Investment Banking - Technical
Interview Questions and Answers |
Latest Version | 2025/2026 | Correct &
Verified
What is investment banking mainly focused on?
✔✔ Advising companies on capital raising, mergers, and acquisitions
What is the difference between investment banking and commercial banking?
✔✔ Investment banking focuses on advisory and capital markets, while commercial banking
focuses on deposits and loans
What does an IPO stand for?
✔✔ Initial Public Offering
What is the main purpose of an IPO?
✔✔ To raise capital by selling shares to the public
What is equity financing?
✔✔ Raising money by selling ownership shares
What is debt financing?
✔✔ Raising money by borrowing funds that must be repaid
1
,What is a bond?
✔✔ A fixed-income instrument representing a loan to an issuer
What is the face value of a bond?
✔✔ The amount repaid to the bondholder at maturity
What does maturity mean for a bond?
✔✔ The date when the principal is repaid
What is yield?
✔✔ The return an investor earns on a security
What is underwriting in investment banking?
✔✔ The process of raising capital by selling securities to investors
What does M&A stand for?
✔✔ Mergers and Acquisitions
What is a merger?
✔✔ The combination of two companies into one
2
,What is an acquisition?
✔✔ When one company buys another company
What is a hostile takeover?
✔✔ An acquisition made without the target company’s approval
What is enterprise value?
✔✔ The total value of a company including debt and equity
What is market capitalization?
✔✔ Share price multiplied by number of outstanding shares
How does enterprise value differ from equity value?
✔✔ Enterprise value includes debt and excludes cash, equity value does not
What is EBITDA?
✔✔ Earnings before interest, taxes, depreciation, and amortization
Why is EBITDA used in valuation?
✔✔ It approximates operating cash flow
What is a valuation?
3
, ✔✔ The process of determining a company’s worth
What is discounted cash flow (DCF)?
✔✔ A valuation method based on future cash flows discounted to present value
What is free cash flow?
✔✔ Cash available after operating expenses and capital expenditures
What is the discount rate in a DCF?
✔✔ The rate used to reflect risk and time value of money
What does WACC stand for?
✔✔ Weighted Average Cost of Capital
What does WACC represent?
✔✔ The average cost of a company’s capital
What increases WACC?
✔✔ Higher business or financial risk
What is terminal value?
✔✔ The value of cash flows beyond the forecast period
4
Interview Questions and Answers |
Latest Version | 2025/2026 | Correct &
Verified
What is investment banking mainly focused on?
✔✔ Advising companies on capital raising, mergers, and acquisitions
What is the difference between investment banking and commercial banking?
✔✔ Investment banking focuses on advisory and capital markets, while commercial banking
focuses on deposits and loans
What does an IPO stand for?
✔✔ Initial Public Offering
What is the main purpose of an IPO?
✔✔ To raise capital by selling shares to the public
What is equity financing?
✔✔ Raising money by selling ownership shares
What is debt financing?
✔✔ Raising money by borrowing funds that must be repaid
1
,What is a bond?
✔✔ A fixed-income instrument representing a loan to an issuer
What is the face value of a bond?
✔✔ The amount repaid to the bondholder at maturity
What does maturity mean for a bond?
✔✔ The date when the principal is repaid
What is yield?
✔✔ The return an investor earns on a security
What is underwriting in investment banking?
✔✔ The process of raising capital by selling securities to investors
What does M&A stand for?
✔✔ Mergers and Acquisitions
What is a merger?
✔✔ The combination of two companies into one
2
,What is an acquisition?
✔✔ When one company buys another company
What is a hostile takeover?
✔✔ An acquisition made without the target company’s approval
What is enterprise value?
✔✔ The total value of a company including debt and equity
What is market capitalization?
✔✔ Share price multiplied by number of outstanding shares
How does enterprise value differ from equity value?
✔✔ Enterprise value includes debt and excludes cash, equity value does not
What is EBITDA?
✔✔ Earnings before interest, taxes, depreciation, and amortization
Why is EBITDA used in valuation?
✔✔ It approximates operating cash flow
What is a valuation?
3
, ✔✔ The process of determining a company’s worth
What is discounted cash flow (DCF)?
✔✔ A valuation method based on future cash flows discounted to present value
What is free cash flow?
✔✔ Cash available after operating expenses and capital expenditures
What is the discount rate in a DCF?
✔✔ The rate used to reflect risk and time value of money
What does WACC stand for?
✔✔ Weighted Average Cost of Capital
What does WACC represent?
✔✔ The average cost of a company’s capital
What increases WACC?
✔✔ Higher business or financial risk
What is terminal value?
✔✔ The value of cash flows beyond the forecast period
4
