Likely questions to be asked in an interview for financial analyst or investment banker

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Likely questions to be asked in an interview for financial analyst or investment banker

Post by Jarus »

The position of financial analyst is potentially very lucrative within the financial services sector. Financial analysts scrutinize the economy, as well as individual industries and companies, to help make investment decisions for banks, insurance companies, investment firms or corporations. The key to nailing an interview for a financial analyst position lies primarily in demonstrating your understanding of basic financial analysis and showing your skills in evaluating economic conditions and companies. Financial analyst interviews commonly include some technical questions that an individual qualified for the position should be able to answer with relative ease.

1. What programs would you use to prepare illustrated technical reports with graphs, spreadsheets or charts?

The key to providing a good answer to this question is not mentioning a specific program but explaining why you would choose one program over another, along with noting your willingness and ability to use any program the company prefers. Therefore, you could respond by saying you prefer using Microsoft Excel because it offers the ability to present a wide variety of statistical and analytical reference points.

Alternately, you could answer that you prefer a program such as Stimulsoft Reports.Ultimate because you feel it offers superior visual representations of charts or graphs, and can be helpful in illustrating points to people less familiar with financial analysis terminology. Whatever your answer, follow it with a statement that you have used multiple software programs in preparing such reports. Explain that you are confident in your ability to quickly become proficient in using whatever program the company prefers and are also capable of using multiple programs for preparing different types of reports.

2. Explain financial modeling.

Financial modeling is a frequent practice in conducting financial analysis; therefore, some question about this subject is likely to be asked in a financial analyst interview. You should be able to give a brief, succinct answer to the question, such as, "Financial modeling is a quantitative analysis commonly used for either asset pricing or general corporate finance. Essentially, hypothetical variables are used in a formula to determine the likely impact on market behavior, profitability or economic conditions."

It is a good idea to supplement your answer with an example. Explain that financial modeling could be used to determine the effect on jet fuel costs for an airline as a result of a 5% annual rise in the cost of crude oil over the next seven years.

3. What do you think is the single best evaluation metric for analyzing a company's stock?

This is another question where there is no specific, single "right" answer. All that is necessary to answer this question well is to provide some reasonable point of evaluation and be able to explain the value of using that specific metric. Answer the question by saying the first point of analysis you use in evaluating a company is its operating profit margin, and you prefer this metric because it provides an indication of not only basic profitability, but also gives a solid indication of how well managed the company is overall.

Alternately, you can offer that the price/earnings to growth ratio (PEG) is the single most complete equity valuation metric because it factors in projected earnings growth rate, and is, therefore, superior to the commonly used price/earnings ratio (P/E). Feel free to choose any evaluation metric that is an honest answer for you. The more important part of answering this question lies in being able to explain the strength of whatever particular metric you prefer. A good addition or qualifier to answering this question is to note in conclusion that it is unlikely that any single evaluation metric provides adequate information to make a judgment about a company as an investment, and you prefer to examine companies from as many perspectives as possible.

Source: Common Interview Questions for Financial Analysts | Investopedia ... z54G6i9Uhd
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