Investment Banking interview preparation

Questions

100

Traced to a firm

100

Firms

46

Updated

September 2026

Asked at

All firmsTSTruist Securities10Rothschild & Co8Centerview Partners7CSCredit Suisse7HWHarris Williams6Houlihan Lokey6Lazard6Mizuho6Barclays5Citi5Deutsche Bank5Evercore5Moelis & Company5MSMorgan Stanley5Piper Sandler5RCRBC Capital Markets5Goldman Sachs4Nomura4TD Securities4Bank of America3GSGuggenheim Securities3J.P. Morgan3Jefferies3Moody's3Perella Weinberg Partners3WPWarburg Pincus3WBWilliam Blair3HSBC2Lincoln International2Scotiabank2TPTPG2UBS2Wells Fargo Securities2Advent International1Apollo Global Management1Bain Capital1Balyasny Asset Management1BLBlackRock1BPBNP Paribas1General Atlantic1Invesco1Morningstar1PIMCO1STSociété Générale1SSState Street1WMWellington Management1

Topic

All topicsAccounting14Valuation21M&A10Markets and deals10Capital markets3LBO8Leveraged finance3Restructuring2Credit3Debt capital markets2Capital structure2Case and estimation11Brainteasers6Fit5

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseBrainteaserFitMarket view

1. 016What are the main drivers or sensitivities in a DCF?ValuationIntermediatetechnicalTD SecuritiesInvestment Banking · New York · 2026Moelis & CompanyInvestment Banking · New York · 2026

   Say this

   The discount rate and the terminal value assumption, by a wide margin. After those, the revenue growth and margin path in the forecast years, then CapEx and working capital intensity.

   Then walk it

   1. WACC dominates because it compounds. A 100 basis point move in WACC can swing value 15 to 20 percent for a long-duration business.
   2. Terminal value is the other big one, since it is usually 60 to 80 percent of enterprise value. A 50 basis point change in perpetuity growth moves the answer materially.
   3. Inside the forecast, margin matters more than revenue for most mature businesses, because a margin point drops straight to cash.
   4. CapEx and working capital intensity matter most for capital-hungry or fast-growing companies, where growth consumes cash.
   5. The standard output is a two-way sensitivity table, WACC against exit multiple or against perpetuity growth. That grid is what actually goes in the deck, not a single point value.

   Where candidates lose it

   Listing revenue growth first. It feels intuitive but it is wrong for most businesses; discount rate and terminal value swamp it. Also, saying 'a DCF gives you the intrinsic value' as if it were one number, rather than a range you present as a football field.

   Expect next

   • Given a $10 change in revenue, COGS, or CapEx, which has the biggest impact?
   • How do you pick the perpetuity growth rate?
   • What would you do if the DCF value is miles above the trading price?

   Reported by candidates at TD Securities (Investment Banking, New York, 2026); Moelis & Company (Investment Banking, New York, 2026). Source: Wall Street Oasis.

2. 031Can debt ever be more expensive than equity, and in what scenario?ValuationHardtechnicalTD SecuritiesCapital Markets · New York · 2025

   Say this

   Yes. In deep distress, debt yields can exceed any plausible cost of equity, because the debt is effectively pricing bankruptcy risk while the equity is a cheap out-of-the-money option on recovery.

   Then walk it

   1. The usual ordering holds because debt is senior and its interest is deductible. But it is a tendency, not a law.
   2. In distress, existing bonds can trade at yields of 20 or 30 percent. New rescue financing can price higher still, sometimes with PIK toggles and warrants on top.
   3. Meanwhile the equity has almost no value left, so the required return the market demands on the residual stub can look modest in absolute dollars. Option-like equity behaves strangely.
   4. The tax shield also disappears when there is no taxable income to shield. A company with large losses gets no benefit from deductibility, so the after-tax cost of debt equals the pre-tax cost.
   5. Rescue and mezzanine financing is the clean real-world example. Sponsors regularly choose to issue equity rather than take a 15 percent PIK instrument, precisely because the debt is dearer.

   Where candidates lose it

   Answering flatly 'no, debt is always cheaper because it is senior and tax-deductible'. That is the textbook line and the question is designed to test whether you can break it. Name distress and the loss of the tax shield.

   Expect next

   • What happens to the tax shield if the company has no taxable income?
   • Why would a sponsor prefer high yield over bank debt in an LBO?
   • How would you price rescue financing?

   Reported by candidates at TD Securities (Capital Markets, New York, 2025). 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.