投资银行真对MBA生的面试问题及参考答案.docx

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1、投资银行真对MBA生的面试问题及参考答案Source: EfinancialCareersBelow are a collection of real questions that were asked of investment bankingcandidates at the MBA level, along with suggested answers that they later puttogether. If you find yourself on a uperda interview at a big bank, you can bet thatyou,ll be asked

2、at least of few of these questions. Disagree with an answer? Let usknow in the comments below.Explain an LBO (leveraged buyout) to my grandmother, who knows nothing aboutfinanceAn LBO is a transaction in which a party purchases a business and brings itprivate. The transaction is funded using a large

3、 portion of debt. Three maincharacteristics of LBOs - 1) high debt, which is intended to be paid down, 2)incentives, managers are given greater stake in business, 3) private ownership, manyLBOs go public again once debt has been paid down.If a company was looking to raise debt or equity, what are th

4、e 3 most importantquestions to ask?1) Whether they will generate enough cash flows to cover interest obligations. Howmany multiples in excess of current interest payments is their operations generatingin cash flow?2) What is their current capital structure and can they bring on more debt andleverage

5、 the company further without being too levered versus industry and peers sothat their credit rating and stock price isn,t negatively impacted.3) What is the current equity value? If the stock price is appropriately valued or has apotentially high value, then equity might be better.How does FED chang

6、e the interest rates?The FED can adjust the Federal Funds Rate which is the interbank overnight rate atwhich the FED lends money The lower the Federal Funds Rate, the lower realinterest rates. The FED can also adjust the money supply through the purchase orsale of government bonds, whereby affecting

7、 inationary expectations which willadjust nominal interest rates.What would be the difference between the interest coverage rate of a senior boardvs. junior debt?Interest coverage rate is operating income divided by interest expense(EBIT/interest). This basically measures how much leadway a company

8、has betweenits earnings and interest payments (a hurdle they must keep jumping to avoiddefault).In event of bankruptcy, the senior debt would have to be paid before the junior.However, when using the interest coverage ratio to analyze a company s ability tokeep up with their debt payments, I would l

9、ook at the EBIT divided by ALL forms ofdebt as a failure to make payments for any form of debt results in default.How does Net Income flow into the Balance Sheet, Income Statement andStatement ofCash Flows?The Net Income on the bottom line of the income statement gets added into theretained earnings

10、 on the balance sheet. The net income from the income statementis also the starting line of the statement of cash flows.How do you value a company?There are five common valuation methodologies. Trading Range (the range the stock has been trading in during the past 52-weeks).If we trust the market we

11、 should assume this is a reasonable place to start ouranalysis. Discounted Cash Flow (DCF), also called Intrinsic Value, seeks to find a presentvalue of all future cash flows of the firm that are available to stakeholders.This can be done using WACC (weighted average cost of capital) or APV(adjusted

12、 present value). Public Comparables looks at peer companies to determine how the market valuescompanies in the same or similar businesses using multiples including P/Eand EV/EBITDA. Acquisition Comparables, also called Deal Comps or Precedent Transactions, looksto see how much acquirers recently pai

13、d for similar businesses. Asset Value, also called liquidation or breakup value, examines what you can sellthe company assets for (including real estate).In addition, valuation can be framed through: Leveraged Buyout looks at what a financial sponsor could pay considering a targetIRR (internal rate

14、of return) and the debt capacity of the firm. Merger Consequences Analysis is actually an affordability analysis (what can anacquirer pay) rather than an analysis of the value of a target.Describe how to value a privately held companyValuation for a private company is the same as the valuation of a

15、public companywith some complications, particularly as it relates to DCF (discounted cashflow). Because a private company has no publicly traded equity, a beta cannot bedirectly computed.To find the cost cf equity (KE)1. Estimate the total value of the private company based on comparables (use avera

16、geEV/EBITDA)2. Deduct the value of the debt to get estimated “market” value of equityor internaluse only3. Get the average levered beta from the comparables and unlever it4. Re-lever the beta for the private company based on the target D/E (debt-to-equity)ratio5. Calculate Ke based on CAPM (capital asset pricing model)To find