To complete the deal, Company A must issue 6 ($150 / $25.00) new shares which means that the combined share count after the deal is 16 (10 + 6). Sample Answer:The three most common ways of valuing a company are: Comparable companies or multiples analysis: This is the most common way to value a company. If you are asked a question, you can answer it in a way that almost guarantees the next question, which you will be prepared for. This round mostly assesses your level of stability and confidence. These questions have been taken from "What Are Some Good Questions To Ask The Interviewer At The End Of The Interview? Currently, the bulge bracket consists of the following banks: Boutique IBs can range in size from reasonably large, global firms to tiny one-person firms. Talk about past projects that show you being successful in both types of roles. The formula for calculating TV without accounting for growth is:Expected cash flow / (1 + Required rate of return)^Time. I am looking here for you to take five seconds, double-check your math, and answer with a confident, "Yes, I am sure.". Examples include things like being extremely driven, never giving up, wanting to learn, looking for challenges, etc. Restructuring Improving the structures of a company to make it more profitable or efficient. Updated: March 24, 2022 While overall M&A activity has slowed thus far in 2022 - including across tech given the valuation readjustment we've seen - Bank of America has started off the year strong and is fourth in the overall league tables based on total transaction value. Sample Answer 2: The Nigerian election takes place in February. This is due to the historical nature of accounting. Here is a list of the four valuation methodologies organized from highest valuation to lowest valuation: Sample Answer:Each method of valuation will generate a different value because it is based on different assumptions, different multiples, or different comparable companies and/or transactions. They earn revenue through APR, interchange, late fees, and subscription fees and their primary costs are operations and marketing-related expenses. with further examples should you want more advice. Giving them a rundown of your thoughts and occasionally asking if you're headed in the right direction demonstrates your capabilities to reflect, and approach a problem with composure. They look for a candidate who would fit right into the company, who are able to stand out and showcase their strengths in a way their competition can't match. If a firm has a leverage ratio of 5x and it has an interest coverage ratio of 5x, what is the firm's interest rate? It is calculated by multiplying the number of shares outstanding by the current stock price. Irrespective of the bank, the position, or your region, you can be sure these 2 questions will be asked as they're a standard in the industry. also be asked to discuss your CV. You've reached the behavioral/ fit interview. The Why Investment Banking? interview question Youre almost guaranteed to be asked this question in an investment banking interview . This can, however, be countered by Apple building an extensive or expanding on its current online infrastructure to ensure an optimal and sustainable online shopping experience for customers. If we assume it's a single asset company, we can estimate the capital efficiency based on historical data and apply it against the company's CAPEX forecast to reach a "new additions" production estimate. Company A has an Enterprise Value (EV) of $1B, an EBITDA of $200M and is leveraged 2.5x wants to buy company B which has EBITDA of $100M; A will finance the acquisition with $250M debt; how does this transaction affect leverage? This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors. It is important to show that you are comfortable taking up a leadership role or working under the leadership of someone else. Easiest Most Difficult Interviews at Bank of America Experience Positive 77% Neutral 23% Getting an Interview Campus Recruiting 58% Applied online 25% Other 8% Difficulty I am looking for 3 things, A connection with myself and the firm's culture, Will you be able to do the work? Sample answer:I have been fortunate enough to have a lot of contacts who work in finance, and their usual response to this question is the long hours. If you give an, "I don't know" follow it with, "But here is what I am thinking. Interviewers can often see through this, and it could potentially harm your chances of getting an offer. A common method of answering this question would be bringing up 2-3 different types of financial risk concepts, giving a straight definition as to what they are, and following up with an example to demonstrate applied understanding. Sample Answer:Yes. Sample Answer 1:An IPO is the first public sale of stock in a previously private company. Graduates will have a final interview at the Bank of America assessment centre. In the context of a private equity investment, the debt acts as a way to magnify returns (boost IRR for the fund), but it can also backfire if the acquisition turns south. Hence, higher prices mean lower yields and vice versa. The Income Statement discloses a company's revenues and expenses, which together yield net income over a period of time. The following 16 industry-specific questions have been taken from our forums and company database where over 30,000 candidates have reported their interviewing experiences for different divisions within investment banks. You should acknowledge the long hours and the heavy workload while making it clear that you are ready to take on the challenge. In a high inflation environment, do you favor value or growth stocks? Access to Exclusive Company Database for 12 months which includes: 6-Months Access to Macabacus Excel Add-In, Investment Banking Interview Questions & Answers. You can answer this question by explaining that a business analyst is a liaison or a link between different stakeholders belonging to different domains in an organization. Land More Interviews | Detailed Bullet Edits | Proven Process, Land More Offers | 1,000+ Mentors | Global Team, For Employers | Flat Fee or Commission Available, Build Your CV | Earn Free Courses | Join the WSO Team | Remote/Flex, Investment Banking Interview Questions and Answers. Accrual-based accounting recognizes revenues and expenses as they are incurred regardless of whether cash flows in or out of the company at that exact time. What are the top 10 skills that'll get you a job when you graduate? Give us your understanding of our organization. for more in-depth advice. With BAML you have 8 lines of services, Merrill Lynch, and Merrill Edge. Talk about your teamwork skills (communication, collaboration, etc.) On the other hand, the higher cost of borrowing might reduce the amount of leveraged M&A activity at the same time. How would you underwrite a real estate loan? The biggest thing I am looking for is humble confidence - someone I would like to grab a beer with. Investment banking product groups are broken down into: M&A seems to be off the table because REITs have low cash balances and can't do stock issuances because they would be dilutive. Then read on for targetjobs tailored advice on how to answer Bank of Americas interview questions, based