Top 15 Banking and Finance Interview Questions

Some of the most common interview questions for an investment banking interview include (some are a bit tricky, but they DO come up very often, increasingly as a means of narrowing down candidate lists as the graduate job market in finance it becomes more difficult):

1. How many degrees (if any) are there in the angle between the hour and minute hands of a clock when it is a quarter past three? [Typically asked during investment banking interviews for entry level investment banking graduate jobs]
2. Find the smallest positive integer that leaves a remainder of 1 when divided by 2, a remainder of 2 when divided by 3, a remainder of 3 when divided by 4,… and a remainder of 9 when divided by 10 [Asked during interviews for quantitative finance jobs]
3. Two standard options have exactly the same characteristics, expect one to have a long expiration and the other to have a short expiration. Which has higher gamma? [Typically asked during interviews for bank derivatives trading jobs]
4. How is the delta of an option calculated? [Asked during investment banking interviews for derivatives trading jobs]
5. When can hedging an options position make you take on more risk? [Typically asked during interviews for trading jobs]
6. Is it better for you to use the implied standard deviation or the historical standard deviation to forecast volatility? Why? [Asked during interviews for quantitative finance jobs]
7. Describes “duration” and “convexity”. Describe its properties and uses. [Typically asked during investment banking interviews for graduate investment banking jobs]
8. Two players A and B are playing a game of marbles. Each player has one red and one blue marble. They present a marble to each other. If they both show red, A wins $3. If they both show blue, A wins $1. If the colors do not match, B wins $2. Is it better to be A or B, or does it matter? [Asked during interviews for quantitative finance or derivatives jobs]
9. How do you “value” yourself? Here “value” means in financial terms [Typically asked during interviews for MBA finance jobs or experienced banking hires]
10. What sets you apart from other candidates we might hire? [Typically asked during investment banking interviews for graduate investment banking vacancies]
11. If you could take a car trip across the country with three people, who would you choose? Why? [Typically asked during interviews for corporate finance / mergers & acquisitions banking jobs]
12. Talk about an action you like or hate and why [Asked by job interviewers for any accounting, finance or job!]
13. What is the difference between default risk and prepayment risk? [Typically asked during interviews for credit jobs / risk management jobs]
14. How would you move Mount Fuji? [Typically asked during investment banking interviews for consulting jobs or graduate accounting jobs]
15. Estimate annual car demand for car batteries [Typically asked during interviews for corporate finance jobs, mergers & acquisition banking jobs or consulting jobs]