EVERYTHING YOU NEED TO KNOW TO SURVIVE (AND GET) A FINANCE INTERVIEW By Sarah Watterson

Edited By Rich Curtis 2008

Table of Contents:
I. II. III. How to Get the Interview How to Dress for the Interview How to Prepare Before the Interview a. Sales and Trading b. Investment Banking c. Research IV. V. How to Ace the Interview How to Follow-Up to an Interview

I. HOW TO GET THE INTERVIEW

No matter what anyone tells you, the hardest part of the internship process is getting an interview. These companies have literally thousands of resumes flying right under their noses and YOU have to stand out in order to have a chance amongst the rest. Sure, you may have a 4.0 average from an Ivy League school and be the President of a club or two, but guess what, a lot of YOUs are out their applying for these types of internships as well. Here are some tips to best prepare yourself and you resume for the interview process ! Get involved The worst thing to hear from students is that they did not know what to get involved in while they were at college. There are endless opportunities to get involved in activities that meet any need on Cornells campus. Companies like to see that students are involved in every setting that they are in for multiple reasons: o It shows dedication to your environment " Companies want people that they will want to represent their company later on o It shows a sense of character and personality " When you can be part of a team or the leader of a team, you have successfully honed a very desired character trait that companies want their employees to possess

o It shows initiative and motivation " In a school of 14,000+ students, taking on involvement in several activities shows the initiative that many finance firms look for when hiring.

Cornells Student Activity Office is a great resource for you to check out the types of clubs you would like to be affiliated with. You can check out the club descriptions and meeting times at: o http://sao.cornell.edu/SO/

! Resume After you have taken the initiative to involve yourself in several activities, it should be relatively feasible to begin building a good resume. Your resume is crucial to getting an interview because the employer (normally) only has this one piece of paper to try to build an accurate picture of you in his or her mind. Therefore there are some things you should definitely do: o PROOFREAD " This seems like it should go without saying, but so many employers claim that they will stop reading a resume if there is any type of error present. This means that if you are careless with any grammatical or spelling mistakes your internship search could be over before they even begin looking at your positives.

" Furthermore, at this time you should also be forewarned that ALL of the information presented on your resume can be attached to your name. Therefore, DO NOT LIE ABOUT ANYTHING. If you get an internship and they find out that some of your information is false, you will be held liable and your job could be taken away.

!Network, Network, Network While you are busy getting involved make sure you are meeting people and learning from them. It goes without saying that if you are interested in a job in finance, join some of the finance-related clubs here on campus. Interviewers will ask you why you are interested in finance and you better have a good answer for them. Joining finance-related clubs will also help your ability to meet people in the fields you want to go into: o You should be contacting Cornell alumni at the banks to talk to you about their experiences. This will be so beneficial, because not only are they a part of the recruitment effort for your school, but usually they are young professionals willing to take the time to explore your interests and tell you about their experiences. AEM alumni are mostly always willing to give up their time to help Cornellians. However, YOU must take the effort and initiative to contact them! o The AEM alumni link on the website can be useful " http://aem.cornell.edu/undergrad/network.htm

 Also, make sure that you are going to all of the presentations provided to Cornell by the companies. If you are unsure as to when the companys presentations will be, go on the companys website and look at their recruiting calendar. You should definitely see Cornells name on there. o Meet people and remember names " I will save you a lot of time and aggravation throughout your job search and tell you that if you do not like meeting people and learning about what they do, YOU SHOULD NOT BE INTERVIEWING WITH THEM. Companies see through people who are not showing a genuine interest and if that is not reason enough, do something you want to do, not something you feel like you should be doing just because o Also always follow-up " Ask for a business card and always follow-up with the people you meet. They are going to meet at least 50 students at these presentations. Send them a thank-you note (NOT GENERIC) and let them know that you enjoyed speaking with them and would love to learn more about what they do! " More on Following-Up in How to Follow-Up to an Interview

II. HOW TO DRESS FOR THE INTERVIEW

The best advice Ive ever received regarding to dress is to Dress for the job you want to have. Sure, the dress code may be business casual, but if you show a little effort and go the extra step all the time it will be noticed. For mostly all finance-related interviews your dress code will be business professional. Princeton Review says that this means: Business Professional for Women:

