What does an investment bank actually do?

An investment bank works for companies, governments, and other large institutions. Two things: it advises them when they buy, sell, or merge with another business, and it raises money for them by selling their stock or their bonds to investors. The cash comes from those investors. The client is paying for the valuation work, the pricing, and the access to buyers. The bank gets hired deal by deal and takes a fee, usually a percentage of the deal size, and usually only once the deal closes.

What's the difference between an investment bank and a commercial bank?

A commercial bank earns a spread. It takes in customer deposits, lends that money out at a higher interest rate, and keeps the difference. An investment bank earns fees. It advises companies on transactions like buying or selling a business, and it underwrites new securities: it helps a company sell newly issued shares or debt to investors, and often commits its own capital to get that sale done. The dividing line is the revenue model and the funding base. Which firm is bigger or more diversified has nothing to do with it.

What is a private equity firm? What is a hedge fund?

A private equity firm pools money from outside investors such as pension funds and endowments, adds borrowed money on top, and buys controlling stakes in companies, usually the entire business. It owns that business privately for roughly three to seven years, works to make it more profitable, and sells it. A hedge fund raises a similar pool but puts it into securities that already trade in public markets, meaning tradable instruments like shares, bonds, currencies and derivatives. It can profit from prices falling as well as rising, and it moves in and out far more quickly. Both are paid the same shape of fee, an annual management fee plus a cut of the profits, commonly around 2% and 20%. Both are clients of investment banks.

What's the difference between sell-side and buy-side?

The sell-side sells services. Investment banks, brokerages and research desks advise companies, raise money for them and execute trades, and they are paid mainly in fees, commissions and spreads (a spread is the gap between the price a dealer buys at and the price it sells at). The buy-side buys and holds the assets. Private equity funds, hedge funds, mutual funds and pension funds put capital at risk, for themselves or for their investors, and keep the gains and losses that follow. In one line: the sell-side is paid for the service, the buy-side owns the outcome.

What does a junior banker actually do day-to-day?

A junior banker (an analyst or a first-year associate) spends the day building financial models and client presentations, researching companies and industries, and turning senior bankers' comments on those documents. A financial model is a spreadsheet that projects a company's future finances, and you use it to value the company or test a deal. A pitch book is the slide deck a bank brings to a client to argue for a transaction. Senior bankers own the client relationship and win the business. The junior produces the analysis and the materials that make that conversation possible.

What's the difference between coverage groups and product groups?

Coverage groups are organized by industry and own the client relationship. Product groups are organized by transaction type and execute the deal. A healthcare coverage banker knows the companies in healthcare and what their management teams are trying to do. A mergers and acquisitions banker knows how the purchase of one company by another gets valued, structured, and negotiated, and does that work across industries. On most live deals the two sit side by side, and the bank typically earns its fee when the transaction closes.

A stock is a share of ownership in a company. Each share entitles the holder to a slice of what is left over after everyone the company owes has been paid. That is why equity is called the residual claim. Lenders sit ahead of shareholders and are owed a fixed amount on a set schedule. Shareholders are owed nothing specific and take whatever remains, from zero to very large.

What is market cap, and how is it different from the share price?

Market cap, short for market capitalization, is the share price multiplied by the number of shares outstanding. That is the market's price tag on the company's whole equity, everything the shareholders own. Share price is the value of one share, one slice of that total. Companies divide themselves into very different numbers of shares, so a higher share price does not tell you that a company is bigger.

A bond is tradable debt. The buyer lends money to an issuer, a company or a government, and gets a contractual promise of interest payments, called coupons, plus repayment of the borrowed amount, called the principal or face value, on a set maturity date. The holder is a lender, not an owner, so the payments are set by the contract and do not vary with profits, and debt claims are repaid ahead of equity if the issuer runs into trouble. Bonds trade in the secondary market after issue, so the price moves even while the coupon stays fixed.

What happens to bond prices as interest rates rise, and can you explain why?

Bond prices fall when interest rates rise. A bond already issued promises a set coupon and a set face value at maturity. Those cash flows are locked, so the price does the moving: when the market's required return goes up, the same payments get discounted at a higher rate and are worth less today. The price keeps falling until a new buyer's return on that bond matches what comparable new bonds are paying.

