Top 10 Investment Banking Interview Questions: Master These with Sample Answers and Insider Tips

You’ve landed the investment banking interview you’ve been dreaming about. Your resume caught their attention, your networking paid off, and now you’re sitting across from a Managing Director who holds your future in their hands.

The reality? Investment banking interviews are among the most rigorous in finance, designed to test not just your technical knowledge but your ability to think under pressure, communicate complex concepts clearly, and demonstrate the resilience needed for this demanding career.

But here’s what most candidates don’t realize: While there are hundreds of possible questions, certain questions appear in nearly every investment banking interview. Master these core questions, and you’ll walk into any interview with confidence.

The challenge most candidates face is trying to memorize endless technical details without understanding how to structure compelling answers. This often leads to rambling responses that fail to showcase their problem-solving abilities or relevant experience.

This article breaks down the 10 most critical investment banking interview questions you’ll encounter, complete with sample answers using our proven SOAR method for behavioral questions and insider tips gathered from current investment bankers at top-tier firms.

By the end of this guide, you’ll have a strategic framework for answering any investment banking interview question confidently, plus specific talking points that will set you apart from other candidates vying for the same position.

Why These 10 Questions Matter Most

Investment banking interviews test four core competencies that predict success in the role: technical mastery, analytical thinking, communication skills, and cultural fit. These 10 questions collectively assess all four areas, making them virtually guaranteed to appear in your interviews.

The interview landscape has evolved significantly. According to recent data from top investment banks, the average candidate now faces 4-6 interview rounds, with technical questions becoming more conceptual rather than purely computational. Memorizing formulas isn’t enough anymore. You need to demonstrate understanding and practical application.

Modern investment banking interviews focus heavily on:

• Your ability to explain complex financial concepts to non-experts (critical for client interactions)
• How you approach problem-solving when facing incomplete information
• Your resilience and motivation for choosing this demanding career path
• Evidence of leadership and teamwork capabilities in high-pressure situations

Interview Guys Tip: The most successful candidates prepare examples that demonstrate both technical competence and soft skills. Every answer should reinforce why you’re not just qualified but uniquely suited for investment banking.

Understanding Investment Banking Interview Categories

Investment banking interview questions fall into three main categories, and understanding these categories helps you tailor your preparation strategy for maximum impact.

Technical Questions (40% of interview time)

These assess your fundamental knowledge of finance, accounting, and valuation. Questions range from basic concepts like the three financial statements to complex scenario analysis involving merger models or LBO structures.

Behavioral Questions (35% of interview time)

These evaluate your past experiences to predict future performance. Interviewers want specific examples of leadership, teamwork, problem-solving, and resilience. Use the SOAR method for all behavioral responses to create compelling narratives that highlight your obstacle-overcoming abilities.

Fit and Motivational Questions (25% of interview time)

These determine whether you understand the role, have genuine interest in the industry, and would thrive in the firm’s culture. Questions focus on your career goals, industry knowledge, and reasons for choosing investment banking.

The strategic approach: Prepare 5-7 detailed examples from your experience that can be adapted across multiple behavioral questions. Each example should highlight different competencies while demonstrating your fit for investment banking specifically. Our behavioral interview matrix can help you organize these examples systematically.

The SOAR Method for Behavioral Questions

While technical knowledge gets you in the door, your ability to tell compelling stories about overcoming challenges often determines whether you get the offer. This is where the SOAR method becomes your secret weapon.

SOAR stands for Situation, Obstacle, Action, and Result – a framework specifically designed to highlight your problem-solving abilities and resilience, two qualities investment banking employers value most.

Here’s how to structure SOAR responses for maximum impact:

• Situation (20% of response time): Set the scene with relevant context. Focus on details that help the interviewer understand the environment and stakeholders involved.
• Obstacle (20% of response time): This is what sets SOAR apart from other methods. Clearly articulate the specific challenges, complications, or barriers that made the situation difficult. This component demonstrates that your success required skill and determination.
• Action (50% of response time): Detail the specific steps you took to overcome the obstacles. Use active language and take ownership of your contributions, even in team situations.
• Result (10% of response time): Quantify your success and emphasize what you learned. Include both immediate outcomes and longer-term impacts when relevant.

Interview Guys Tip: The best SOAR responses balance individual contributions with team collaboration. Investment banking is intensely collaborative, so demonstrate that you can lead and follow effectively in different situations.

For more guidance on structuring your behavioral responses, check out our comprehensive guide to answering behavioral interview questions.

Top 10 Investment Banking Interview Questions with Sample Answers

1. “Walk me through the three financial statements and how they connect.”

