24 questions you will encounter in capital markets interviews

The last 12 months have been a mixed bag for debt and equity capital markets bankers. While the equity capital markets (ECM) teams continue to pull in record revenues - particularly in the US where volumes hit a record $158bn in the first half of 2015, according to Dealogic - debt capital markets (DCM) revenues have slowed across the industry and were down 7% year-on-year in the first six months.

Still, while DCM doesn't have the 'sexy' feel of seeing your work listed in the FT or Wall Street Journal, banks still make around twice the amount of revenues from debt listings than they do from equity listings. And bankers working in the sector suggest there's still a decent amount of demand for their talents.

"I wouldn't say that we're a safe harbour or anything, but our team is still growing and there are plenty of banks still hiring at my level," says one third-year analyst working in DCM.

Corporate investment grade bond issuance hit a record high of $977.5bn in the first half of 2015, but again this was driven by revenues in the U.S. Assuming that the capital markets divisions of investment banks hold more allure to you than M&A, what types of interview questions can you expect?

ECM: 

What are the advantages and disadvantages of an IPO?

A company makes a $140 cash purchase of equipment on January 1. How does this impact the three statements this year and next year?

How would you explain the difference between the debt capital markets and leveraged finance teams in investment banking?

Tell me how would you value a company? Which tools are most effective in this area?

Tell me a company you would invest in and why.

A company with high P/E acquires a rival with low P/E. Is this accretive or dilutive?

When would you use a PEG multiple?

What two companies are you bullish on, and what two companies are you bearish on? Why?

DCM: 

Explain to me what an FX forward is.

How would you describe the difference between the DCM team of an investment bank and a leveraged finance team?

A UK company decides to issue a bond in USD. What are the reasons for doing this? What risks are they exposing themselves to? How would you mitigate against this risk?

Let’s say this company issues $xx of senior notes – what will its credit statistics look like after that debt issuance, over the next 5 years?

Explain a yield curve as you would to your grandma.

What's your opinion on the Bank of England's monetary policy? How do you see it changing next year?

What is a convertible bond? When would a company use one?

Both: 

What does the capital markets division of an investment bank do?

How would you rate us against our competitors?

Wouldn’t you be better suited to working for another organisation?

What exactly does the word ‘success’ mean to you?

Tell me about a challenging situation you have faced. What was this situation? How did you handle it?

What’s 567 x 4?

How many weddings are there in France in a year?

What is unique about our firm's culture?