Investment Banking interview preparation
Every question below is either traced to a named firm from a public candidate report, or tagged at desk level when we could not trace it. Answers are written the way you would actually say them out loud — answer first, then the mechanism, then the limitation.
100 questions, mapped to the firms that asked them
- Questions
- 100
- Traced to a firm
- 100
- Firms
- 46
- Updated
- September 2026
020What is the beta of a slot machine?Rothschild & CoMergers and Acquisitions · New York · 2021Rothschild & CoGeneralist · New York · 2026
Say this
Zero. A slot machine's payout is random but the randomness is entirely idiosyncratic, and beta only measures the part of risk that moves with the market. Uncorrelated risk carries no beta.
Then walk it
- Beta is covariance with the market divided by the variance of the market. If the payout is independent of the market, the covariance is zero, so beta is zero.
- The machine is enormously risky in a standard deviation sense. That is exactly the point: total volatility and systematic risk are different things.
- This is CAPM's central claim. The market only pays you for risk you cannot diversify away, and pure gambling risk diversifies to nothing across many pulls.
- The sharp extension: a casino's equity beta is clearly not zero, because discretionary gambling spend rises and falls with the economy. The machine's payout is uncorrelated; the volume of people playing it is not.
- So the answer is zero for the mechanism, positive for the business built on it.
Where candidates lose it
Answering 'very high, because it is so risky'. That confuses volatility with systematic risk and tells the interviewer you do not really understand CAPM. Get to zero fast, then earn the extra credit with the casino distinction.
Expect next
- So why is a casino's beta not zero?
- How would you value your favourite animal?
- What is your personal beta?
Reported by candidates at Rothschild & Co (Mergers and Acquisitions, New York, 2021); Rothschild & Co (Generalist, New York, 2026). 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.