Finance Interview Questions

In this lesson, we will focus on the common interview questions asked for finance roles. Whether you're applying for positions in corporate finance, investment banking, financial analysis, or risk management, this lesson will help you prepare for the most frequently asked questions in finance interviews.

General Finance Questions

1. Why did you choose to pursue a career in finance?
2. What do you know about our company and its financial operations?
3. How do you stay updated on financial news and trends?
4. What are the three main financial statements, and how are they interconnected?
5. Can you explain the difference between equity financing and debt financing?
6. What is your understanding of the time value of money?
7. How do you approach making financial decisions under uncertainty?
8. What is the significance of working capital in a business?
9. What is your understanding of financial modeling, and have you had any experience with it?
10. How do you evaluate the financial health of a company?
11. Market cap, primary and secondary market, equity, derivatives
12. What is the bond market?
13. What are derivatives?
14. What is an option?
15. What is a repo?
16. Capital market, primary market, secondary market, equity
17. On derivatives and option Greeks
18. Why do you want to join Goldman Sachs?
19. Explain risk in simple terms.
20. What is the risk?
21. What is the difference between a forward contract and a futures contract?
22. Can you explain the concept of net present value (NPV)?
23. What is the internal rate of return (IRR) and how is it used in finance?
24. Explain the difference between stocks and bonds.
25. What is a hedge fund?
26. How do you calculate the weighted average cost of capital (WACC)?
27. What is the efficient market hypothesis?
28. Can you explain what a swap is in finance?
29. What is a financial statement and what are its main components?
30. How do you perform a discounted cash flow (DCF) analysis?
31. What is the difference between an income statement and a balance sheet?
32. Explain the concept of liquidity in financial markets.
33. What are the key differences between debt and equity financing?
34. How does inflation impact financial markets?
35. What are the main types of financial ratios, and how are they used?
36. Can you explain what beta is in finance?
37. What is the capital asset pricing model (CAPM)?
38. How do you value a company using the multiples approach?
39. What is working capital, and why is it important?
40. How would you assess the financial health of a company?
41. What are the key factors that drive stock prices?
42. Can you explain the difference between a bull market and a bear market?
43. What is an IPO, and how does it work?
44. How do interest rates affect the bond market?
45. What is quantitative easing?
46. What is a credit default swap (CDS)?
47. How do you manage currency risk in international finance?
48. What is the difference between a call option and a put option?
49. Explain the role of the Federal Reserve in the U.S. economy.
50. What is a leveraged buyout (LBO)?
51. How do you calculate return on equity (ROE)?
52. What are the different types of financial markets?
53. What is the difference between systematic and unsystematic risk?
54. How do you calculate the price-to-earnings (P/E) ratio?
55. What is the difference between absolute return and relative return?
56. Can you explain what a convertible bond is?
57. What are the main functions of investment banking?
58. What is a margin call, and how does it work?
59. How do you assess the creditworthiness of a borrower?
60. Explain the concept of arbitrage in finance.

Corporate Finance

1. What are the key components of a capital budgeting process?
2. How do you calculate a company’s cost of capital?
3. What is the Weighted Average Cost of Capital (WACC), and why is it important?
4. Can you explain the concept of net present value (NPV)?
5. What is the internal rate of return (IRR), and how is it used in finance?
6. How would you assess whether a company should take on a new project?
7. What are the advantages and disadvantages of raising capital through equity versus debt?
8. Can you explain what a leverage ratio is and why it matters?
9. How do you approach a company’s dividend policy decision?
10. What factors would you consider in a company’s capital structure decision?

Investment Banking

1. Why do you want to work in investment banking?
2. What is a discounted cash flow (DCF) analysis, and how do you perform it?
3. Can you walk me through a merger or acquisition deal you’ve studied?
4. How would you value a company for a potential acquisition?
5. What are the main valuation techniques used in investment banking?
6. How do you evaluate the fairness of a company’s valuation?
7. What is the role of an investment bank in an IPO?
8. Can you explain what an LBO (leveraged buyout) is and how it works?
9. What is the difference between a private equity firm and a hedge fund?
10. How do you stay organized when working on multiple deals simultaneously?

Financial Analysis and Planning

1. How do you create a financial forecast for a company?
2. What is the difference between a budget and a forecast?
3. How do you approach variance analysis in financial planning?
4. What tools and software do you use for financial analysis?
5. Can you explain the concept of free cash flow (FCF)?
6. How would you assess the financial impact of a new business initiative?
7. What is ratio analysis, and which ratios do you consider most important?
8. How do you use financial ratios to assess a company’s performance?
9. What steps would you take to improve a company’s financial performance?
10. How do you prepare a company’s financial statements for a board presentation?

Risk Management

1. What is your understanding of financial risk, and how do you manage it?
2. How do you identify and assess risks in a financial project?
3. Can you explain the concept of Value at Risk (VaR)?
4. What role does hedging play in risk management?
5. How would you evaluate the credit risk of a potential client or investment?
6. What is the difference between market risk and credit risk?
7. How do you approach liquidity risk management?
8. What is operational risk, and how do you mitigate it?
9. Can you explain the role of derivatives in managing financial risk?
10. How do you ensure compliance with regulatory requirements in risk management?

Asset Management and Investment Analysis

1. What is your investment philosophy, and how do you choose investments?
2. How do you evaluate the performance of an investment portfolio?
3. What is the difference between active and passive portfolio management?
4. Can you explain the concept of asset allocation?
5. What is modern portfolio theory, and how is it applied in investment management?
6. How do you assess the risk-return profile of an investment?
7. What factors would you consider in constructing a diversified portfolio?
8. Can you explain the concept of alpha and beta in portfolio management?
9. How do you approach selecting stocks for an equity portfolio?
10. What is the role of bonds in an investment portfolio?

Financial Markets and Instruments

1. How do you stay informed about market developments?
2. What is your understanding of the efficient market hypothesis (EMH)?
3. How do interest rates affect financial markets?
4. What is the difference between a stock and a bond?
5. Can you explain the concept of derivatives, and how are they used in finance?
6. What factors drive currency exchange rates in the forex market?
7. How do you analyze the performance of a stock market index?
8. What are the key differences between equity and fixed-income securities?
9. Can you explain the role of central banks in financial markets?
10. How do you approach investing in emerging markets?

Scenario-Based Questions

1. A company’s stock price has dropped by 20% in one day. How would you analyze the situation?
2. You’re tasked with assessing the financial viability of a new product launch. What steps do you take?
3. A client wants to know whether they should invest in a volatile sector. How do you advise them?
4. You’ve been asked to create a financial model for a startup. What factors do you consider?
5. The CFO asks you to identify cost-saving opportunities. How do you approach this?
6. A client is concerned about potential market downturns. How do you address their concerns?
7. You discover a significant discrepancy in the financial statements. What do you do?
8. A company is considering a merger. What financial aspects would you evaluate?
9. You’re analyzing a company with inconsistent cash flows. How do you assess its financial stability?
10. A client is interested in diversifying their portfolio. What recommendations would you make?

Analytical and Problem-Solving Skills

1. How do you approach solving complex financial problems?
2. Can you describe a time when you used data to make a financial decision?
3. What is your process for analyzing financial statements?
4. How do you ensure the accuracy of your financial analysis?
5. Can you explain how you would perform a scenario analysis for a financial project?
6. How do you balance risk and reward when making investment decisions?
7. Describe a situation where you had to analyze conflicting financial data.
8. How do you use financial ratios to evaluate a company’s performance?
9. What is your approach to forecasting future financial performance?
10. Can you give an example of a time when your analysis led to a significant business outcome?