Suitblack, gray, dark burgundy or navy Contrasting jacket and skirt Two-piece dress White or off-white blouse Solid color blouse (may be pastel) Gold or silver earrings Scarf that picks up colors from the suit Black, navy or taupe pumps Neutral or taupe hosiery Black, dark brown or burgundy leather handbag All-weather coat Black, brown or burgundy briefcase

Business professional for Men:

Suitssolid-color navy, gray and charcoal gray (one each color) Black socks, two pairs navy socks Pin-striped navy suit, same in gray Tiesburgundy, red print, navy, mauve, striped silk and patterned silk Navy sport coat with gray trousers Black leather belt

White cotton shirts, a blue or pin-striped shirt Black leather briefcase Black slip-on shoes, or black lace-up shoes (http://www.princetonreview.com/cte/articles/hired/dressUp.asp)

Also, now that you know what is acceptable to wear you should also be familiar with things that are NEVER acceptable to wear: Flip-flops or open toed shoes Big over-accentuated jewelry Heavy smelling perfume or cologne Large hair accessories or hats Bare midriffs Low-cut garments Anything that is too tight Jeans Shorts or T-Shirts Sarah, how about skirts or dresses that are too short?

III. HOW TO PREPARE BEFORE THE INTERVIEW

Before beginning to prepare for the interview, you need to assess what is expected of you throughout the interview. This will depend upon what type of job you are interviewing for (e.g. sales and trading, investment banking, or research), as well as what type of interview that the interviewer will choose to conduct. I will first go over the types of interviews used by employers and then I will talk more in depth about how to prepare for each interview: sales and trading, investment banking and research. ! GO THROUGH THE TYPES OF INTERVIEWS USED BY EMPLOYERS AND PREPARE ANSWERS FOR THE QUESTIONS YOU THINK YOU MIGHT BE ASKED A. What is the point of the interview? - Goals of the Interviewer: o Assess intelligence, competence, and fit of the prospective employee - Goals of the Interviewee: o Control the tone and tempo of the interview by suiting the answers and direction of the conversation to YOUR strengths o Have a general story about yourself that you want to create for the interviewer.

" For example, you might be a qualitatively-inclined Econ major who has been taken by the recent happenings in the economy and the credit crisis. After reading the Wall St. Journal to learn more about what is going on, you are becoming interested in the world of finance. " For example, you could be a star basketball player who has always strived to show your competitive spirit in all that you do. You are a driven and motivated individual who never wants to lose and enjoys learning new things. " Point! your story DOES NOT necessarily have to be directly related to finance, but it sure as hell better let the interview know something that will make him or her want to hire you and work with you (i.e. fast learner, competitive spirit, etc) B. Interview Preparation - While preparing for your interview, make sure to ask all those stupid questions to networks you have made at school or young professionals working for companies. o Point! Do not ask a managing director who will be interviewing you about Sales and Trading the day before your interview - Use Vault Interview Guide and Vault Company Guides to help give you a sketch of what will be expected through your interview. Please search through these different guides and pull information that will help you regarding your specific company or job. These resources are available to you online

!Vault Access The Vault Online Career Library requires a password for access to its guides. Please enter the password indicated below on the Vault login page: Password: cornellcs Please click here to continue

!Wetfeet Access Wetfeet requires a user name and password for access to its guides. Please enter the user name and password indicated below when prompted: User Name (case sensitive): CUStudent Password: cornellcs Please click here to continue

C. Types of Questions for Each Job: Technical: Questions that relate directly to the nature of the position for which you are interviewing. These differ from job to job o Investment Banking: Accounting, Valuations " Example: Explain the discounted cash flow method of valuation. o Sales and Trading; Quantitative brainteasers, investment ideas, macroeconomic views " Example: Whats been happening to the dollar and where will it be in six months? o Research; Stock ideas that you would short and long; Valuations " Example: You are a pharmaceutical/biotech research professional. Pitch me a stock that you would go long and short right now and why? How to go about answering the technical questions o Manage the expectations of the interviewer " Do not feign knowledge If you are not a finance/business major let them know that while answering the question The less they expect, the more easily impressed they will be with something that you know

