The short answer: investment banking interviews mix fit questions (why banking, why this bank, walk me through your resume, teamwork under pressure) with technical questions on accounting (how the three statements connect), valuation (DCF, trading comparables, precedent transactions, enterprise value), and M&A and LBO basics, plus a deal or market you follow. Technical answers should be short, structured and correct; fit answers should show motivation, resilience and attention to detail. Below are the common questions with short answers.
Sample answers are illustrations, not quotes from real candidates.
What the job involves
The U.S. Bureau of Labor Statistics explains that “investment bankers connect businesses that need money to finance their operations or expansion plans with investors who are interested in providing that funding,” including work on initial public offerings and mergers and acquisitions. In the U.S., bankers who advise on offerings and M&A need FINRA’s Investment Banking Representative registration: candidates “must pass the Securities Industry Essentials (SIE) exam and the Series 79 exam,” usually after joining a firm that sponsors them.
Fit questions
“Walk me through your resume.”
Two minutes, in order, with a thread: what you did, what you learned, and why each step led you to banking. End with why you’re here today. See tell me about yourself.
“Why investment banking?”
Sample answer: “I like working on transactions that change a company’s direction, and I learn best with steep responsibility. In my internship at a corporate development team, I built parts of the model for a $40 million acquisition and saw how valuation, negotiation and timing came together. I want to do that across many deals, and banking gives the fastest exposure to them.”
“Why our bank?”
Name specific deals, the groups you’re interested in and conversations you’ve had with people at the bank. Generic praise is a red flag.
“Tell me about a time you worked under intense pressure” or “made a mistake.”
Use the STAR method, show how you prioritized and kept quality high, and for a mistake, how you caught it and what you changed.
Accounting
“Walk me through the three financial statements.”
The income statement shows revenue, expenses and net income over a period. The balance sheet shows assets, liabilities and equity at a point in time. The cash flow statement starts with net income, adjusts for non-cash items and working capital to get cash from operations, then adds investing and financing cash flows. Net income flows into retained earnings, and ending cash ties to the balance sheet.
“If depreciation goes up by $10, what happens to the three statements?” (assume a 25% tax rate)
- Income statement: operating income falls by $10; net income falls by $7.50 (the tax saving is $2.50).
- Cash flow statement: net income is down $7.50, but you add back the $10 of depreciation, so cash from operations rises by $2.50.
- Balance sheet: cash is up $2.50; property, plant and equipment is down $10; total assets fall $7.50. On the other side, retained earnings fall $7.50, so it balances.
“What’s working capital?”
Current assets minus current liabilities; for valuation, bankers often use operating working capital (excluding cash and debt). An increase reduces cash flow.
Valuation
“How do you value a company?”
Three main methods: comparable companies (trading multiples of similar public companies), precedent transactions (multiples paid in similar acquisitions, which include a control premium) and a DCF (the present value of projected free cash flows). Bankers often show all three in a “football field” chart.
“Walk me through a DCF.”
Project unlevered free cash flow for five to ten years (EBIT × (1 − tax rate) + depreciation and amortization − capital expenditures − increase in working capital). Calculate a terminal value with a perpetuity growth rate or an exit multiple. Discount everything at the weighted average cost of capital (WACC) to get enterprise value, then subtract net debt to get equity value and divide by diluted shares for a price per share.
“What’s the difference between enterprise value and equity value?”
Equity value is the value of the company to shareholders (share price × diluted shares). Enterprise value is the value of the core business to all capital providers: equity value plus debt, preferred stock and non-controlling interests, minus cash.
“How do you calculate WACC?”
The weighted average of the cost of equity (often from CAPM: risk-free rate + beta × equity risk premium) and the after-tax cost of debt, weighted by the target capital structure.
“Which method gives the highest valuation?”
Usually precedent transactions, because they include a control premium, though it depends on the market and the assumptions.
M&A and LBOs
“Walk me through an accretion/dilution analysis.”
Combine the buyer’s and target’s net income, adjust for synergies, new interest expense on debt used, lost interest on cash used and new amortization, then divide by the new share count (if stock is issued). If the combined earnings per share is higher than the buyer’s standalone EPS, the deal is accretive.
“Walk me through a basic LBO.”
A sponsor buys a company using a lot of debt, uses its cash flows to pay down debt over several years, and sells it. Returns come from earnings growth, debt paydown and any increase in the exit multiple. See our private equity interview questions.
Markets and deals
- “Tell me about a deal you’ve followed.” Explain the rationale, the price and multiple, how it was financed, and whether you think it was a good deal and why.
- “Where do you think interest rates are heading, and why does it matter for M&A?” Higher rates make debt more expensive, which lowers what leveraged buyers can pay.
See also our hedge fund and commercial banking interview guides.
Frequently asked questions
What questions are asked in an investment banking interview?
What happens to the three statements if depreciation increases by $10?
What are the main valuation methods?
What licenses do investment bankers need?
How do I answer "Why investment banking?"
Sources
- U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, Securities, Commodities, and Financial Services Sales Agents. Read on 1 October 2026.
- FINRA, Series 79 – Investment Banking Representative Exam. Read on 1 October 2026.
