Finance Technical Questions for Interview: 44 Samples and More

You're just starting the finance recruiting season. Whether you're an undergrad looking to ace your finance job interviews or an MBA student aiming to land that dream job, it's crucial to be well-prepared for the technical questions that may come your way.

In this blog post, we'll provide you with a comprehensive list of 44 finance technical interview questions and answers. We'll cover topics ranging from the four financial statements to valuation methodologies, and from working capital to capital budgeting.

10 Basic Finance Technical Interview Questions

Let's start with some fundamental questions that often pop up during finance interviews:

1. What are the four financial statements?
2. How are the three main financial statements connected?
3. Briefly walk me through the Income Statement.
4. What is EBITDA?
5. What are the ways you can value a company?

These questions serve as a foundation for further discussions and allow interviewers to assess your knowledge of financial statements and valuation techniques.

5 Advanced Finance Technical Interview Questions For Professionals / MBA Candidates

If you're an experienced professional or an MBA candidate, you might encounter more complex questions that delve deeper into specific finance concepts. Here are five such questions:

1. What are some possible reasons why a company would issue equity rather than debt to fund its operations?
2. What are the major factors that drive mergers and acquisitions?
3. How is it possible for a company to have a positive net income but go bankrupt?
4. How/Why do you lever or unlever beta?
5. What is the difference between cash-based accounting and accrual accounting?

These questions require a deeper understanding of finance principles and demonstrate your ability to analyze complex financial situations.

WSO's Free 101 Investment Banking Interview Guide

When it comes to investment banking interviews, you need to be well-prepared with the right resources. Wall Street Oasis (WSO) offers a free 101 Investment Banking Interview Guide that covers various aspects of investment banking interviews. It's a valuable resource to enhance your knowledge and improve your chances of success.

5 Investment Banking Interview Questions

Here are five sample investment banking interview questions to give you an idea of what to expect:

1. Which valuation methodologies result in the highest valuations?
2. What does an investment banking division do?
3. If enterprise value (EV) is $80mm, and equity value is $40mm, what is the net debt?
4. All else equal, should the WACC be higher for a company with a $100 million market cap or a $100 billion market cap?
5. Why do you believe you will be a competent investment banking analyst?

These questions cover valuation methodologies, the role of investment banking divisions, and the importance of market capitalization in determining the Weighted Average Cost of Capital (WACC).

5 Private Equity Interview Questions

Private equity interviews are known for their rigorous questioning. Here are five sample private equity interview questions:

1. How would you successfully close a deal if you and the seller disagree on the price of an asset due to different projections of its future operating performance?
2. What are some common methods PE firms use to increase portfolio company value?
3. What are some pros and cons of market value?
4. Tell me why each of the financial statements by themselves is inadequate for evaluating a company?
5. Why are you interested in X PE Firm?

These questions assess your ability to analyze deal structures, understand the role of private equity firms, and evaluate financial statements for decision-making.

5 Hedge Funds Interview Questions

Hedge funds have their own unique set of questions. Here are five sample hedge funds interview questions:

1. What's the difference between intrinsic and book value, and how can they deviate?
2. What are Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL)? How are they created in an M&A transaction?
3. Let's suppose implied volatility (IV) for a security is extremely high. Why could this be, and how would you profit from this?
4. What are typical default rates for high-yield bonds? What are typical recovery rates for these bonds? What impacts their recovery?
5. What's the single most impressive experience on your resume?

These questions challenge your knowledge of valuation concepts, tax implications, risk management, and the ability to highlight your relevant experiences.

5 Equity Research Interview Questions

If you're pursuing a career in equity research, here are five sample interview questions you may encounter:

1. How do you value a private company?
2. What is the market risk premium?
3. When should an investor buy preferred stock?
4. When should a company buy back stock?
5. What makes you think you can put up with the stress, pressure, and long hours of a career in finance?

These questions test your knowledge of valuation techniques, understanding of risk, and your suitability for the demands of an equity research role.

Additional Resources for Finance Interviews

Aside from the specific questions mentioned above, it's essential to equip yourself with additional resources for finance interviews. Here are some recommendations:

• WSO Interview Prep Guides & Additional Resources
• WSO Company Database
• Everything You Need To Master Financial Modeling
• Finance Technical Interview Prep - Students
• Top 35+ Finance Interview Questions And Answers

These resources offer a wealth of information, including interview preparation guides, company databases, financial modeling courses, and comprehensive lists of finance interview questions and answers.

Conclusion

Preparing for a finance technical interview requires a thorough understanding of financial concepts and the ability to apply them to real-world scenarios. By familiarizing yourself with a wide range of interview questions and utilizing the resources provided, you can enhance your chances of success and impress potential employers.

FAQs

Q: What should I expect in a finance interview?

A: Finance interviews often include technical questions that assess your knowledge of financial concepts and your ability to apply them.

Q: How can I prepare for finance interviews?

A: Preparation involves studying financial concepts, practicing interview questions, and utilizing resources such as interview guides and courses.

Q: What are some essential financial concepts for interviews?

A: Essential financial concepts for interviews include financial statements, valuation methodologies, working capital, capital budgeting, and risk management.

Q: How can I analyze a company's financial statements?

A: Analyzing a company's financial statements involves assessing its profitability, liquidity, solvency, and efficiency using financial ratios and other performance indicators.

Q: What is the difference between a forward contract and a futures contract?

A: A forward contract is a customized agreement between two parties to buy or sell an asset at a future date, while a futures contract is a standardized agreement traded on an exchange.