Finance InterviewsFinance Interviews

Darren Wray, Finance Sector Darren Wray, Finance Sector Manager Manager

Madison Investment FundMadison Investment Fund

2/26/072/26/07

AgendaAgenda I. Basic Interview TipsI. Basic Interview Tips

-Ground rules for all Finance interviews-Ground rules for all Finance interviews II. Areas of InterestII. Areas of Interest

-Investment Banking, Sales & Trading, Research, -Investment Banking, Sales & Trading, Research, Structured Finance, The “Buy Side” Structured Finance, The “Buy Side”

III. Investment Banking Recruiting Profile and Interview III. Investment Banking Recruiting Profile and Interview FAQFAQ -Typical path of entry into I-banking as a JMU -Typical path of entry into I-banking as a JMU studentstudent

-What to expect in an investment banking -What to expect in an investment banking interviewinterview

IV. Sales & Trading Recruiting Profile and Interview FAQIV. Sales & Trading Recruiting Profile and Interview FAQ

-Why Salespeople/Traders are inherently better -Why Salespeople/Traders are inherently better thanbankersthanbankers

Agenda (Cont.)Agenda (Cont.) V. Research Profile and Interview FAQV. Research Profile and Interview FAQ

-Highlight the different opportunities in -Highlight the different opportunities in researchresearch

-Illustrate common pitfalls in research -Illustrate common pitfalls in research interviewsinterviews

VI. Structured Finance and Buy Side Profiles/FAQVI. Structured Finance and Buy Side Profiles/FAQ

-What is Structured Finance? -What is Structured Finance?

-Brief overview of Buy Side interviews-Brief overview of Buy Side interviews VII. ConclusionVII. Conclusion

-List of resources for interview prep-List of resources for interview prep

-Closing Remarks-Closing Remarks

Basic Interview TipsBasic Interview Tips Dress professionally, keep it conservativeDress professionally, keep it conservative Know every line of your resumeKnow every line of your resume Interpersonal/communication skillsInterpersonal/communication skills Accomplishments: Must be measurableAccomplishments: Must be measurable Be able to tell “your story” in 30 seconds Be able to tell “your story” in 30 seconds

or lessor less Build a rapport with the interviewerBuild a rapport with the interviewer Thank you notesThank you notes Have intelligent and relevant questions Have intelligent and relevant questions

preparedprepared

Investment Banking Investment Banking InterviewsInterviews

Investment Banking Business SegmentsInvestment Banking Business Segments

-Corporate Finance: FIG, TMT, Energy etc..-Corporate Finance: FIG, TMT, Energy etc..

-Mergers & Acquisitions-Mergers & Acquisitions Typical Path of Entry for JMU StudentsTypical Path of Entry for JMU Students

-Very difficult industry to enter. Must be -Very difficult industry to enter. Must be persistent.persistent.

-Multiple phone interviews followed by -Multiple phone interviews followed by “super day”“super day”

Expect to do most of the work independentlyExpect to do most of the work independently

-JMU has no formal recruiting -JMU has no formal recruiting arrangements with any bankarrangements with any bank

Investment Banking FAQInvestment Banking FAQ

Why I-Banking? What is I-banking? Why do you Why I-Banking? What is I-banking? Why do you want to work for this bank? Various “fit questions”want to work for this bank? Various “fit questions”

Are you prepared to effectively sacrifice your Are you prepared to effectively sacrifice your social life by working 100+ hour weeks?social life by working 100+ hour weeks?

How do you value a company?How do you value a company? Tell me about a recent deal we completedTell me about a recent deal we completed Explain how the three financial statements fit Explain how the three financial statements fit

togethertogether What is your biggest weakness? What is your biggest weakness? Long stock recommendationsLong stock recommendations Brainteasers Brainteasers Where else are you applying/interviewing?Where else are you applying/interviewing? Computer SkillsComputer Skills

AttitudeAttitude

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

- Ace Greenberg - Ace Greenberg

Sales & Trading InterviewsSales & Trading Interviews

Sales & Trading:Sales & Trading:

--Often the most profitable area of an I-bankOften the most profitable area of an I-bank

-Traders buy and sell financial products with the -Traders buy and sell financial products with the goal of goal of making an incremental amount of money making an incremental amount of money on each trade. on each trade.

-The sales force primary job is to call on -The sales force primary job is to call on institutional institutional investors to suggest trading ideas and investors to suggest trading ideas and take orders.take orders.

