Interview questions IB Analyst Goldman Sachs

I have seen many very good questions posted here by readers from their actual interviews. Over a year ago, I have interviewed with Goldman Sachs myself (for a VP position) where the questions were largely background and dealflow related.

Here are 20 essential and perhaps, omni-present questions that a lot of candidates will be asked and which are, more than anything, mental exercises. I am sure they can be found in different variations (especially the conceptual ones), and may also be found on interviews-specific sites and sites that cater to the finance community.

Note these are not only Goldman Sachs interview questions, but also questions from other firms.

1. How would you identify a company's success looking backwards if you were given 10 yrs of financial statements?

2. What does it mean a company's ROE is greater than its earnings growth rate ?

3. How do you weigh a helicopter without any weighting tools but with an infinite number of weights ?

4. Explain risk - quantitatively and fundamentally.

5. Tell me how you would structure a portfolio given our current market environment for a 30 -year old?

6. Gambler's ruin problem: A has $1, with 2/3 to win; B has $2, with 1/3 to win. What is the probability that A eventually wins ?

7. Write a recurrsive function to compute fibonacci.

8. Re: LBOs. Would you rather finance an acquisition with a debt/equity split of 70/30 or 90/10? Why? (let's ignore current market conditions that do not permit any of that, it's just simulation).

9. There are 3 types of coins. The values are 1, 2, 5, respectively. What's the algorithm to get the minimun number of coins if the sum of them is N?

10. You are asked to evaluate the credit risk of three companies: a high-tech firm, a pharmaceutical firm, and a major car manufacturer. How would you approach this analysis, what industry-specific factors are important to consider, and what would be your expected timeline/maturity for a loan with each firm if it passes the credit check?

11. What kind of credit risk you have in a swap transaction? How would you calculate the credit risk exposure?

12. Build a portfolio with 10% return a VAR X.

13. Question about Value At Risk: you have Asset 1 with Var 1 million and Asset with Var 2 million - what would be Var of a portfolio of Assets 1 and 2?

14. Which data structure would you use to organize a phonebook, and how would you optimize it?

15. Can a stock that is more volatile than the market have a negative beta?

16. Given an arbitrary dimension n, write a function that outputs a random n-vector of unit length (completely uniform distribution).

17. In what situation could a call option have parabolic returns?

18. What is the definition of probability space? What is the definition of probability?

19. You have a stick of length 1, and you break it at a (uniformly) random position along its length. Take the longer of the two resulting sticks, and break it somewhere randomly along its length. What is the probability that you can make a triangle out of the three pieces?

20. Suppose that you have a fair coin. You start with $0. You win 1$ each time you get a head and loose $1 each time you get tails. Calculate the probability of getting $2 without getting below $0 at any time.