2. Updated WSO Technical Guide - Buyer Gena...

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Page 1Technical Interview GuidePreparation for Finance Interviews Second Edition Copyright 2009 by WallStreetOasis.com. All rights reserved. All information in this guide is subject to change without notice. WallStreetOasis.com makes no claims as to the accuracy and reliability of this guide and the information contained within. No part of this guide may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of WallStreetOasis.comBuyer: Gena Jiang ([email protected])Transaction ID: 83G76986JA281445G
Page 2ContentsTechnical Questions: Introduction .....................................................................................................................................................3General Topics of Study .....................................................................................................................................................................5Keeping Current is Key! .................................................................................................................................................................5Financial Report Basics ..................................................................................................................................................................6Current Event Related ........................................................................................................................................................................7Accounting, Finance and Valuation ..................................................................................................................................................10Basic ............................................................................................................................................................................................10Intermediate .................................................................................................................................................................................23Advanced .....................................................................................................................................................................................30Stocks ..............................................................................................................................................................................................31Basic ............................................................................................................................................................................................31Intermediate .................................................................................................................................................................................34Advanced.........................................................................................................................................................................................39Bonds and Interest Rates ..................................................................................................................................................................40Basic ............................................................................................................................................................................................40Intermediate .................................................................................................................................................................................46Advanced.........................................................................................................................................................................................51Currencies........................................................................................................................................................................................53Basic ............................................................................................................................................................................................53Intermediate .................................................................................................................................................................................54Advanced .....................................................................................................................................................................................55Options and Derivatives ...................................................................................................................................................................56Basic ............................................................................................................................................................................................56Intermediate .................................................................................................................................................................................59Advanced .....................................................................................................................................................................................61Mergers and Acquisitions .................................................................................................................................................................63Basic ............................................................................................................................................................................................63Intermediate .................................................................................................................................................................................65Advanced .....................................................................................................................................................................................67Other ...............................................................................................................................................................................................73Brainteasers .....................................................................................................................................................................................75Income Statement Basics ..................................................................................................................................................................78Balance Sheet Basics........................................................................................................................................................................79Cash Flow Basics .............................................................................................................................................................................80Link Between Financial Statements ..................................................................................................................................................81Buyer: Gena Jiang ([email protected])Transaction ID: 83G76986JA281445G
Page 3Technical Questions: IntroductionTechnical Questions: IntroductionTechnical Questions: IntroductionTechnical Questions: IntroductionTechnical questions are part of almost every finance interview. While the level of difficulty of these questions vary from firm to firm, and will change based on a candidates background, all interviewees will undoubtedly be quizzed on technical questions in at least one round. This guide is a fairly exhaustive compilation of the most common technical questions in finance interviews. Obviously, you will not encounter every question, however, the interview may also contain variations or new questions altogether. The more detailed and accurate responses you give, the more likely you will impress your interviewer. The questions in this guide are broken down into the following categories: Current Events, Accounting / Finance / Valuation, Stocks, Bonds / Interest Rates, Currencies, Options / Derivatives, and Mergers & Acquisitions. These categories are then divided into basic, intermediate and advanced concepts. The questions you are most likely to be asked are in bold. Obviously, you should focus your studies on the relevant industry you are trying to enter. If you are preparing for a Sales and Trading interview, you should focus on stocks, bonds/interest rates, currencies, and options/derivatives. For Investment Banking positions you should have a general background in all of those categories, but you are more likely to encounter questions from the Accounting/Finance/Valuation and the Mergers and Acquisitions section. The final category is the brainteasers section. Getting brainteasers can definitely rattle you in an interview. In some cases, an interviewer will give a brain teaser to see how you react under pressure. What is

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