Example: What type of a stock would you pitch me right now? o Although I have never taken finance, I know that you are a twenty-something year old male with a comfortable living. Therefore, you are looking for something that is kind of risky and something that you could make you a good return. Therefore I would pitch you something like o This showed that you based your investment decision on the preferences and earnings of your prospective client. Even though you claimed to know nothing, they would be impressed that you knew something! o Never go deeper into a subject than you feel completely comfortable with " If you try to impress the interviewer by talking about topics you dont fully understand, you will be embarrassed by the interviewer For my first interview ever when I was a sophomore in college, the woman interviewing me asked me if I knew anything about United States inter-bank lending practices. I had never taken finance, but I remembered reading something in the Wall Street Journal about this thing called LIBOR. I started talking and talking about this LIBOR and how it controls United States inter-bank lending and very in-depth procedures used. She kept probing me and probing me and I kept talking about these

foreign things that I knew nothing about at all. After the interview I found out the LIBOR was the London Inter bank Offering Rate and I basically felt like a really idiot. Needless to say I did not get that job, but at least I learned my lesson. " Remember that as a student who has never had a job in finance, you dont know anything, so dont try to present yourself as a know-it-all o If you dont know something exactly, show effort to provide some answer " If you dont exactly know what a CDO is, you might know they have something to do with mortgages. This opens the conversation to something that you might be able to talk more intelligently about " One young man (08) going to work at Lazard was asked something about a specific price of something. He wittingly said, I do not know what that actually means or what the price is, but I know that it is located on the back of the Wall Street Journal next to the weather. This impressed the interviewer, because he did not pretend to know something, but it showed that he did read the Wall Street Journal regularly. o If you dont nail a technical question, dont lose your composure. One question wont sink you, but losing confidence for the rest of the interview definitely will!

 Company Questions o Students, it is plain and simpleLEARN ABOUT THE COMPANY o Companies want employees that feel emotionally connected to the firm. This minimizes turnover and increases productivity. It costs A LOT of money to hire and fire, so companies do not want to do it very often! o Company websites can be very helpful " Simply Google the company and look up headlines " Go to companys website and look over career section " Learn about the firm management (they will ask you who the CEO, CFO, and Presidents are very often) " Know about their international presence and initiatives

Behavioral: Questions that assess your character, personality, and fit. You want to demonstrate several qualities/characteristics when answering these questions o Business Acumen/Professionalism: These will mainly focus on your past experiences and what youve learned from them o Leadership: How youve become a leader, when youve been challenged and how you dealt with obstacles o Teamwork: Examples of how youve worked on a team and what roles youve taken

o Analytical Skills o Initiative Answering Behavioral Questions o Each answer should demonstrate at least two of the qualities above o Present your answers in STAR framework " Situation: Basic background on the circumstances " Task: What was the immediate assignment/obstacle facing you (best if presented as some kind of adversity) " Action: What exactly did you do to accomplish the task " Result: What did you learn from the experience, how did you grow from the adversity o By the end of your answer, the interviewer should have a clear understanding of the qualities that you aimed to express in your answer

QUESTIONS TO EXPECT (PREPARE) FOR EACH JOB INTERVIEW Investment Banking (provided by http://www.ubsla.com/ibp/): Technical: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Walk me through a DCF. What is valuation? What are different methods of valuing a company? Walk me through the financial statements. How do they tie together? How would a change in depreciation expense flow through the financial statements? How would a change in LIFO/FIFO flow through the financial statements? Walk me through an increase in depreciation expense of 10mm? What happens if capital expenditure increases by 10mm? Walk me through the purchase of a truck for 10 mm When would you issue debt and when would you issue equity? How would you normalize a $20m restructuring charge? Given such a change in interest rates, what will happen to bond prices? What is EBITDA? EBIT? Why are they important? When would you use EBIT vs. EBITDA? What is WACC? How do you calculate the growth rate for WACC? Where do you get the risk free rate? What are multiples? How do you know which ones to use? What is 15 x 17? Enterprise Value is 100, Equity value if 150, what is net debt? For Acquisition vs. Public Comparables, which would be greater and why? What are the drawbacks of using WACC in valuing companies? What multiples would a company use? When would a company issue debt? How about equity? What is cheaper, debt or equity? What is an LBO? What are some measures of cash flow for a company?

26. How do you get FCF from EBITDA? 27. What would happen to net change in working capital if receivables went up? 28. What is our companys stock price? Is it fairly valued or overvalued? 29. You buy an investment for $100m, you sell it for $100m, how would you make a profit? 30. What are the different types of debt? How do they differ? 31. If interest rates increase, what happens to bond prices?