Personality Conflicts between Salespeople and TradersPersonality Conflicts between Salespeople and Traders Path of entry almost identical to Investment BankingPath of entry almost identical to Investment Banking Interviews focus on your ability to work under pressureInterviews focus on your ability to work under pressure

Sales & Trading FAQSales & Trading FAQ

Expect Rapid Fire Questions from Volatile TradersExpect Rapid Fire Questions from Volatile Traders Long & Short Stock RecommendationsLong & Short Stock Recommendations Impact on Markets Following Economic Data Impact on Markets Following Economic Data

ReleaseRelease What is the square root of .1?What is the square root of .1? Why should I hire you as a trader/sales person?Why should I hire you as a trader/sales person? What would you do for a career if Wall St. didn’t What would you do for a career if Wall St. didn’t

exist?exist? Where are the major market indices now, and Where are the major market indices now, and

what have they done over the past 3, 6, 12 - what have they done over the past 3, 6, 12 - month periods?month periods?

What financial publications do you read?What financial publications do you read?

Research InterviewsResearch Interviews

Equity ResearchEquity Research--Division which reviews companies and Division which reviews companies and

writes reports writes reports about their prospects, often with about their prospects, often with "buy" or "sell" ratings. "buy" or "sell" ratings.

-Sell side research aids the firm’s traders and -Sell side research aids the firm’s traders and sales force as sales force as well as its institutional clientswell as its institutional clients

-Buy side research is typically less formal-Buy side research is typically less formal Fixed Income ResearchFixed Income Research

-Ratings companies such as S&P, Moody’s, -Ratings companies such as S&P, Moody’s, and Fitch and Fitch evaluate corporate and sovereign debt evaluate corporate and sovereign debt instrumentsinstruments

Research Interviews FAQResearch Interviews FAQ

Despite popular belief, research analysts are not Despite popular belief, research analysts are not hermits that enjoy going over 10-Ks in the dark by hermits that enjoy going over 10-Ks in the dark by themselves.themselves.

Long stock recommendation…Very importantLong stock recommendation…Very important How do you value a company?How do you value a company? Explain how the three financial statements fit togetherExplain how the three financial statements fit together What financial publications do you read? What financial publications do you read? Do you stray away or look forward to client contact?Do you stray away or look forward to client contact? How has GDP trended over the past year?How has GDP trended over the past year? What does the inverted yield curve mean for our What does the inverted yield curve mean for our

companies?companies? Writing skills are VERY important on the sell side.Writing skills are VERY important on the sell side.

Structured FinanceStructured Finance

The securitization of an asset with a steady The securitization of an asset with a steady stream of cash flows. Ex. Mortgage Backed stream of cash flows. Ex. Mortgage Backed Securities (MBS) and Collateralized Debt Securities (MBS) and Collateralized Debt Obligations (CDO)Obligations (CDO)

Big four accounting firms all have established Big four accounting firms all have established structured finance groups which recruit actively structured finance groups which recruit actively at JMUat JMU

Interviews tend to be more personality fit based. Interviews tend to be more personality fit based. Computer skills, especially Excel, are highly Computer skills, especially Excel, are highly

valued.valued. Math skills may be tested.Math skills may be tested.

The Buy SideThe Buy Side

Institutions such as mutual funds, pension Institutions such as mutual funds, pension funds and hedge funds that buy large portions funds and hedge funds that buy large portions of securities for capital-management purposes. of securities for capital-management purposes. Private equity firms can also be included in this Private equity firms can also be included in this definition.definition.

Very limited opportunities for JMU students.Very limited opportunities for JMU students. Buy side interviews will be very similar to sell Buy side interviews will be very similar to sell

side. Private Equity interview = Ibanking side. Private Equity interview = Ibanking interview on roids.interview on roids.

Hedge Fund Research = Sell Side Research – Hedge Fund Research = Sell Side Research – Writing.Writing.

PreparationPreparation

Vault Guide to Finance InterviewsVault Guide to Finance Interviews

-THIS IS NEEDED-THIS IS NEEDED Become familiar with Wall Street pop culture.Become familiar with Wall Street pop culture.

Books: Monkey Business, Liar’s Poker, When Books: Monkey Business, Liar’s Poker, When Genius Failed, and The Bonfire of the VanitiesGenius Failed, and The Bonfire of the Vanities

Movies: Wall Street, Boiler Room, American PsychoMovies: Wall Street, Boiler Room, American Psycho As MIF analysts you should already be reading WSJ As MIF analysts you should already be reading WSJ

daily. Start reading more obscure/industry specific daily. Start reading more obscure/industry specific publications.publications.

Practice with friends, fellow analysts, and your Practice with friends, fellow analysts, and your manager.manager.

Questions & Comments?Questions & Comments?