What's a public company vs. a private company?

A public company has its shares listed on a stock exchange, a regulated marketplace such as the New York Stock Exchange or Nasdaq, where an ordinary investor can buy or sell them through a broker at a quoted price. The listing brings a filing duty with it: audited financial reports (in the US, with the Securities and Exchange Commission, the SEC) that anyone can read. A private company's shares are not listed. They change hands through privately negotiated transfers that usually need company or board approval, and the company generally has no duty to publish its numbers. The dividing line is the listing plus the public reporting that comes with it. Size, profitability, and the mix of owners do not decide it.

Why would a company issue debt or equity? What are the pros and cons of each?

A company issues debt or equity to raise cash it cannot generate internally: funding growth and capital spending, paying for an acquisition, refinancing debt that is coming due, or, with equity, letting early owners sell part of their stake, where the cash goes to them rather than the company. Debt is the cheaper source. Interest is generally deductible against taxable profit, lenders rank ahead of shareholders for repayment, and straight debt is non-dilutive, meaning existing owners keep the same percentage of the company. The price of that is interest and principal the company owes whatever its results, plus the risk of default if it misses them. Equity costs more, because shareholders are paid last and only out of what is left, so they require a higher return. In exchange it carries no required payment, no repayment date, and room to survive a bad year.

What does an investment bank actually do?

An investment bank works for companies, governments, and other large institutions. Two things: it advises them when they buy, sell, or merge with another business, and it raises money for them by selling their stock or their bonds to investors. The cash comes from those investors. The client is paying for the valuation work, the pricing, and the access to buyers. The bank gets hired deal by deal and takes a fee, usually a percentage of the deal size, and usually only once the deal closes.

What's the difference between an investment bank and a commercial bank?

A commercial bank earns a spread. It takes in customer deposits, lends that money out at a higher interest rate, and keeps the difference. An investment bank earns fees. It advises companies on transactions like buying or selling a business, and it underwrites new securities: it helps a company sell newly issued shares or debt to investors, and often commits its own capital to get that sale done. The dividing line is the revenue model and the funding base. Which firm is bigger or more diversified has nothing to do with it.

What is a private equity firm? What is a hedge fund?

A private equity firm pools money from outside investors such as pension funds and endowments, adds borrowed money on top, and buys controlling stakes in companies, usually the entire business. It owns that business privately for roughly three to seven years, works to make it more profitable, and sells it. A hedge fund raises a similar pool but puts it into securities that already trade in public markets, meaning tradable instruments like shares, bonds, currencies and derivatives. It can profit from prices falling as well as rising, and it moves in and out far more quickly. Both are paid the same shape of fee, an annual management fee plus a cut of the profits, commonly around 2% and 20%. Both are clients of investment banks.

What's the difference between sell-side and buy-side?

The sell-side sells services. Investment banks, brokerages and research desks advise companies, raise money for them and execute trades, and they are paid mainly in fees, commissions and spreads (a spread is the gap between the price a dealer buys at and the price it sells at). The buy-side buys and holds the assets. Private equity funds, hedge funds, mutual funds and pension funds put capital at risk, for themselves or for their investors, and keep the gains and losses that follow. In one line: the sell-side is paid for the service, the buy-side owns the outcome.

What does a junior banker actually do day-to-day?

A junior banker (an analyst or a first-year associate) spends the day building financial models and client presentations, researching companies and industries, and turning senior bankers' comments on those documents. A financial model is a spreadsheet that projects a company's future finances, and you use it to value the company or test a deal. A pitch book is the slide deck a bank brings to a client to argue for a transaction. Senior bankers own the client relationship and win the business. The junior produces the analysis and the materials that make that conversation possible.

What's the difference between coverage groups and product groups?

Coverage groups are organized by industry and own the client relationship. Product groups are organized by transaction type and execute the deal. A healthcare coverage banker knows the companies in healthcare and what their management teams are trying to do. A mergers and acquisitions banker knows how the purchase of one company by another gets valued, structured, and negotiated, and does that work across industries. On most live deals the two sit side by side, and the bank typically earns its fee when the transaction closes.

