Your answer should be a summary of your company research, a plan of key points to tell about the company, a focus on growth and opportunities, and a general statement of what you like and would like to work for at a company like yours.

Sample answer: 

“Oaktree Capital Management is a leading international investment management firm specializing in alternative investments. This is an American company that offers one of the largest pension plans in the country.

I have known your company for several years because I work in the same field. I recently read the news that the company is launching a new fund focused on the retail lending market.

I was very excited to apply for the position when I saw that you posted a job opening on your website, as this company is one of the leading emerging companies in its industry.”

Candidates can answer these questions to indicate the skills required for the job and their desire to study and work in the same field as their educational background.

Sample answer:

“Building on my previous actions in investment banking, I am exuberant to gear up my career at an asset management company. At an early stage of my life, I invested money in various alternatives.

This drew my attention to finance then, so I completed an MBA with a major in finance, where I had the opportunity to intern and work directly with a senior investment banker.

As an intern, I was able to assist my supervisor with various financial models and accounting statements to gain hands-on experience for the position.

I am ready to take the next step in my career, and I think my in-depth knowledge of the financial industry will become valuable in the company.”

This question will help the interviewer understand your investment strategy and how you apply it to a particular business. Use your experience to demonstrate your analytical, interpersonal, and decision-making skills.

Sample answer:

“I start by researching an industry's background, current trends, technical analysis, and growth rates and then compare those numbers to historical data to discover the industry's conditions and if they are sustainable and likely to rise or fall in the future.

After that, I review each company in the industry to see which ones have strong management teams, competitive advantages, growth potential, current news, and events.

From there, I decide whether to invest in individual companies or entire industries.”

The interviewer wants to ask for detailed knowledge of mergers and acquisitions of companies, so the answer should be compiled with risk factors of a company's merger and acquisition quoted with a case summary, for example, the Twitter and Elon Musk acquisition.

Sample answer:

“When acquiring a business, several risks must be taken into account. These include overpaying to target companies, overstating synergies, poor due diligence, onboarding challenges, and unexpected cultural clashes.

Due diligence is essential in preparing for an M&A transaction, and a lack of due diligence can cause problems. Overpayment is also a common pitfall when acquiring businesses.

Improper assessment of synergies and integration issues can result in significant financial losses, and the most considerable trends of the market affect the fluctuation in the share prices. It affects the price of target companies.

Therefore we should carefully assess the potential risks and benefits before undertaking any acquisition.”

You can answer this according to your availability in a professional manner.

Sample answer:

“I will be elated to work with a company like yours. After learning more about this position, I believe it will match my experience and skills. I can be available to start as soon as the beginning of the following workweek.”

The interviewer wants to understand your future goals, so be sure to give an honest and realistic response appropriate to your personal and professional growth.

Sample answer:

“I consider myself an essential part of the business for the next five years and will contribute to its growth and success. I want to develop my skills and knowledge to be able to take on more responsibilities within the company. 

I will be more confident and a better person and will be looking for a family for the next few years so that I can balance work and family life.”

The interviewer will test your skills in the subject area of ​​the position you are applying for. This question is for portfolio analysis. So, always prepare topics related to your position. Always prepare the positions related to academic topics.

Sample answer: 

“For example, a $1,000 bond with a face value of 7% will reimburse $70 per year. If interest is paid semi-annually, then they paid 2 times and make payments in the duration the investor will receive $35 per payment. 

Therefore, the payment on a bond that pays a 7% coupon semi-annually is $35.” 

This question can help the interviewer understand how you react to negative comments and opinions and whether you are ready to improve your performance.

When responding, it may be helpful to mention specific times when you were blamed and steps you took to improve yourself or your job. 

You must remain calm and professionally handled while receiving criticism and avoid getting defensive or argumentative. 

Instead, you can ask for specific examples or suggestions for improvement and take the feedback constructively to improve your performance.

Sample answer:

“When I started working as an analyst in my earlier organization, I made mistakes that resulted in the minor loss of clients. My manager gave me constructive criticism of my performance, which I calmly and professionally handled.