on questions previously asked of applicants, alongside an overview of the banks graduate interviews. Why do you want to leave your current role / firm? What they will expect, however, is that you can identify the importance of being able to influence a decision and identify when the skill should come into play. may While networking is generally seen as important for advancing one's professional career irrespective of industry, there is significantly more weight placed on its value within the investment banking industry relative to other industries. Jump to: The slower growth and low valuations will then lead to an increase in M&A by strategics. If I have a credit card loan, a car loan, and a mortgage, explain and rank their relative interest rates. So many mistakes happen just because of not listening carefully and not being in the moment. The investment banking division is sometimes referred to as corporate finance and is broadly split into 2 sectors, products and industries. Bank of America wants all its graduate recruits and interns, irrespective of what theyve applied for, to have the ability to withstand stress and hit targets in the face of obstacles. Since there are 12 numbers, the 3 and the 4 are 30 degrees apart, making the hour hand 7.5 degrees beyond the 3, and 7.5 degrees from the minute hand. Additionally, this is learned more with experience, but there comes a point in the interview where you have the ability to gain control of the interview and steer it in the direction you want. Here, youll be asked to List of Bulge Bracket Investment Banks and Boutiques, Private Equity Interview Questions and Answers, Hedge Funds Interview Questions and Answers, Accounting Interview Questions and Answers, 7,548 Questions across 469 investment banks, 3 Modules to master Technical + Fit + Networking. 5. The following questions and sample answers will help you achieve specialized focus and demonstrate expertise for the industry you're interviewing for. 101 common technical, fit, behavioral, and logic investment banking interview assessments with sample answers, Expertise: Private Equity | Investment Banking. may While my undergraduate studies prepared me for business, I know that most of the skills I need will be acquired on the job. 14. The three parts are: your characteristics, your attributes in the workplace, and your relationship with others. We won the conference 2 consecutive years and played at the NCAA tournament. Sample Answer:Major factors that justify mergers and acquisitions are:. General Why Investment Banking? Questions Q: What is investment banking? Irrespective of the situation, show respect and leave on a positive note with the interviewer. Showing passion is a little more difficult, but it comes out in different ways. Everyone I have spoken to within the industry tells me you learn everything on the job. If the owners of the company want to sell off a portion of their ownership. Explain your approach to completing multiple assignments in a workday. layoffs. Dial-in a cohesive 90-second resume walkthrough that focuses on the positive and motivating factors behind every transition (school to job, job to better job, most recent job to grad school). Describe a work scenario in which you were faced with competing priorities. Free interview details posted anonymously by Bank of America interview candidates. Past candidates have typically been asked Why do you want to work for Bank of America? and Why this division?. If a REIT is trading below NAV, what strategic options would you provide them as a banker? Company B has a Net Income of $10 as well. We then (add/subtract) interest expense (income), taxes, and other expenses (income) to arrive at Net Income. Unlevered beta removes the debt component. Every move you made should have a reason (preferably that you initiated). Do you have an interview coming up and have preferences on what industry you want to join? 12. Walk me through every calculation you are doing. Current liabilities include items such as accounts payable, accrued expenses, deferred revenue, and other short-term liabilities. It is important to be able to do both. The formula for calculating TV using Gordon Growth is:Terminal Value = Expected dividend / (Required rate of return Growth rate). Make sure to have an example to back up whatever word you choose with a specific story. Upstream2. OFS3. 2008-2023 - Shore News Media & Marketing Ltd. Co. All rights reserved. create your targetjobs graduate profile Itll take the hassle out finding the job-hunting advice that you want with recommended content tailored to your career interests. First, you can mention things that you are interested in that are job-related like keeping up with current events, studying for the CFA, etc. There are countless variations of this question, from "Tell me about a time you acted with integrity" to "Tell me about a time that you had difficulty dealing with coworkers". What if the price instead was $90? The buyer receives a step-up tax basis on the new assets it acquires, and it can depreciate/amortize them so it saves on taxes. WebPast candidates have said that interview questions have covered competencies, motivation and banking/markets/technical knowledge, including hypothetical scenarios 15. As both their EPS are equal, the transaction is neither accretive nor dilutive. 176 Bank of America Intern interview questions and 157 interview reviews. This is a great analyst quality because it shows that you'll think about a problem critically before you call me and ask about it. Being able to clearly, confidently, and consistently answer the 30 technical questions bank-specific questions above will undoubtedly give you a competitive edge over the applicant pool. You can expect your technical knowledge relating to the role to be assessed by Bank of Americas recruiters. Some examples of these risks would be: Credit Risk - This is the risk of a possible loss being incurred by a business or an individual, should their borrower fail to repay a loan or meet contractual obligations. In an interview, it is important to keep your technical overview at a high level. The seller is still subject to double-taxation on its assets that have been appreciated and on the proceeds from the sale. The course you name should have something to do with business/finance/economics, and the grade you report should be a good one. As such, the interview consists of a majority of behavioral questions (as covered above), with some banks not even asking a single technical question to candidates. 2. It can announce an accretive merger or an acquisition that will increase earnings per share. We've got you covered. Aptitude Test. The AI tracks and analyzes verbal, as well as non-verbal cues such as facial movements, body language, speech formation, as well as attire, and clothing. This is an important question investment banking is a difficult industry to break into, and the job requires a lot of dedication, long In the cash flow statement, net income is reduced by $6, depreciation is increased by $10, net cash from operations and total cash is increased by $4. Rank their relative interest rates stock price for is humble confidence - someone I would like to grab a with! 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