A stock is a share of ownership in a company. Each share entitles the holder to a slice of what is left over after everyone the company owes has been paid. That is why equity is called the residual claim. Lenders sit ahead of shareholders and are owed a fixed amount on a set schedule. Shareholders are owed nothing specific and take whatever remains, from zero to very large.

What is market cap, and how is it different from the share price?

Market cap, short for market capitalization, is the share price multiplied by the number of shares outstanding. That is the market's price tag on the company's whole equity, everything the shareholders own. Share price is the value of one share, one slice of that total. Companies divide themselves into very different numbers of shares, so a higher share price does not tell you that a company is bigger.

A bond is tradable debt. The buyer lends money to an issuer, a company or a government, and gets a contractual promise of interest payments, called coupons, plus repayment of the borrowed amount, called the principal or face value, on a set maturity date. The holder is a lender, not an owner, so the payments are set by the contract and do not vary with profits, and debt claims are repaid ahead of equity if the issuer runs into trouble. Bonds trade in the secondary market after issue, so the price moves even while the coupon stays fixed.

What happens to bond prices as interest rates rise, and can you explain why?

Bond prices fall when interest rates rise. A bond already issued promises a set coupon and a set face value at maturity. Those cash flows are locked, so the price does the moving: when the market's required return goes up, the same payments get discounted at a higher rate and are worth less today. The price keeps falling until a new buyer's return on that bond matches what comparable new bonds are paying.

What's a public company vs. a private company?

A public company has its shares listed on a stock exchange, a regulated marketplace such as the New York Stock Exchange or Nasdaq, where an ordinary investor can buy or sell them through a broker at a quoted price. The listing brings a filing duty with it: audited financial reports (in the US, with the Securities and Exchange Commission, the SEC) that anyone can read. A private company's shares are not listed. They change hands through privately negotiated transfers that usually need company or board approval, and the company generally has no duty to publish its numbers. The dividing line is the listing plus the public reporting that comes with it. Size, profitability, and the mix of owners do not decide it.

Why would a company issue debt or equity? What are the pros and cons of each?

A company issues debt or equity to raise cash it cannot generate internally: funding growth and capital spending, paying for an acquisition, refinancing debt that is coming due, or, with equity, letting early owners sell part of their stake, where the cash goes to them rather than the company. Debt is the cheaper source. Interest is generally deductible against taxable profit, lenders rank ahead of shareholders for repayment, and straight debt is non-dilutive, meaning existing owners keep the same percentage of the company. The price of that is interest and principal the company owes whatever its results, plus the risk of default if it misses them. Equity costs more, because shareholders are paid last and only out of what is left, so they require a higher return. In exchange it carries no required payment, no repayment date, and room to survive a bad year.

Beginner Investment Banking Interview Questions

Q: What are beginner investment banking interview questions?

Beginner IB interview questions focus on accounting fundamentals, valuation basics, and fit vocabulary. Examples include: what does an investment bank do, what is enterprise value, what are the three financial statements, and walk me through a DCF.

Q: How many beginner investment banking questions should I practice?

A serious beginner should practice at least 50 questions before live interviews. That is enough repetition to cover accounting, valuation, capital markets vocabulary, and common first follow-ups.

Q: Are beginner technical questions enough for first rounds?

They are necessary but usually not enough. First rounds can start with beginner material and then move into intermediate follow-ups on depreciation, working capital, WACC, enterprise value, and accretion/dilution.

Q: Should I memorize beginner IB answers?

Memorize the structure, not a script. You should know the key steps and direction of each answer, but interviewers can tell when a candidate is reciting without understanding.

Q: What should I study after beginner IB interview questions?

Move into intermediate accounting, DCF, WACC, enterprise value, working capital, valuation multiples, and basic accretion/dilution.

Q: How long should I prepare for investment banking interviews?

Most candidates spend 8 to 12 weeks of dedicated prep. The first 2 to 3 weeks should be on beginner technicals and fit. Weeks 4 to 8 cover intermediate technicals and behavioral depth. The final 2 to 4 weeks are advanced LBO, merger model, and Superday-style pressure follow-ups.

Q: What is the most common beginner investment banking interview question?

The walk-me-through-a-DCF question is the single most common beginner technical. Variants ask for an EBITDA bridge, walk through the three financial statements, or define enterprise value vs. equity value. These four prompts together cover the majority of first-round technical opens.