This incident helped me to learn from my mistakes, a better employee. Now I am more cautious in my work and always make sure to dig or verify all my calculations, research, and resources. Recently I was appreciated by my manager with the best employer award.”

The interview will assess your skills for the job you are applying for, so be prepared for questions on job role-related topics that relate to your academic perspective.

Sample answer:

“The company's net income will be overdrawn, and the company's balance sheet will be high on the value of fixed assets which results in an overvalue of the company’s assets.

The cash flow statement of the company's cash flows from operations will be reduced, so these effects will be shown on the financial statements when depreciation is not included.”

Suppose you are applying to an asset management or investment banking company. In that case, you have a strong theoretical and practical knowledge of your subject matter, like financial models, financial statements, valuation techniques, capital markets, and other relevant topics.

Brush up on all the finance-related topics and go through with conceptual questions and answers.

Answer:

“A company with a positive EBITDA for ten years recently went bankrupt due to several reasons:

• The company spends too much on capital expenditures - these do not affect EBITDA at all but can still be negative money.
• The company has high-interest rates and cannot pay its debts.
• The company's debts were paid in full in one day and could not be collected due to a "credit crunch" - all cash when paying off debts.”

EBITDA excludes investment and depreciation of long-term assets, interest, and one-time charges, which could end up bankrupting the company.

The interviewer wants to test your philosophy and level of mind on investment strategies.

Sample answer:

“For a conservative investor with fixed income covered but wants exposure to housing finance, I would suggest investing in Real Estate Investment Trusts (REITs).

REITs provide exposure to the real estate market without the hassle of owning and managing physical properties. REITs are low-risk investments that can generate income through dividend payments and capital gains.

Further, REITs propose diversification advantages as they invest in a combination of real estate assets, such as residential, commercial, and healthcare possessions.”

The question was asked in the interview for an associate position in fixed income.

Sample answer:

“Yield to maturity (YTM) is the total rate of return that will have been earned by a bond when it makes all interest payments and repays the original principal.

Yield to maturity (YTM) is an evaluated annual rate of return representing the expected return earned on a bond if kept until maturity, considering that all coupon payments are made on time and reinvested at the same interest rate.”

Interviewers rarely ask this type of question, but be prepared for unexpected questions. For example, the LBO-related question was asked for the analyst position.

Sample answer:

“To back into an exit multiple that would return a 25% Internal Rate of Return (IRR) using a standard paper Leveraged Buyout (LBO) model, we can use the following steps:

Determine the purchase price of the company and the debt-to-equity ratio. For this example, let's assume a purchase price of $500 million and a debt-to-equity ratio of 60:40.

Calculate the amount of debt and equity used to finance the transaction. For example, with a 60:40 debt-to-equity ratio, the total debt would be $300 million, and the equity investment would be $200 million.

Determine the expected cash flows over the holding period. For this example, let's assume cash flows of $50 million in Year 1, $75 million in Year 2, $100 million in Year 3, and $125 million in Year 4.

Calculate the exit multiple needed to achieve a 25% IRR. Using a standard LBO model, we can assume an exit multiple of 8x EBITDA. To achieve a 25% IRR, we would need to exit the investment at a multiple of approximately 11.7x EBITDA.

Calculate the exit enterprise value needed to achieve the target multiple. Using the Year 4 cash flow of $125 million and applying an 11.7x exit multiple, we get an exit enterprise value of $1.4625 billion.

Subtract the remaining debt from the exit enterprise value to get the equity value. For example, with $300 million in remaining debt, the equity value would be $1.1625 billion.

Calculate the equity multiple by dividing the exit equity value by the initial equity investment. In this case, the equity multiple would be 5.8125x.

By achieving an 11.7x exit multiple, we can generate a 25% IRR on our $200 million equity investment over a four-year holding period. However, it's important to note that LBO models are highly dependent on assumptions and market conditions, and actual results may vary.”