investment banking summer analyst Interview Questions

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Bank of America
Investment Banking Summer Analyst was asked...7 February 2014

If someone offered you $1000 today or paid out at $100 a month over the next ten months, which would you take?

5 Answers

The answer should be the $1000...$1000 today is worth more than $1000 ten months from now or $100 every month for 10 months due to the time value of money. Less

Money loses value over time...

I think it depends largely on the market. 1000 dollars a couple years ago if put into the right fund would be nice now. With how long the market has been expanding It would be a tough choice now. Additionally, they might be checking personality on this. Do you want your money now, or do you like something steady even if the value depreciates over time? Less

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Goldman Sachs

If I stacked pennies from the ground to the top of the Empire State Bldg, would they all fit onto a floor of the building?

3 Answers

1. Yes on the terrace. 2. Conver pennies into Dollers on better brokerage and get it fit into a bag. Now you can more money fit at any floor. Less

The Empire state building is approximately 1200 ft. I'm guessing there are 100 floors. This means 12 ft of single stack pennies per floor. 100 of them. I think we can fit 100 stacks of pennies on any floor in New York City. Less

Yes. 1) break coins into stacks in relation to each window/floor (gives height of floor) 2) highly likely sum of stacks is less than the square of the floor height I'm sure there's another way to answer this as per Vault, though I like to come up with diff answers instead. Less

Deutsche Bank

What is the probability of you walking out of this room and seeing someone without the average number of legs.

2 Answers

100% Average will be just under 2

so it should be 0% not 100%. )

BMO Capital Markets

How do the balance sheet and income statement relate?

3 Answers

BS flows to next BS through IS

BS shows what you have as snap shot in time IS shows what you did with it over a period of time Less

net income flows to the balance sheet as retained earnings

Nomura Holdings

Which valuation technique gives the highest value?

2 Answers

Depends highly of the DCF assumptions. In practice, it is often the DCF but if we set a certain set of assumption it could give us the lowest value as well. Deal comps have high constant value because of the market premium. Less

Precedent because of the premium

Nomura Holdings

Brainteasers

2 Answers

Just training!

Hi, I just got invited to Frankfurt as well, would be really great if you could post some of the technical questions they asked you? Less

Goldman Sachs

What is a shareholder's right's plan? (poison pill)

2 Answers

It is a safety plant agains hostile takeovers that enables currently shareholder, upon a hostile buyer gaining a certain percentage of ownership (say 15%), Less

Excuse my first response. It is a safe block against hostile takeovers that enables shareholders, upon a hostile bidder acquirers a certain percent ownership stake (say 15%), to purchase additional shares at a deep discount. This effectively dilutes the hostile bidders ownership stake. Less

Goldman Sachs

Some CS questions: There is a set of n - 1 numbers from the range 1 to n, determine the smallest number that doesn't exist in the set. Write a program to output all permutations of numbers 1 to N.

2 Answers

If all number are distinct than it is easy: just sum up 1:n and subtract sum of your numbers. If they are not distinct sort both arrays and subtract first n-1 elements from each other. The first non-zero will give the index of the missing number. Permutations is more or less standard, there are many algorithms available. Less

Use bucket sort,maintain a array of all zeros and size N put 1 for every number processed in the corresponding index and again go through the arrayto get the first index with a zero entry in the array. Less

Greenhill & Co.

Assume a company has 500K of senior debt trading at 50%, and 250K of sub debt trading at 20%. Therefore, the market value of each is 250K and 40K, respectively. According to BIWS, this also means that creditors expect to recover 50% of the senior debt and 20% of the sub debt. Why is that so?

2 Answers

Explained how bankruptcy is expensive and how junior debt holders tend to extend the process and erode value Less

The expected recovery value of the debt should always be the floor of the debt MV. If the debt can be recovered at 300k but MV is at 250k, there is essentially an arbitrage. Less

Goldman Sachs

You have a cube of 100cm*100*100cm. You poor 1 liter of water into the cube, how high will the cube be filled with water in centimeters?

2 Answers

1L=1000ml=1m3=100cm*100cm*100cm 100cm

1 liter of water is equal to 1000 cubic centimeters, so you need a base*height that equals 1000 cubic centimeters. Since water will fill the entire bottom of the cube first we know the base is the two sides times each other (100*100). This equals 10,000 so the height must be 0.1 centimeters to give a total of 1000 cubic centimeters. Less

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