A practical article-style question list for candidates building the base layer of investment banking technical prep.

By Michael Neal11 min readGOBLIN100 Questions 1-1212 written answersLast updated May 6, 2026

Beginner investment banking interview questions test whether you can define the core terms, walk through the basic statements, and give clean 30-60 second answers before the interviewer asks a follow-up.

GOBLIN100 Questions 1-12

Use this beginner list to practice short, direct answers. A good beginner answer should take 30-60 seconds, define the term, and name one trap or follow-up. These are positions 1-12 of the ordered GOBLIN100 ramp.

GOBLIN100 #1OFFERGOBLIN
What does an investment bank actually do?
An investment bank works for companies, governments, and other large institutions. Two things: it advises them when they buy, sell, or merge with another business, and it raises money for them by selling their stock or their bonds to investors. The cash comes from those investors. The client is paying for the valuation work, the pricing, and the access to buyers. The bank gets hired deal by deal and takes a fee, usually a percentage of the deal size, and usually only once the deal closes.
Work full answer in app
GOBLIN100 #2OFFERGOBLIN
What's the difference between an investment bank and a commercial bank?
A commercial bank earns a spread. It takes in customer deposits, lends that money out at a higher interest rate, and keeps the difference. An investment bank earns fees. It advises companies on transactions like buying or selling a business, and it underwrites new securities: it helps a company sell newly issued shares or debt to investors, and often commits its own capital to get that sale done. The dividing line is the revenue model and the funding base. Which firm is bigger or more diversified has nothing to do with it.
Work full answer in app
GOBLIN100 #3OFFERGOBLIN
What is a private equity firm? What is a hedge fund?
A private equity firm pools money from outside investors such as pension funds and endowments, adds borrowed money on top, and buys controlling stakes in companies, usually the entire business. It owns that business privately for roughly three to seven years, works to make it more profitable, and sells it. A hedge fund raises a similar pool but puts it into securities that already trade in public markets, meaning tradable instruments like shares, bonds, currencies and derivatives. It can profit from prices falling as well as rising, and it moves in and out far more quickly. Both are paid the same shape of fee, an annual management fee plus a cut of the profits, commonly around 2% and 20%. Both are clients of investment banks.
Work full answer in app
GOBLIN100 #4OFFERGOBLIN
What's the difference between sell-side and buy-side?
The sell-side sells services. Investment banks, brokerages and research desks advise companies, raise money for them and execute trades, and they are paid mainly in fees, commissions and spreads (a spread is the gap between the price a dealer buys at and the price it sells at). The buy-side buys and holds the assets. Private equity funds, hedge funds, mutual funds and pension funds put capital at risk, for themselves or for their investors, and keep the gains and losses that follow. In one line: the sell-side is paid for the service, the buy-side owns the outcome.
Work full answer in app
GOBLIN100 #5OFFERGOBLIN
What does a junior banker actually do day-to-day?
A junior banker (an analyst or a first-year associate) spends the day building financial models and client presentations, researching companies and industries, and turning senior bankers' comments on those documents. A financial model is a spreadsheet that projects a company's future finances, and you use it to value the company or test a deal. A pitch book is the slide deck a bank brings to a client to argue for a transaction. Senior bankers own the client relationship and win the business. The junior produces the analysis and the materials that make that conversation possible.
Work full answer in app
GOBLIN100 #6OFFERGOBLIN
What's the difference between coverage groups and product groups?
Coverage groups are organized by industry and own the client relationship. Product groups are organized by transaction type and execute the deal. A healthcare coverage banker knows the companies in healthcare and what their management teams are trying to do. A mergers and acquisitions banker knows how the purchase of one company by another gets valued, structured, and negotiated, and does that work across industries. On most live deals the two sit side by side, and the bank typically earns its fee when the transaction closes.
Work full answer in app
GOBLIN100 #7OFFERGOBLIN
What is a stock?
A stock is a share of ownership in a company. Each share entitles the holder to a slice of what is left over after everyone the company owes has been paid. That is why equity is called the residual claim. Lenders sit ahead of shareholders and are owed a fixed amount on a set schedule. Shareholders are owed nothing specific and take whatever remains, from zero to very large.
Work full answer in app
GOBLIN100 #8OFFERGOBLIN
What is market cap, and how is it different from the share price?
Market cap, short for market capitalization, is the share price multiplied by the number of shares outstanding. That is the market's price tag on the company's whole equity, everything the shareholders own. Share price is the value of one share, one slice of that total. Companies divide themselves into very different numbers of shares, so a higher share price does not tell you that a company is bigger.
Work full answer in app
GOBLIN100 #9OFFERGOBLIN
What is a bond?
A bond is tradable debt. The buyer lends money to an issuer, a company or a government, and gets a contractual promise of interest payments, called coupons, plus repayment of the borrowed amount, called the principal or face value, on a set maturity date. The holder is a lender, not an owner, so the payments are set by the contract and do not vary with profits, and debt claims are repaid ahead of equity if the issuer runs into trouble. Bonds trade in the secondary market after issue, so the price moves even while the coupon stays fixed.
Work full answer in app
GOBLIN100 #10Goldman Sachs/ 1st Round/ Industrials
What happens to bond prices as interest rates rise, and can you explain why?
Bond prices fall when interest rates rise. A bond already issued promises a set coupon and a set face value at maturity. Those cash flows are locked, so the price does the moving: when the market's required return goes up, the same payments get discounted at a higher rate and are worth less today. The price keeps falling until a new buyer's return on that bond matches what comparable new bonds are paying.
Work full answer in app
GOBLIN100 #11OFFERGOBLIN
What's a public company vs. a private company?
A public company has its shares listed on a stock exchange, a regulated marketplace such as the New York Stock Exchange or Nasdaq, where an ordinary investor can buy or sell them through a broker at a quoted price. The listing brings a filing duty with it: audited financial reports (in the US, with the Securities and Exchange Commission, the SEC) that anyone can read. A private company's shares are not listed. They change hands through privately negotiated transfers that usually need company or board approval, and the company generally has no duty to publish its numbers. The dividing line is the listing plus the public reporting that comes with it. Size, profitability, and the mix of owners do not decide it.
Work full answer in app
GOBLIN100 #12OFFERGOBLIN
Why would a company issue debt or equity? What are the pros and cons of each?
A company issues debt or equity to raise cash it cannot generate internally: funding growth and capital spending, paying for an acquisition, refinancing debt that is coming due, or, with equity, letting early owners sell part of their stake, where the cash goes to them rather than the company. Debt is the cheaper source. Interest is generally deductible against taxable profit, lenders rank ahead of shareholders for repayment, and straight debt is non-dilutive, meaning existing owners keep the same percentage of the company. The price of that is interest and principal the company owes whatever its results, plus the risk of default if it misses them. Equity costs more, because shareholders are paid last and only out of what is left, so they require a higher return. In exchange it carries no required payment, no repayment date, and room to survive a bad year.
Work full answer in app

