Goldman Sachs Asset Manager Interview Questions, Process, and Tips

Derivatives are financial contracts that derive their value from an underlying asset or security.

• Derivatives can be used for hedging or speculation.

• Common types of derivatives include futures, options, and swaps.

• Futures contracts obligate the buyer to purchase an asset at a predetermined price and time.

• Options contracts give the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price a...read more

WACC stands for Weighted Average Cost of Capital. It is the average cost of all the capital used by a company.

• WACC is used to determine the minimum return a company must earn on its investments to satisfy its investors.

• It takes into account the cost of debt and equity, as well as the proportion of each in the company's capital structure.

• The formula for WACC is: (Cost of Equity x % Equity) + (Cost of Debt x % Debt) + (C...read more

Company evaluation methods are techniques used to assess the financial health and performance of a company.

• Financial ratio analysis

• Discounted cash flow analysis

• Comparable company analysis

• Asset-based valuation

• Earnings multiples

• Scenario analysis

• Market capitalization

• Dividend discount model

I would rate myself among the top 10% of people on my campus.

• I have consistently maintained a high GPA throughout my academic career.

• I have actively participated in various extracurricular activities and have held leadership positions in some of them.

• I have also completed internships and gained practical experience in my field of study.

• I have received positive feedback from my professors and peers for my work and contr...read more

Finance offers a dynamic and challenging career with opportunities for growth and impact.

• I have a passion for numbers and analyzing financial data

• Finance provides a diverse range of career paths, from investment banking to asset management

• I enjoy the fast-paced and constantly evolving nature of the industry

• Finance plays a crucial role in driving economic growth and development

• I am excited about the potential to make a ...read more

I have traveled to over 20 countries and love experiencing new cultures.

• I have backpacked through Europe and Asia

• I have tried exotic foods like scorpion and snake

• I have learned basic phrases in multiple languages

• I enjoy meeting locals and learning about their way of life

Yes, change in working capital can be negative.

• A negative change in working capital means that current liabilities have increased more than current assets.

• This can happen when a company pays off short-term debt or reduces its inventory levels.

• Negative working capital can also indicate that a company is experiencing financial difficulties.

• However, it is important to analyze the reasons behind the negative change in work...read more

The resulting PE ratio will depend on the terms of the acquisition.

• The PE ratio of the combined company will depend on the price paid for the acquisition.

• If the company with PE 10 acquires the one with PE 5, the resulting PE ratio will likely be closer to 10.

• If the company with PE 5 acquires the one with PE 10, the resulting PE ratio will likely be closer to 5.

• Other factors such as revenue and earnings growth should al...read more

DCF can be affected by inaccurate projections, discount rate assumptions, and terminal value estimates.

• DCF relies heavily on projections, which can be difficult to accurately predict.

• Discount rate assumptions can also greatly impact the valuation.

• Terminal value estimates can be particularly challenging to determine.

• DCF does not account for external factors such as market volatility or changes in industry trends.

• DCF ass...read more

The reserve replacement ratio is a key ratio to evaluate the ability of upstream companies to replace the reserves they produce.

• The reserve replacement ratio compares the amount of reserves added to the amount of reserves produced in a given period.

• A ratio above 100% indicates that the company is replacing more reserves than it is producing.

• A ratio below 100% indicates that the company is producing more reserves than i...read more

I would choose ROCE over ROE.

• ROCE takes into account both equity and debt financing, providing a more accurate measure of a company's profitability.

• ROE only considers equity financing, which can be misleading if a company has a high debt-to-equity ratio.

• ROCE is a better indicator of a company's ability to generate returns on all invested capital.

• ROE is still useful in analyzing a company's profitability from the perspe...read more

ROCE is chosen to evaluate the efficiency of a company's capital investments.

• ROCE measures the return a company generates on its invested capital.

• It helps in comparing the performance of companies in the same industry.

• ROCE is useful in identifying companies that are reinvesting capital efficiently.

• It is a better metric than just looking at profits as it considers the capital invested.

• ROCE can be used to identify potent...read more

Compare ROE of 2 IT companies to determine undervalued and overvalued.

• Calculate the average ROE for the industry to use as a benchmark

• Compare the ROE of the two companies to the industry average

• Consider other factors such as growth potential, debt levels, and market share

• Use valuation methods such as P/E ratio and discounted cash flow analysis

• Undervalued company will have lower ROE than industry average and lower valua...read more

GSAM is a leading asset management firm with a strong track record of delivering results for clients.

• GSAM has a diverse range of investment strategies and a global presence

• The firm has a strong focus on risk management and a commitment to sustainable investing

• GSAM has a history of delivering strong investment performance across asset classes

• The firm has a culture of innovation and a commitment to excellence in client s

Companies go for share buyback to increase shareholder value and improve financial ratios.

• To return excess cash to shareholders

• To increase earnings per share by reducing the number of outstanding shares

• To improve financial ratios such as return on equity and earnings per share

• To signal to the market that the company believes its shares are undervalued

• To prevent hostile takeovers by reducing the number of outstanding sh

True. Fiscal deficit leads to higher interest rates, reducing private investment.

• Fiscal deficit leads to higher government borrowing, increasing demand for credit

• Higher demand for credit leads to higher interest rates

• Higher interest rates make borrowing expensive for private investors

• Expensive borrowing reduces private investment

• Examples: India's fiscal deficit led to high interest rates, reducing private investment in

Increase in fiscal deficit leads to depreciation of exchange rate.

• Fiscal deficit means government spending exceeds revenue, leading to increased borrowing.

• This increases the supply of domestic currency, leading to depreciation.

• Investors may demand higher interest rates to compensate for increased risk, further depreciating the exchange rate.

• Examples include India's rupee depreciation due to high fiscal deficit in 2013