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. 069Explain the different ways a firm might finance itself, besides straight equity and debt.Capital structureIntermediatetechnicalHSBCGeneralist · New York · 2024TSTruist SecuritiesCorporate Banking · Atlanta · 2025

   Say this

   Everything in between: convertible bonds, preferred stock, mezzanine and PIK, plus asset-based routes like securitisation, sale-leaseback, factoring and equipment leasing. And structural options like a rights issue or a convertible preferred.

   Then walk it

   1. Hybrid instruments sit between the two: convertible bonds give a low coupon in exchange for equity upside, preferred stock ranks ahead of common with a fixed dividend, and mezzanine or PIK sits below senior debt with equity warrants attached.
   2. Asset-based financing monetises specific assets rather than the whole enterprise: asset-backed lending against receivables and inventory, securitisation of a receivables pool, factoring, and equipment leasing.
   3. Sale-leaseback converts owned real estate into cash while keeping the operational use. It is off-balance-sheet in spirit, though under current standards the lease liability comes back on.
   4. Operational financing is often overlooked: stretching supplier terms, customer prepayments and deferred revenue are all working capital funding, and they cost nothing.
   5. And there are equity variants: rights issues to existing holders, PIPEs, convertible preferred for a strategic investor, and in some markets government or development-bank funding for specific projects.
   6. The structuring logic is to match the funding to the asset. Long-lived assets get long-dated debt, receivables get revolving asset-based facilities, and uncertain growth gets equity or something convertible.

   Where candidates lose it

   Listing instruments with no organising principle. Group them, hybrids, asset-based, operational, equity variants, and finish with the matching principle. A list without a frame reads like flashcards.

   Expect next

   • When would you advise a convertible over straight equity?
   • What are the primary categories of collateral securing an asset-based loan?
   • What is the difference between a loan and a bond?

   Reported by candidates at HSBC (Generalist, New York, 2024); Truist Securities (Corporate Banking, Atlanta, 2025). Source: Wall Street Oasis.

2. 070What happens to EPS if a company issues debt to buy back shares?Capital structureIntermediatetechnicalDeutsche BankInvestment Banking · San Francisco · 2025

   Say this

   EPS usually rises, because the share count falls faster than net income does. It is accretive as long as the after-tax cost of the new debt is below the earnings yield of the stock you are buying.

   Then walk it

   1. Net income falls by the after-tax interest on the new debt. Share count falls by the shares repurchased. EPS is the ratio, so the direction depends on which falls proportionally more.
   2. The test: compare the after-tax cost of debt to the stock's earnings yield, which is the inverse of its P/E. Debt at 6 percent pre-tax is 4.5 percent after tax. A stock at 15 times P/E has a 6.7 percent earnings yield. Accretive.
   3. Flip it: a stock at 30 times P/E has a 3.3 percent earnings yield, below the 4.5 percent after-tax cost. Dilutive. Which is why expensive stocks should issue equity, not buy it back.
   4. Say the number to prove you can do it: $1,000 of debt at 6 percent costs $45 after tax at a 25 percent rate. If that buys 100 shares out of 1,000 and net income was $100, EPS goes from $0.10 to $55 over 900 shares, which is $0.061. Dilutive in that case, and the arithmetic tells you immediately.
   5. Then the value point: higher EPS does not mean more value. You have raised leverage, so the equity is riskier and the multiple should compress. Rearranging the capital structure does not create value on its own.

   Where candidates lose it

   Answering 'EPS goes up' with no condition. It depends entirely on the relationship between the cost of debt and the earnings yield. And stopping at EPS without noting that the multiple should fall as leverage rises.

   Expect next

   • So when is a buyback value-destructive?
   • What are the different ways to use excess cash?
   • How does this change the company's WACC?

   Reported by candidates at Deutsche Bank (Investment Banking, San Francisco, 2025). Source: Wall Street Oasis.

3. 073How does a bank make money?Markets and dealsCorephone / HireVueJ.P. MorganPrivate Banking · Charlotte · 2026

   Say this

   Two engines: net interest income, which is the spread between what it pays depositors and earns on loans and securities, and fee income from advisory, underwriting, trading, asset management and payments.

   Then walk it

   1. Net interest income is the classic bank business. Borrow short and cheap from depositors, lend long and dearer. The spread times the balance sheet is the revenue, and it is levered, which is why capital rules exist.
   2. Fee income is everything that does not consume much balance sheet: M&A advisory, ECM and DCM underwriting, trading commissions and spread capture, asset and wealth management fees, and transaction banking.
   3. The costs are compensation, which dominates, technology, regulatory and compliance, and credit losses through the provision line.
   4. The distinction that matters for an investment bank specifically: advisory revenue is capital-light and cyclical, while lending revenue is capital-heavy and steadier. That is why banks cross-sell, using the balance sheet to win the advisory mandate.
   5. So for a universal bank the shape is: net interest income for stability, fees for the upside, and the credit cycle as the thing that occasionally takes it all back.