Why they ask this: This question appears in virtually every investment banking interview because it tests fundamental knowledge that’s essential for financial modeling, valuation, and client advisory work.

How to approach it: Start with a clear definition of each statement’s purpose, then explain the connections between them. Focus on the logical flow rather than memorizing specific line items.

Sample Answer:

“Sure. Think of the three statements as telling different parts of the same story about a company’s finances.

The income statement shows you how profitable the company was over a period like a quarter or year. It starts with revenue, subtracts all the costs and expenses, and gets you to net income. Basically, did they make money or lose money?

The balance sheet is more like a snapshot on a specific date. It shows everything the company owns, like cash and equipment, and everything they owe, like debt. The difference between what they own and owe is shareholders’ equity.

The cash flow statement is really important because it shows the actual cash moving in and out of the business. You can be profitable on paper but still run out of cash, so this statement tracks operating cash flow, investing activities, and financing activities.

Here’s how they connect: The net income from the income statement flows into retained earnings on the balance sheet. It also becomes the starting point for the cash flow statement, where we add back things like depreciation and adjust for changes in working capital to see how much cash the operations actually generated.”

Pro tip: Practice drawing this connection visually. Many interviewers will ask you to sketch the relationships on a whiteboard.

2. “Why do you want to work in investment banking?”

Why they ask this: This question tests your understanding of the role, genuine interest in the industry, and ability to articulate your career motivation clearly.

How to approach it: Avoid generic answers about prestige or money. Focus on specific aspects of the work that align with your interests and career goals.

Sample Answer:

“Honestly, it’s the combination of problem-solving and real business impact that draws me to investment banking.

I love breaking down complex financial situations and figuring out creative solutions. During my internship at TechStartup, I was analyzing a potential acquisition and found some accounting irregularities that could have cost us $2M if we hadn’t caught them. That kind of detective work really energizes me.

But beyond just the analysis, I want to be involved in decisions that actually matter to companies and their futures. Investment bankers advise CEOs during their biggest moments – raising capital to expand internationally, merging with competitors, going public. These aren’t just spreadsheet exercises. They’re decisions that affect thousands of employees and reshape entire industries.

The learning curve is also incredible. Where else could I work on a biotech IPO one month and a retail merger the next? I’d be exposed to different business models, industries, and deal structures that would take years to see anywhere else.

I know the hours are brutal and the work is demanding, but I genuinely think this is the best place to build the foundation I need for a long-term career in finance. I want to understand how deals really work before I move into more senior strategic roles later on.”

3. “How do you value a company?”

Why they ask this: Valuation is the core skill in investment banking. This question tests your understanding of different methodologies and when to use each one.

How to approach it: Cover the three main approaches and explain the pros and cons of each. Show you understand practical applications.

Sample Answer:

“There are three main ways to value a company, and in practice, you’d want to use all three to get a good range.

First is the DCF, or discounted cash flow analysis. This is where you project out the company’s future cash flows for maybe 5-10 years and then discount them back to today’s dollars using a discount rate. It’s great because it’s based on the actual fundamentals of the business, but it can be tricky because you’re making a lot of assumptions about the future.

Then you have comparable company analysis, or ‘comps.’ You look at similar public companies and see what multiples they’re trading at – like price-to-earnings or EV-to-EBITDA. Then you apply those multiples to your company. It’s useful because it shows you what the market is actually paying, but finding truly comparable companies can be challenging.

The third method is precedent transactions, where you look at recent deals involving similar companies and see what buyers actually paid. This gives you a sense of what someone might pay in an acquisition, including any control premium.

In reality, I’d probably put the most weight on the DCF for a stable, mature company because you can really dig into the business fundamentals. But for something like a high-growth tech company where cash flows are unpredictable, the comps might be more reliable. The precedent transactions help you understand if there’s an active M&A market for similar companies.”

4. “Walk me through a DCF analysis.”

Why they ask this: DCF analysis is fundamental to investment banking work. This question tests your understanding of the process and underlying assumptions.

Sample Answer:

“Sure, let me walk through the basic steps.

A DCF values a company based on all the cash it’s going to generate in the future, discounted back to what that’s worth today.

So first, you need to project out the company’s free cash flows, usually for about 5-10 years. I’d start with revenue projections based on the company’s historical growth, what’s happening in their industry, and what management is saying about their outlook. Then I’d apply margin assumptions to get to EBITDA, subtract taxes, capital expenditures, and changes in working capital to get to free cash flow.

The tricky part is what happens after year 5 or 10. You can’t project forever, so you calculate something called terminal value. You can either assume the company grows at a modest rate forever – like 2-3% – or apply a multiple to the final year’s EBITDA.

