Finance Interviews

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Finance Interviews

• Darren Wray, Finance Sector Manager
• Madison Investment Fund
• 2/26/07

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Agenda

• I. Basic Interview Tips
• -Ground rules for all Finance interviews
• II. Areas of Interest
• -Investment Banking, Sales Trading, Research,
  Structured Finance, The Buy Side
• III. Investment Banking Recruiting Profile and
  Interview FAQ -Typical path of entry into
  I-banking as a JMU student
• -What to expect in an investment banking
  interview
• IV. Sales Trading Recruiting Profile and
  Interview FAQ
• -Why Salespeople/Traders are inherently better
  thanbankers

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Agenda (Cont.)

• V. Research Profile and Interview FAQ
• -Highlight the different opportunities in
  research
• -Illustrate common pitfalls in research
  interviews
• VI. Structured Finance and Buy Side Profiles/FAQ
• -What is Structured Finance?
• -Brief overview of Buy Side interviews
• VII. Conclusion
• -List of resources for interview prep
• -Closing Remarks

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Basic Interview Tips

• Dress professionally, keep it conservative
• Know every line of your resume
• Interpersonal/communication skills
• Accomplishments Must be measurable
• Be able to tell your story in 30 seconds or
  less
• Build a rapport with the interviewer
• Thank you notes
• Have intelligent and relevant questions prepared

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Investment Banking Interviews

• Investment Banking Business Segments
• -Corporate Finance FIG, TMT, Energy etc..
• -Mergers Acquisitions
• Typical Path of Entry for JMU Students
• -Very difficult industry to enter. Must be
  persistent.
• -Multiple phone interviews followed by super
  day
• Expect to do most of the work independently
• -JMU has no formal recruiting arrangements with
  any bank

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Investment Banking FAQ

• Why I-Banking? What is I-banking? Why do you want
  to work for this bank? Various fit questions
• Are you prepared to effectively sacrifice your
  social life by working 100 hour weeks?
• How do you value a company?
• Tell me about a recent deal we completed
• Explain how the three financial statements fit
  together
• What is your biggest weakness?
• Long stock recommendations
• Brainteasers
• Where else are you applying/interviewing?
• Computer Skills

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Attitude

• We don't hold it against people who have
  advanced degrees, like MBAs, but we do prefer
  people with PSDs poor, smart, and a deep desire
  to become rich.
• - Ace Greenberg

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Sales Trading Interviews

• Sales Trading
• -Often the most profitable area of an I-bank
• -Traders buy and sell financial products with
  the goal of making an incremental amount of
  money on each trade.
• -The sales force primary job is to call on
  institutional investors to suggest trading ideas
  and take orders.
• Personality Conflicts between Salespeople and
  Traders
• Path of entry almost identical to Investment
  Banking
• Interviews focus on your ability to work under
  pressure

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Sales Trading FAQ

• Expect Rapid Fire Questions from Volatile Traders
• Long Short Stock Recommendations
• Impact on Markets Following Economic Data Release
• What is the square root of .1?
• Why should I hire you as a trader/sales person?
• What would you do for a career if Wall St. didnt
  exist?
• Where are the major market indices now, and what
  have they done over the past 3, 6, 12 - month
  periods?
• What financial publications do you read?

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Research Interviews

• Equity Research
• -Division which reviews companies and writes
  reports about their prospects, often with "buy"
  or "sell" ratings.
• -Sell side research aids the firms traders and
  sales force as well as its institutional
  clients
• -Buy side research is typically less formal
• Fixed Income Research
• -Ratings companies such as SP, Moodys, and
  Fitch evaluate corporate and sovereign debt
  instruments

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Research Interviews FAQ

• Despite popular belief, research analysts are not
  hermits that enjoy going over 10-Ks in the dark
  by themselves.
• Long stock recommendationVery important
• How do you value a company?
• Explain how the three financial statements fit
  together
• What financial publications do you read?
• Do you stray away or look forward to client
  contact?
• How has GDP trended over the past year?
• What does the inverted yield curve mean for our
  companies?
• Writing skills are VERY important on the sell
  side.

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Structured Finance

• The securitization of an asset with a steady
  stream of cash flows. Ex. Mortgage Backed
  Securities (MBS) and Collateralized Debt
  Obligations (CDO)
• Big four accounting firms all have established
  structured finance groups which recruit actively
  at JMU
• Interviews tend to be more personality fit based.
  
• Computer skills, especially Excel, are highly
  valued.
• Math skills may be tested.

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The Buy Side

• Institutions such as mutual funds, pension funds
  and hedge funds that buy large portions of
  securities for capital-management purposes.
  Private equity firms can also be included in this
  definition.
• Very limited opportunities for JMU students.
• Buy side interviews will be very similar to sell
  side. Private Equity interview Ibanking
  interview on roids.
• Hedge Fund Research Sell Side Research
  Writing.

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Preparation

• Vault Guide to Finance Interviews
• -THIS IS NEEDED
• Become familiar with Wall Street pop culture.
• Books Monkey Business, Liars Poker, When
  Genius Failed, and The Bonfire of the Vanities
• Movies Wall Street, Boiler Room, American
  Psycho
• As MIF analysts you should already be reading WSJ
  daily. Start reading more obscure/industry
  specific publications.
• Practice with friends, fellow analysts, and your
  manager.

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Questions Comments?