What this level tests

Investment banking role and junior banker workflow
Stocks, debt, enterprise value, and equity value
Three-statement basics
DCF and valuation vocabulary
Introductory M&A and LBO concepts

The trap at this level is not difficulty - it is clarity. Most candidates know the answer but cannot deliver it in 30 seconds without rambling. Practice the shape of each answer before you practice the depth.

How to know you are ready

You can define each term without using another undefined term.
You can answer in 30-60 seconds before adding detail.
You can name the most likely follow-up or trap.
You can connect the concept to a simple company example.

Beginner vs other question levels

Level	Example prompts	Ready when
Beginner	What does an investment bank do? What is enterprise value? Walk me through a DCF.	You can explain the concept cleanly before the first follow-up.
Intermediate	What happens if taxes fall in a DCF? How do AP days affect valuation?	You can connect formulas to valuation direction and name the trap.
Advanced	Calculate the LBO IRR. Why would a buyer not pay away all synergy value?	You can answer under pressure and defend the assumption set.

Keep practicing in the full bank.

The samples above are public. The full question bank and adaptive engine live in the practice app.

This beginner investment banking interview question set pairs each prompt with a written direct answer, GOBLIN100 position, and bank context so candidates can compare question difficulty before moving into the full OFFERGOBLIN practice bank.