Then you need a discount rate, which is usually the company’s weighted average cost of capital, or WACC. This reflects both the cost of equity and debt, weighted by how much of each the company uses.

Finally, you discount all those future cash flows and the terminal value back to today using that discount rate. Add it all up and you get enterprise value. Subtract net debt and you get equity value.

The big thing to remember is that terminal value usually makes up like 60-80% of the total value, so your assumptions there really matter. That’s why sensitivity analysis is so important.”

For more detailed guidance on technical preparations like DCF modeling, Wall Street Prep’s comprehensive investment banking interview guide provides excellent practice problems and step-by-step explanations.

5. “Tell me about a time you worked in a team to solve a difficult problem.” (SOAR Method)

Why they ask this: Investment banking requires intense collaboration under pressure. This question assesses your teamwork abilities and problem-solving approach.

SOAR Sample Answer:

Situation: “During my finance internship at TechCorp, our team was tasked with analyzing a potential acquisition target. We had just three weeks to complete a comprehensive financial model and present recommendations to the executive committee.”

Obstacle: “Midway through the project, we discovered that the target company had recently changed their accounting methods, making our historical analysis unreliable. Additionally, our team’s data analyst left for a family emergency, leaving us understaffed with the same deadline.”

Action: “I took initiative to reorganize our approach. First, I reached out to the target company’s CFO to understand the accounting changes and obtained restated financials. Then, I taught myself advanced Excel modeling techniques to cover the data analysis gap and created a streamlined workflow so each team member could focus on their strengths. I also established daily progress check-ins to ensure we stayed on track despite the setbacks.”

Result: “We delivered the analysis on schedule, and our recommendation to proceed with the acquisition was adopted. The deal closed six months later and generated $50M in synergies in the first year. Most importantly, the experience taught me how to adapt quickly when initial plans don’t work and how to leverage team members’ unique strengths under pressure.”

6. “What’s the difference between equity value and enterprise value?”

Why they ask this: This concept is fundamental to valuation and appears in every financial model. Understanding the distinction is essential for investment banking work.

Sample Answer:

“This is a fundamental difference that shows up everywhere in investment banking.

Equity value is basically what the stock is worth – it’s the value that belongs to shareholders. So for a public company, it’s just shares outstanding times the stock price. If you own equity, you get whatever’s left after everyone else gets paid.

Enterprise value is different. It represents the value of the entire business, regardless of how it’s financed. The formula is equity value plus total debt minus cash.

Here’s why this matters: Let’s say you wanted to buy an entire company. You’d need to pay the shareholders for their equity, but you’d also be taking on all the company’s debt. However, you’d get to keep whatever cash is sitting on the balance sheet. So enterprise value tells you what you’d really pay to own the whole business.

This is super important when you’re comparing companies. Two companies might have totally different stock prices because one has a lot of debt and the other doesn’t. But if they’re the same underlying business, their enterprise values should be similar.

That’s why we use enterprise value multiples like EV-to-EBITDA when we’re doing comps. It strips out the effect of different capital structures so you’re really comparing apples to apples.”

7. “Describe a time when you had to work under intense pressure and tight deadlines.” (SOAR Method)

SOAR Sample Answer:

Situation: “In my role as team leader for our university’s business case competition, we qualified for the national finals and had 48 hours to analyze a real company’s strategic challenges and present solutions to a panel of executives.”

Obstacle: “The case involved a complex international merger scenario across four different industries I wasn’t familiar with. Additionally, two of our five team members got sick the night before our analysis was due, leaving us with 60% of our planned workforce to complete the same amount of work.”

Action: “I immediately restructured our approach by prioritizing the highest-impact analysis areas and dividing tasks based on each remaining member’s strengths. I took on the unfamiliar industry research myself, spending the entire night learning regulatory frameworks and competitive dynamics. I also created a structured timeline with hourly milestones to ensure we maintained momentum despite the time pressure.”

Result: “We finished our analysis and presentation with an hour to spare and placed second out of 50 teams nationally. The judges specifically praised our depth of industry insight and structured problem-solving approach. This experience reinforced my ability to maintain analytical rigor even when resources and time are constrained – a crucial skill for investment banking.”

8. “How would a $10 increase in depreciation affect the three financial statements?”

Why they ask this: This tests your understanding of how non-cash expenses flow through financial statements – a concept essential for financial modeling.

Sample Answer:

“Okay, let me work through this step by step.

On the income statement, depreciation expense goes up by $10, so EBIT drops by $10. Assuming we’re at a 40% tax rate, our taxes go down by $4, which means net income only falls by $6.