   Where candidates lose it

   Answering only 'they lend money at a higher rate than they borrow'. For an investment banking interview you must name fee income and, ideally, the cross-sell point about using lending to win advisory work. That is the actual business model you are joining.

   Expect next

   • What are the biggest challenges banks face today?
   • How would that change in a falling rate environment?
   • Which revenue line would you want to be in and why?

   Reported by candidates at J.P. Morgan (Private Banking, Charlotte, 2026). Source: Wall Street Oasis.

4. 086What are the formulas for net revenue retention, gross retention and churn?Case and estimationIntermediatetechnicalPiper SandlerInvestment Banking · Burlingame · 2026

   Say this

   All three measure the same cohort a year later. Gross retention counts only what you kept, capped at 100 percent. Net retention adds expansion, so it can exceed 100. Churn is the revenue you lost as a percentage of what you started with.

   Then walk it

   1. Gross revenue retention: starting recurring revenue from a cohort, less churn and downgrades, divided by starting revenue. Expansion is excluded, so it can never exceed 100 percent.
   2. Net revenue retention: starting revenue, less churn and downgrades, plus upsell and expansion, divided by starting revenue. Above 100 percent means the base grows by itself.
   3. Gross churn: revenue lost divided by starting revenue. It is one minus gross retention. Logo churn counts customers rather than revenue, and the two can diverge sharply if you lose many small accounts or one large one.
   4. The critical rule: neither retention metric includes revenue from new customers. Mixing new business into retention is the most common error and it flatters the number badly.
   5. Benchmarks worth knowing: best-in-class enterprise SaaS runs gross retention above 90 percent and net above 120. SMB software runs materially lower on both because small customers fail.
   6. Why it matters for valuation: net retention above 110 percent means the business compounds without selling, which is exactly what justifies a high revenue multiple.

   Where candidates lose it

   Including new customer revenue in the retention calculation. It is a cohort metric. And not knowing which one can exceed 100 percent, which immediately reveals whether you have actually used these numbers.

   Expect next

   • What is the rule of forty?
   • Which matters more for valuation, growth or retention?
   • Why can logo churn and revenue churn diverge?

   Reported by candidates at Piper Sandler (Investment Banking, Burlingame, 2026). Source: Wall Street Oasis.

5. 089Given a 20x P/E, 10x EV/EBITDA, $20 of interest at a 5 percent rate, $200 of market cap and $20 of depreciation, calculate the tax rate.Case and estimationHardsuperdayEvercoreMergers and Acquisitions · San Francisco · 2026

   Say this

   Work backwards from the multiples to build the income statement. Net income is $10, debt is $400, so enterprise value is $600 and EBITDA is $60. EBIT is $40, pre-tax income is $20, so tax is $10 on $20 — a 50 percent rate. That is above any statutory rate, so I would flag that the inputs are inconsistent rather than just hand you the number.

   Then walk it

   1. Net income: market cap $200 at a 20 times P/E means net income of $10.
   2. Debt: $20 of interest at a 5 percent rate implies $400 of debt.
   3. Enterprise value: $200 equity plus $400 debt is $600, assuming no cash. At 10 times EV/EBITDA, EBITDA is $60.
   4. Then EBIT is EBITDA less depreciation, so $60 less $20 is $40. Pre-tax income is EBIT less interest, so $40 less $20 is $20. Net income is $10, so tax is $10 on $20, which is a 50 percent rate.
   5. I would then flag it: 50 percent is above any statutory rate, which usually means the question contains rounded or inconsistent inputs, or there is a non-operating item I am not being told about.
   6. The way to handle this live is to lay out the chain clearly, state the answer the arithmetic gives, and then say what would make it plausible: cash on the balance sheet would lower enterprise value and therefore EBITDA, and minority interest or a one-off charge below the line would change the bridge.

   Where candidates lose it

   Either freezing on the arithmetic or reporting an absurd tax rate with a straight face. The test is whether you can chain multiples backwards into an income statement, and whether you have the judgement to flag an implausible output rather than just handing it over.

   Expect next

   • What if there were cash on the balance sheet?
   • Which assumption are you least comfortable with?
   • Redo it with $100 of cash.

   Reported by candidates at Evercore (Mergers and Acquisitions, San Francisco, 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.