sachs, JP Morgan, or Morgan Stanley.
And here’s our first tip: you’ll REALLY need to know your industry and economic news.
Let’s get straight to the questions!
- Economy questions
- Deals questions
- Industry questions
- Investing questions
- Brainteaser questions
- Other IB questions
1. Economy questions (36%) ↑
Investment bankers are expected to be up to speed on the broader market, and how local and global events could affect the economy. As a result, you’ll typically get some questions during your IB interviews that focus on your knowledge of current events. In fact, these account for 36% of all business sense questions reported.
To prepare for this, you’ll want to do a couple of things. First, you should make an intentional effort to stay up to date on economic news. If you don’t have a favorite source already, then consider trying The Economist or the Morning Brew newsletter.
To take this a step further, it’s a good exercise to “quiz” yourself on these current events by reframing them in the form of a question. For example, “What kind of effect will X have on the stock market?”, or “What is my perspective on X news event? How will it impact the economy?”, etc.Use the questions below for even more ideas you can practice with. The below are all REAL IB interview questions that were reported by candidates on Glassdoor.
Economy example questions
Name one story in the news and how it’s important to you
What are the main challenges facing the financial industry over the next 5 years?
How do you expect current trade policy and federal reserve policy to impact the markets over the next 12 months?
Describe the local economy in layman’s terms
What are today's 10-year treasury bond returns?
What’s your view on the European debt crisis?
What do you know about public finance?
2. Deals questions (20%) ↑
Another topic that frequently comes up in investment banking interviews are questions about real-world deals. Interviewers from IB firms want to see if candidates really understand the industry and the important things to consider when looking at a deal.
So, you should prepare to discuss a couple of recent IB transactions in-depth. Be ready to give your opinion on whether the deal was a good (or bad) move, and memorize some key numbers to back up your analysis. If you’re applying for a particular group within your target firm, make sure you prepare to discuss deals that are relevant to that group.
You can find information about recent deals by reading the Investment Banking section of the Financial Times, which frequently covers stories involving leading firms, like Goldman Sachs, JP Morgan, and Morgan Stanley. We’ve also found this guide on preparing for deal interview questions to be really helpful.Now, here are a few different versions of deal interview questions:
- Tell me about a recent M&A transaction and what you thought about it
- Tell us about a recent private equity deal
- What deals has our group done that you’ve liked, and why?
- What is a recent transaction that you’ve found interesting?
3. Industry questions (18%) ↑
Industry questions are where you’ll need to demonstrate that you understand the landscape of the investment banking industry. That includes answering basic questions about investment banking, and it’s also where you’ll need the most firm-specific information.
For example, if you’re targeting an IB position at Goldman Sachs, then you’ll really want to familiarize yourself with the firm and their market position compared to competitors.
A great starting point is to read a strategy report about your target firm. Like one of these:
- Goldman Sachs strategy teardown (by CB Insights)
- JP Morgan strategy teardown (by CB Insights)
- Morgan Stanley vs. Goldman Sachs (by Investopedia)
It could also be helpful to follow the insights published directly by these firms:.
- Goldman Sachs newsletter (by Goldman Sachs)
- JP Morgan weekly brief (by JP Morgan)
- Morgan Stanley insights (by Morgan Stanely)
- What is something you recently heard about our company (i.e. Goldman, JPM, etc.)? And why is it important?
- What is the biggest threat to our company?
- What makes our bank different to other banks?
- How would you describe our bank and what we do?
- What is investment banking?
- How can an investment bank add value?
4. Investing questions (16%) ↑
No surprise here, but investment banking interviewers are likely to ask you questions about investing. This ranges from high-level questions about investing, to questions about specific companies.
If you’re applying for a role that focuses on a specific area of investing (e.g. IPOs) then you’ll want to make sure you’re familiar with all of the basics of investing in that area.
It would also be a good idea to analyze a few specific investments (this could simply be stocks you’re interested in), so that you can be prepared to discuss them in-depth with your interviewer.Now here are a few examples of what these questions look like:
- If you had $1 million to invest tomorrow, what would you do with it?
- What are the requirements for a good investment?
- Describe Solar City’s business model
- How would you compare GE and GM?
- What stock would you long and which would you hedge?
- What market sector are you interested in?
- What interests you about IPOs?
5. Brainteaser questions (11%) ↑
Finally, investment banking firms occasionally ask “brainteaser” questions, which test your math, creativity, and critical thinking skills.
Brainteaser questions typically require you to estimate numbers for unique or unusual situations. And when approaching this type of question, it’s more important that you use a logical approach than it is for you to get the “correct” answer.
To help you develop a repeatable method for answering these questions, we recommend learning the approach covered in this market sizing guide.Now here are a few examples of the kind of brainteaser questions you might encounter:
- How many tennis balls can you fit in a Tesla?
- Which number is closest to 27 squared: 600, 700, 800?
- T-Mobile is planning on placing orders for the new iPhone, how would you estimate the number of phones they should order?
- How many coins would fit in this room?
- How many cigarettes are sold in the US each year?
6. Other IB interview questions ↑
There are 3 main types of interview questions asked by investment banking firms, and they are as follows:
- Technical (i.e. accounting and valuation)
- Business sense
We’ve just covered business sense questions, but before your IB interviews, you’ll also want to prepare for the other two question types.
6.1 Behavioral questions
Behavioral questions are the most common type of interview questions asked at IB firms, so we’ve created guides on how to prepare for them, which are specifically designed for each of the 3 leading firms:
- Goldman Sachs behavioral questions
- JP Morgan behavioral questions
- Morgan Stanley behavioral questions
If you’re planning to interview with one of these firms, then simply use the corresponding guide to prepare. If you’re interviewing with a company that is not listed here, then you can use the Goldman Sachs guide above as a starting point, since the approach covered in that guide will still apply to other firms.
6.2 Technical questions
Technical questions are arguably the most difficult IB interview questions to prepare for, because there’s so much ground to cover.
The good news is that we’ve identified the 14 most common accounting and valuation questions that are asked in IB interviews. We’ve covered each question, and how to approach them, in a guide that can be found at the above link.
This should give you a nice head-start on technical questions, because it will allow you to focus your preparation on the most common questions, and to avoid wasting time on other questions that you’re not likely to encounter.
If your interview was today, would you get an offer?
Find out where you’re at and what you need to improve, by doing a mock interview with an ex-interviewer from Goldman Sachs, Morgan Stanley, JP Morgan, etc.
Mock interviews are also a great way to prepare yourself for unexpected situations, or follow-up questions, which are often overlooked by candidates.
We’ve launched a coaching platform where you can schedule time with ex-interviewers from the leading investment banks. Learn more and start scheduling sessions today.