Investment Banking Interview Questions: Technical & Behavioral
Comprehensive guide to IB interview questions. Covers accounting, valuation, M&A technicals, plus behavioral and fit questions.
Investment banking interviews test both technical knowledge and your ability to think clearly under pressure. This guide covers the most important questions across all categories—with interactive practice to ensure you're ready.
What IB Interviews Test
Investment banking interviews assess:
- Technical Knowledge: Accounting, valuation, M&A mechanics
- Analytical Thinking: Ability to work through problems methodically
- Communication: Explaining complex concepts clearly
- Fit & Motivation: Why banking, why this bank, your story
Accounting Questions
Accounting fundamentals are the foundation of finance. You'll be tested on the three financial statements and how transactions flow through them.
Depreciation increases by $100. Tax rate is 30%. What happens to Net Income and Cash?
Accounts Receivable increases by $100. What happens to cash from operations on the Cash Flow Statement?
Valuation Questions
You need to know the three main valuation methodologies cold: Trading Comps, Precedent Transactions, and DCF. Be ready to explain when to use each and their relative outputs. Also review enterprise value vs equity value concepts.
Which valuation method typically produces the HIGHEST valuation for a company?
Three Valuation Methods
| Term | Definition | Note |
|---|---|---|
| Trading Comps | Value based on public company multiples | Minority stake, lowest valuation |
| Precedent Transactions | Value based on M&A deal multiples | Includes control premium, highest |
| DCF | Present value of projected cash flows | Intrinsic value, most assumptions |
M&A Questions
M&A concepts like accretion/dilution analysis and merger premiums are critical. You need to understand not just the mechanics, but the strategic rationale. If you're interested in PE, also review LBO mechanics.
Acquirer has P/E of 20x, target has P/E of 10x. If acquirer pays 100% stock, is the deal accretive or dilutive?
Company trading at $50/share gets acquired for $65/share. What is the acquisition premium?
Behavioral Questions
The STAR Method
Structure behavioral answers using STAR:
- Situation: Set the context
- Task: What you needed to accomplish
- Action: What you specifically did
- Result: Quantifiable outcome
Common Behavioral Questions
| Term | Definition | Note |
|---|---|---|
| Why Investment Banking? | Show genuine interest in deals, fast learning, client service | Be specific |
| Why This Bank? | Research culture, deals, people. Show you've done homework. | Be authentic |
| Tell Me About Yourself | 2-minute story: background → why finance → why IB → why now | Practice this |
| Walk Me Through Your Resume | Highlight relevant experiences, show progression | Connect dots |
| Tell Me About a Team Challenge | Show conflict resolution, leadership, teamwork | Use STAR |
Preparation Tips
How to Prepare
- Master Accounting Fundamentals: Practice flow-through questions until automatic
- Know Valuation Cold: DCF, Comps, Precedents—understand not just mechanics but when to use each
- Understand M&A: Accretion/dilution, merger models, deal dynamics
- Stay Current: Read DealBook, know recent M&A transactions in your target sector
- Practice Out Loud: Explain concepts to friends. If you can teach it, you know it.
- Prepare Your Story: Why banking, why this bank, your career arc—crisp 2-minute pitch
Related IB Guides
- Walk Me Through a DCF — Core valuation methodology
- Enterprise Value vs Equity Value — Fundamental valuation concept
- 3 Financial Statements Linked — Master accounting flow-throughs
- Accretion/Dilution Explained — M&A analysis deep dive