Debt Capital Markets interview preparation

Questions

100

Traced to a firm

45

Firms

26

Updated

September 2026

Asked at

All firmsTSTruist Securities5PIMCO4TD Securities4Apollo Global Management3Nomura3Scotiabank3Bain Capital2Houlihan Lokey2Mizuho2Neuberger Berman2Oaktree Capital Management2RCRBC Capital Markets2Carlyle Group1Deutsche Bank1Golub Capital1HPS Investment Partners1Invesco1KKR1Lazard1Moelis & Company1Moody's1Northern Trust1NUNuveen1Rothschild & Co1S&P Global1Wells Fargo Securities1

Topic

All topicsBond mechanics11Duration and convexity6Yield curve and rates5Credit spreads5Credit analysis and ratings13Credit modelling9Primary issuance9Syndication and loans10Structured credit7Covenants and documentation5Liability management5Indian debt markets7Fit8

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AnyCoreIntermediateHard

Type

AnyTechnicalBrainteaserMarket viewCaseFit

1. 047How much would you pay for 2x your money on a 12 percent PIK security with no compounding?Credit modellingHardsuperdayApollo Global ManagementGeneralist · New York · 2019

   Say this

   You need the holding period. With simple 12 percent accrual, the instrument is worth 100 plus 12 per year, so it reaches 200 at a bit over 8.3 years. If you want 2x in five years, the accrued value is only 160, so you must buy at 80.

   Then walk it

   1. Simple accrual means the balance is 100 plus 12 times the number of years. No compounding, so it is linear, not exponential.
   2. For 2x with no discount, solve 100 plus 12t equals 200. That gives t equals 8.33 years. So if you pay par and hold to maturity, you double in a shade over eight years.
   3. If the hold is fixed, you solve for price instead. Five-year hold: terminal value is 160, and you want 2x, so entry price is 80. Three-year hold: terminal value 136, entry price 68.
   4. Sanity-check the implied return, because that is what the interviewer wants. 2x over five years is a 14.9 percent IRR; over three years it is 26 percent. State which one you are quoting.
   5. Now the real-world qualifications, which is where the marks are. PIK usually compounds, and at 12 percent compounding you double in 6.1 years by the rule of 72, not 8.3. So confirm the accrual convention before you answer.
   6. And the credit qualification: doubling requires the borrower to repay a balance that has grown 60 to 100 percent while never paying you cash. So the recovery question is whether enterprise value grows faster than the accrual. If it does not, the accrued claim is above the value and your recovery is capped well below the accreted number.

   Where candidates lose it

   Assuming compounding when the question explicitly says none — that turns 8.3 years into 6.1 and you have answered a different question. And answering without asking for the holding period, since price and horizon are two unknowns in one equation.

   Expect next

   • Now assume it compounds. How does the answer change?
   • What IRR is 2x over five years?
   • What has to be true about enterprise value for you to get repaid?

   Reported by candidates at Apollo Global Management (Generalist, New York, 2019). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.