Investment Banking Analyst Interview Questions and Answers for Freshers

Financial statements are documents that provide information about a company's financial performance and position.

• Financial statements include the income statement, balance sheet, and cash flow statement.

• The income statement shows a company's revenues and expenses over a period of time, resulting in net income or loss.

• The balance sheet provides a snapshot of a company's assets, liabilities, and equity at a specific point in time.

• The cash flow statement shows how cash is genera...read more

Valuation methods include DCF, comparable company analysis, precedent transactions, and LBO analysis.

• Discounted Cash Flow (DCF) analysis involves forecasting future cash flows and discounting them back to present value.

• Comparable Company Analysis involves comparing the target company to similar publicly traded companies to determine valuation multiples.

• Precedent Transactions Analysis involves looking at past M&A transactions in the same industry to determine valuation multipl...read more

Tata Motors and Mahindra are two major players in the Indian automotive industry, with Tata Motors being larger in terms of revenue and market share.

• Tata Motors is a larger company in terms of revenue and market share compared to Mahindra.

• Tata Motors has a more diverse product portfolio including passenger vehicles, commercial vehicles, and electric vehicles, while Mahindra is known for its SUVs and tractors.

• Both companies have a global presence, with Tata Motors owning Jagua...read more

A derivative is a financial contract whose value is derived from the performance of an underlying asset, index, or interest rate.

• Types of derivatives include options, futures, forwards, and swaps.

• Options give the holder the right, but not the obligation, to buy or sell an asset at a specified price before or on a specified date.

• Futures are contracts to buy or sell an asset at a future date for a price agreed upon today.

• Forwards are similar to futures but are customized contra...read more

Capital gains tax is a tax on the profit made from selling an asset, such as stocks or real estate.

• Capital gains tax is calculated based on the difference between the purchase price and the selling price of an asset.

• Short-term capital gains are taxed at the individual's ordinary income tax rate, while long-term capital gains have their own tax rates.

• The tax rates for long-term capital gains are generally lower than ordinary income tax rates.

• Certain assets, such as a primary r...read more

Collateral refers to assets or property that a borrower pledges to a lender as security for a loan.

• Collateral is used to mitigate the risk for the lender in case the borrower defaults on the loan.

• It can be in the form of cash, securities, real estate, or other valuable assets.

• The lender has the right to seize and sell the collateral to recover the loan amount.

• Collateral is commonly used in various financial transactions, such as mortgages, car loans, and business loans.

• For ex...read more

Trade life cycle is the process of a trade from initiation to settlement.

• Trade initiation - Trade is proposed and agreed upon by parties involved.

• Trade execution - Trade is executed on the exchange or over-the-counter market.

• Trade confirmation - Parties confirm the details of the trade.

• Trade settlement - Payment and transfer of securities occur to finalize the trade.

• Trade reconciliation - Ensuring all details match between parties' records.