Investment Banking Intern

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Investment Banking Intern Interview Questions and Answers

Updated 12 Sep 2023

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Q1. How do you determine if a company can take on additional debt?

Ans.

To determine if a company can take on additional debt, several factors need to be considered.

  • Analyze the company's current debt-to-equity ratio

  • Evaluate the company's cash flow and ability to make interest payments

  • Assess the company's credit rating and borrowing capacity

  • Consider the company's industry and economic conditions

  • Review the company's financial statements and projections

  • Compare the company's debt levels to its peers

  • Factor in any upcoming capital expenditures or acqui...read more

Q2. What is beta and how is it used?

Ans.

Beta is a measure of a stock's volatility in relation to the overall market. It is used to assess risk and determine potential returns.

  • Beta measures the sensitivity of a stock's price movement to changes in the market.

  • A beta of 1 indicates that the stock tends to move in line with the market.

  • A beta greater than 1 suggests the stock is more volatile than the market.

  • A beta less than 1 indicates the stock is less volatile than the market.

  • Investors use beta to assess the risk ass...read more

Investment Banking Intern Interview Questions and Answers for Freshers

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Q3. What are some ways to value a company?

Ans.

There are several ways to value a company, including discounted cash flow, comparable company analysis, and precedent transactions.

  • Discounted cash flow (DCF) analysis

  • Comparable company analysis (CCA)

  • Precedent transactions analysis

  • Asset-based valuation

  • Earnings multiples

  • Industry-specific valuation methods

Q4. What is EBITDA and how is it used?

Ans.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's financial performance.

  • EBITDA is calculated by adding a company's earnings before interest, taxes, depreciation, and amortization.

  • It is used to evaluate a company's financial health and operating performance.

  • EBITDA is often used by investors and analysts to compare companies in the same industry.

  • It is also used in mergers and acquisitions to determine a company's v...read more

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Q5. How does balance sheet statement work

Ans.

Balance sheet statement shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

  • Balance sheet follows the formula: Assets = Liabilities + Shareholders' Equity

  • Assets are what the company owns, liabilities are what it owes, and shareholders' equity is the difference between the two.

  • It provides a snapshot of the company's financial position and helps investors and analysts assess its financial health.

  • Examples of assets include cash, inventory,...read more

Q6. Discuss financial model

Ans.

A financial model is a tool used to forecast a company's future financial performance based on historical data and assumptions.

  • Financial models are used to analyze a company's financial statements and make projections for future performance.

  • They typically include income statements, balance sheets, and cash flow statements.

  • Assumptions about factors such as revenue growth, expenses, and capital expenditures are key inputs into the model.

  • Sensitivity analysis is often performed t...read more

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