Sales and Trading Vault Guide

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Technical Interviews
  1. Corporate Finance
        o What is the difference between IRR, NPV and payback?
        o Why would a company repurchase its own stock? What
          signals (positive or negative) does this send to the
        o I have a bond with a 5% coupon. What happens to the market price when
          the prevailing interest rates rise to 7%? How are coupons affected?
        o Would you rather have $”x” today or $1 a day for the rest of your life?
          How would you value “x”?
  2. Valuation
        o What are the different ways to value a company?
        o How do you calculate WACC?
        o What is a LBO? Why leverage up a firm?
        o What do you think an investment banker does?
        o What is the current market risk premium? What is the current risk-free
  3. Basic Accounting
        o Walk me through a typical income statement.
        o What is goodwill? How does it affect net income?
        o If accounts receivable increases during a period, how does that impact
        o Which of the three financial reporting statements (balance sheet, income
          statement, or statement of cash flows) is most important and why do you
          believe this is so?
  4. Mergers & Acquisitions
        o What is the difference between I-banking and private equity?
        o Why would two companies merge? What major factors drive mergers and
        o What is the difference between a stock purchase and an asset purchase?
        o What are some common anti-takeover tactics?

                                                                            CAREER CENTRE
                                                        Telephone: 403-220-6743 Fax: 403-282-2973
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Technical Interviews
   5. Capital Markets or Investment Theory
         o Where do you think the interest rate will be one year from now?
         o What does the yield curve currently look like and what does that mean?
         o What is on today’s front page of the Wall Street Journal?
         o What are factors that affect option pricing?
         o Explain put-call parity
Recommended Resources
Please Note: The Vault and WetFeet guides are free to download through your
Haskayne Career Link account (

                Vault Guide to Finance Interviews
                Authors: D. Bhatawedekhar, Dan Jacobson, Hussam Hamadeh, William Jarvis

                If you're looking for a job with an investment bank, mutual fund, hedge fund or
                commercial bank, this is the guide for you. The Vault Guide to Finance Interviews is
                a must for your finance job search.
                We give you over 150 actual finance interview questions with detailed answers,
                key concepts and easy-to-follow charts and frameworks. Don't be afraid of
                technical or quantitative questions. With the new 8th edition of this unique Guide
                you'll be prepared for the toughest finance interview.

                View from the Top: Advice from Finance Professionals
                Authors: Aman Singh Das, Won Kim
                This Vault guide features advice from finance professionals companies including, Credit
                Suisse Group, KPMG LLP, Legg Mason, Inc., Merrill Lynch & Co., Inc., PNC Financial
                Services Group, Inc, Prudential Financial.

                                                                                           CAREER CENTRE
                                                                     Telephone: 403-220-6743 Fax: 403-282-2973
                                                   ~2~                 Email:
Technical Interviews

            Vault Career Guide to Investment Banking
            Author: Tom Lott

            Want to land a job or career in the investment banking industry - but don't know
            where to start? The Vault Career Guide to Investment Banking takes you inside the
            industry - from corporate finance to sales and trading to M&A - to make sure you can
            land the job you want. You'll know banking cold for your interviews after reading this
            guide -- and if you're just starting your financial career, you'll get a topnotch crash
            course. The guide covers the basics of financial markets, including walk-throughs of
            equity and fixed income offerings, and M&A, private placements and re-orgs, and
            dissects career paths and job responsibilities at departments such as corporate
            finance, sales & trading, research, and syndicate.

            Vault Career Guide to Middle Market Investment Banking
            Author: Joe Bel Bruno

            With all the talk about a global economic slowdown, the conventional investment
            banking wisdom is that corporate buyouts will be sharply curtailed. But the increase
            in the number of smaller deals, known in the financial world as the middle market,
            has grown significantly in the past few years. As organic growth stagnates, many
            companies turn to acquisitions as a good way to expand. This means that smaller
            deals will proliferate—and the middle market will be where the action is. Today,
            those looking to launch an investment banking career might want to broaden their
            search to include some of these numerous midsized banks, and the new Vault Career
            Guide to Middle Market Investment Banking will provide the inside scoop on how.

            Vault Career Guide to Sales and Trading
            Author: Gabriel Kim

            If you believe in the efficient markets hypothesis, then you should not be considering
            a career in sales and trading. An old joke about the hypothesis goes something like

            A finance professor and a student are walking down a busy sidewalk. Along the way,
            the professor is discussing efficient markets with his student, who is staring down in
            studious thought. The student catches a glimpse of a $20 bill on the sidewalk, and he
            stops to pick it up. After pocketing the bill, the student runs to catch up with the
            professor. The excited student asks the professor if he had seen the bill, and the
            professor, without skipping a beat, quips "My dear student, have you not been
            listening to any part of the efficient markets that I've been talking about? Yes, I saw
            the $20, but I knew that my eyes must have been deceiving me. Efficient markets
            theory dictates that it couldn't possibly have been there, since someone else would
            have already picked it up."

                                                                                   CAREER CENTRE
                                                               Telephone: 403-220-6743 Fax: 403-282-2973
                                              ~3~                Email:
Technical Interviews
              Careers in Investment Banking

              Intensely competitive, action-oriented, and profit-hungry, investment banking is a
              larger-than-life world where deals—and fortunes—are made. It’s a great place to
              learn the ins and outs of corporate finance, and develop analytic skills that will
              prove useful throughout any business career. But investment banking has a steep
              learning curve, and chances are you’ll start out in a job that involves duties more
              Working Girl than Wall Street. In this Insider Guide, you’ll find plenty of research
               from WetFeet’s experts to help you launch your I-banking career.

              Careers in Venture Capital

              Is it the risk, the potential for dizzying financial rewards, or the chance to play a
              role in funding the American dream that attracts you to a career in venture
              capital? VCs enjoy a high degree of job satisfaction, and many insiders tell us they
              have the privilege of working with bright, driven people. But if you aspire to sit on
              the board of the next Google or eBay, you have your work cut out for you. Venture
              capital is a notoriously difficult field to break into. WetFeet’s career experts have
              done the research to get you started—read this guide to get the inside scoop.

              Beat the Street: Investment Banking Interviews

              Investment banking interviews are highly competitive. In the end, what will likely
              set you apart from the rest of the field are your abilities to convince interviewers
              that you are 110 percent committed to being an investment banker and to
              demonstrate that you have the skills and personality that will enable you to hit
              the ground running. To write this guide, we talked to recruiters, new hires, and
              senior bankers at the leading investment banking firms to answer your burning

              Beat the Street II

              This companion to Beat the Street offers more detailed explanations of the types
              of questions you're likely to encounter, along with a list of recruiters' all-time
              favorite questions in each category. At WetFeet, we believe that you'll respond to
              tough questions more effectively if you know what your interviewer is really
              getting at with each one and you've taken the time to do your homework and
              prepare your responses. To focus your preparations, this book includes 16 typical
              interview questions.

                                                                                  CAREER CENTRE
                                                              Telephone: 403-220-6743 Fax: 403-282-2973
                                             ~4~                Email:

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