Now for the cash flow statement. We start with net income, which is down $6. But then we add back depreciation since it’s a non-cash expense, and that went up by $10. So operating cash flow actually increases by $4.

On the balance sheet, the accumulated depreciation increases by $10, so PP&E net goes down by $10. But cash goes up by $4 because of that improved operating cash flow. So total assets drop by $6. On the other side, retained earnings decrease by $6 because of the lower net income.

The key insight here is that even though net income went down, we actually generated more cash. That’s because depreciation is just an accounting expense – no cash actually left the building. But we still get the tax benefit from that expense, which is why cash flow improved.

This is exactly why cash flow analysis is so important in addition to just looking at accounting profits.”

Interview Guys Tip: When working through financial statement problems, always check that your balance sheet balances. This simple verification can catch calculation errors and shows attention to detail that interviewers appreciate.

9. “Why should we hire you instead of other candidates?”

Why they ask this: This question tests your self-awareness, confidence, and ability to articulate your unique value proposition.

Sample Answer:

“You should hire me because I bring a unique combination of technical rigor, practical problem-solving experience, and genuine passion for investment banking.

Technical foundation: My finance and accounting background, combined with my CFA Level II candidacy, gives me the analytical framework needed to excel in financial modeling and valuation work from day one.

Practical experience: Through my internship at DataCorp, I’ve already worked on deal analysis and client presentations, so I understand the pace and precision required in investment banking. I’ve proven I can maintain accuracy under pressure while contributing meaningfully to team deliverables.

Unique perspective: My previous experience in the technology sector gives me industry expertise that would be valuable for your TMT team. I understand the operational challenges and strategic considerations that drive deal activity in this space.

Cultural fit: I thrive in collaborative, high-performance environments where attention to detail matters. I’m energized by complex problems and direct client impact, and I’m committed to building a career in investment banking rather than using it as a stepping stone.

Most importantly, I’m coachable and committed to continuous improvement – qualities that will help me grow into a valuable long-term contributor to your team.”

10. “Tell me about a recent deal you found interesting.”

Why they ask this: This question tests your industry knowledge, analytical thinking, and genuine interest in investment banking work.

Sample Answer:

“I found Microsoft’s acquisition of Activision Blizzard for $68.7 billion particularly compelling because it highlights several key trends in technology and media convergence.

Strategic rationale: Microsoft is positioning itself for the metaverse and cloud gaming evolution by acquiring premium content and a massive user base. Activision brings franchises like Call of Duty and World of Warcraft, plus expertise in live service games and mobile gaming through King Digital Entertainment.

Valuation perspective: The $95 per share price represented roughly 13x Activision’s 2021 revenue, which seemed reasonable given the company’s recurring revenue model and Microsoft’s ability to leverage these assets across its gaming ecosystem, including Xbox Game Pass and Azure cloud services.

Deal complexity: The regulatory approval process was fascinating, involving multiple jurisdictions and concerns about gaming industry consolidation. The extended timeline created uncertainty that kept Activision’s stock trading below the offer price for months.

Strategic implications: This deal signals that major tech companies are viewing gaming as a critical platform for future digital interaction, not just entertainment. It also demonstrates how traditional software companies are acquiring content to create more integrated ecosystems.

I think we’ll see more of these content-platform combinations as companies position for whatever comes after mobile computing.”

For more examples of how to analyze recent deals and market trends, Mergers & Inquisitions’ detailed interview guide provides excellent frameworks for discussing transactions intelligently.

Top 5 Insider Interview Tips for Investment Banking Success

Based on insights from current investment bankers at top-tier firms and analysis of successful candidate patterns, these five insider tips can significantly improve your interview performance.

1. Master the “Why This Bank” Conversation Beyond Generic Research

Most candidates make the mistake of reciting generic facts from the bank’s website. Successful candidates demonstrate genuine connection to the firm’s culture and deals.

The insider approach: Research recent transactions the bank has led in your target sector. Identify what made these deals unique or challenging, and be prepared to discuss why the bank’s approach impressed you. For example, “I was intrigued by Goldman’s role as sole advisor on the [specific deal] because of how they structured the financing to address regulatory concerns while maximizing shareholder value.”

Advanced strategy: Connect your background to specific strengths of the bank. If you have technology experience and you’re interviewing at a bank known for tech deals, explicitly connect these dots rather than leaving it to the interviewer to figure out.

2. Use the “Layered Response” Technique for Technical Questions

The challenge: Technical questions often have multiple levels of complexity, and candidates either provide overly simple answers or get lost in excessive detail.

The insider solution: Structure technical answers in layers. Start with the basic concept, then add complexity based on the interviewer’s response. For example, when asked about WACC calculation, start with the basic formula, then mention practical considerations like using market vs. book values, and finally discuss how WACC changes in different scenarios.