Brain Teasers: 1. What is the present value of a zero-coupon perpetuity? 2. Its 9:45 pm, how would you go about finding the angle between the minute and hour hand? 3. Two boats are going at 10miles/hour. They are 5 miles from one another. How long before they hit? 4. What is the sum of all the numbers between one and one hundred? 5. If this table was full of pennies, do you think they could stack up to measure this building?

Sales and Trading (partially provided by http://homepages.luc.edu.htm): Technical: 1. 2. 3. 4. 5. 6. 7. 8. Why would two companies merge? Why might a company choose debt over equity financing? Where is our firm's stock trading at? Where is the Dow Jones today? S&P? NASDAQ? 20-year or 30year TBonds? Where do you think interest rates will be 2 years from now? How do you value a bond? How are bonds and interest rates related? Where is the market going? What is going on in the economy?

9. Who is the Fed Chairman? 10. If you could meet the Fed Chairman today, what would you tell him to do with our current economy? 11. Tell me three items on the front page of today's Wall Street Journal. 12. Explain one stock you would pitch to me? 13. Explain one stock you would long and/or short? Why? 14. Do you personally invest in stocks? Which ones? Why? i. If you do not currently invest, you should explain why not! Brain Teasers: 1. How many hot dogs would you sell at the Superbowl? 2. How many miles to the center of the Earth? 3. How many potholes in New York City? 4. How many cars in the United States? Research: Technical: 1. Prepare many stocks to go long/short on. 2. Know how to calculate FCF (Free Cash Flow) 3. Know how to run a DCF (Discounted Cash Flow) 4. Know the interrelationship between the three main financial statements 5. How should a P/E ratio affect how a stock should be rated? If you want to specialize: 6. Go long/short on Biotech/Pharmaceutical/Consumer Goods, etc? 7. Why do you want to work in BLANK sector? 8. What makes you qualified to work in BLANK sector?

IV. HOW TO ACE THE INTERVIEW

Basic Structure of the Interview - Greeting: First 30 seconds are critical. Smile, confident introduction, good handshake. Cannot underestimate the importance of first impressions - Tell me about yourself: This is an opportunity to introduce yourself as a person, not necessarily as a professional. They want to hire someone they like, someone they can relate to, so tell them the things that make you seem interesting. You want to establish a connection with your interviewer. - Walk me through your resume: Have a story or two ready for each major part of your resume (each job experience, club membership, etc.) - Technical/Behavioral Questions - Questions for the Interviewer End of the Interview Why do you want to work for this company? Focus on learning, developing your skills in an area of interest, and company culture Questions for the Interviewer o Ideally, you will have figured out with the interviewers position is and you can ask a question that relates to them personally Ask them about their impression of the firms culture and why theyve stayed with the firm (Why do you get up to go to work?)

The main way to ace the interview is to honestly be yourself. You are going to be working with these people for MANY, MANY hours a day and you will have to get along. You will often hear about the airplane test. This is the little test employers do when they interview. They like to see if they could stand sitting next to you for three-hour flight. Be normal, be genuine, be likeable and you are surely going to ace the interview. Read the interviewers body language. If you see that the interviewer is enjoying your story, continue. However if he or she looks bored, STOP IMMEDIATELY. Also, people always like to hear themselves speak, so make sure that you are giving the interviewer every opportunity to speak throughout the interview!

V. HOW TO FOLLOW-UP THE INTERVIEW

Often this part is left out. However, it is very important. When you are interviewing, make sure to think of a few important points that you spoke about with the interviewer. Then formulate a cohesive, eloquent, and error-free note for your interviewer. They are hiring you to work with clients. If you write chicken-scratch or have errors, they will not want someone like you to work for them because then you will not be trusted to work with clients. Therefore, proofread, proofread, and proofread! Also, make sure that you are following a formal format. No LOL, Thanx or any other type of slang will be permitted! Your note can be online because that will be the most effective way to reach these professionals. Lastly, many times the turnaround time between when you are interviewed and the decision to move to the next round is very fast. Therefore, get a nice note out to your interviewer as quickly as possible. That being said, do not run out of the interview and type it up. Write it around lunchtime if you interview in the morning and wait halfhour to an hour if you interview in the afternoon.