Interview Guys Tip: Pay attention to the interviewer’s body language and engagement level. If they’re nodding and taking notes, continue with more detail. If they look satisfied or start moving to the next question, you’ve provided the right level of depth.

3. Prepare for the “Stress Test” Questions That Separate Top Candidates

What insiders know: Beyond standard questions, top-tier banks ask curveball questions to see how you think under pressure. These might include market estimation problems, ethical scenarios, or requests to explain complex concepts to a hypothetical non-finance audience.

Preparation strategy: Practice explaining financial concepts to friends or family members who don’t have finance backgrounds. If you can make someone understand DCF analysis in simple terms, you can handle any communication challenge in an interview.

Common stress test scenarios:

• “Walk me through how you’d value a private company with no comparable public companies”
• “How would you advise a client who’s considering a deal you personally think is a bad idea?”
• “Estimate the number of investment bankers working in New York City and explain your reasoning”

Financial Edge’s comprehensive question bank includes many of these challenging scenarios with detailed explanations.

4. Leverage the “Reverse Due Diligence” Approach

The insight: While you’re being interviewed, you should also be evaluating whether this firm and team are right for you. This mindset shift improves your performance and demonstrates genuine interest.

Implementation: Prepare thoughtful questions that show you’ve researched the firm’s culture, recent performance, and strategic direction. Our guide to questions to ask in your interview provides excellent examples, but here are some investment banking-specific ones:

• “How has the team’s deal flow evolved in the past 18 months, and what trends are you seeing in client needs?”
• “What opportunities do analysts typically have to work directly with clients during their first year?”
• “How does the firm’s approach to ESG or fintech differentiate it from competitors?”

The psychology: When you’re genuinely curious about the role and firm, your enthusiasm comes across naturally, and you’re more likely to build rapport with interviewers.

5. Perfect Your “Recovery” Strategy for Difficult Moments

Reality check: Every candidate will face moments of uncertainty during investment banking interviews. How you handle these moments often matters more than getting every answer perfect.

The professional approach:

• If you don’t know something: “I’m not familiar with that specific concept, but let me think through how I would approach it…” Then work through your reasoning process aloud.
• If you make a mistake: Acknowledge it quickly and correct course. “Actually, let me reconsider that calculation…” shows intellectual honesty.
• If you’re asked something completely outside your knowledge: “That’s outside my current experience, but I’m curious to learn more about how you typically handle that situation.”

Interview Guys Tip: Interviewers often care more about your thought process and ability to work through problems than whether you know every technical detail. Demonstrating intellectual curiosity and problem-solving ability can recover from knowledge gaps.

For a complete framework on interview preparation and recovery strategies, Leland’s investment banking interview process guide offers step-by-step guidance from networking through final rounds.

Essential Preparation Resources

Beyond mastering these specific questions, successful investment banking interview preparation requires understanding the broader context of the industry and interview process. Here are some key preparation strategies:

Technical Knowledge Foundation

Start with accounting fundamentals and work your way up to complex financial modeling. Focus on understanding the “why” behind formulas rather than just memorizing calculations. Practice building financial models from scratch, not just using templates.

Industry Awareness

Stay current with market trends, recent deals, and regulatory changes affecting investment banking. Subscribe to industry publications and set up Google alerts for major transactions in your target sectors.

Practice and Feedback

Conduct mock interviews with peers, career services, or mentors who understand investment banking. Record yourself answering questions to identify areas for improvement in content and delivery.

Firm-Specific Research

For each firm you’re interviewing with, research their recent deal activity, culture, and strategic priorities. Understand how they position themselves relative to competitors and what makes their approach unique.

Our interview answer templates can help you structure responses across different question types while maintaining authenticity and relevance to investment banking specifically.

Conclusion

Mastering these 10 investment banking interview questions puts you ahead of most candidates who rely on generic preparation. The combination of technical competence and compelling storytelling through the SOAR method demonstrates both your analytical capabilities and the soft skills crucial for client-facing roles.

Remember: investment banking interviews are as much about demonstrating your thought process as showing your knowledge. Interviewers want to see how you approach problems, communicate under pressure, and maintain accuracy when stakes are high.

Your next steps: Practice these answers aloud, develop your SOAR stories using specific examples from your experience, and research recent deals relevant to your target firms. The candidates who get offers are those who can balance technical precision with authentic passion for the industry.

Most importantly, go into every interview genuinely curious about the role and firm. When your enthusiasm is authentic, your confidence follows naturally, and that combination is what transforms good candidates into compelling hires.

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