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VAULT GUIDE TO
FINANCE INTERVIEWS PRACTICE GUIDE DAVID MONTOYA AND THE STAFF OF VAULT
2012 Va I+.
VAULT GUIDE TO
FINANCE INTERVIEWS PRACTICE GUIDE DAVID MONTOYA AND THE STAFF OF VAULT
2012 Va I+.
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AcknowledgemenTs T#a(% -) +)( #) #ad a #a(d $( 'a%$(" -#$ b))% *)$b. W a+ -+' "+a- -) Va- (-$+ -a )+ a -#$+ #* $( -# d$-)+$a, *+)dc-$)( *+)dc-$ )( a(d 'a+%-$(" *+)c. Va- )d a) $% -) ac%()d" -# **)+- ) )+ $(-)+, c$(-, '*), a'$ a(d +$(d. T#a(% )!
V) F(++"$ I+$2($3 p"("$ g(#$ Table of Contents
InTroduc TI on
1
P+ac-$c P+ac -$c Ma% Ma% P+cP+c- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 F$-44 Q-$)( F$Q-$)( . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Sa'* F$-4 Q-$)( a(d A(+ . . . . . . . . . . . . . . . . . . . . . . .7 Ba$c F$(a(c Q-$)( . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
corporATe FInAnce And m&A
15
S%$ )+ C)+*)+a- F$(a(c/M&A . . . . . . . . . . . . . . . . . . . . . . . .17 C)+*)+a- F$(a(c/M&A F$(a(c/M&A Q-$)( . . . . . . . . . . . . . . . . . . . . . . .19
sAles & TrAdIng
67
S%$ )+ Sa & T+ad$(" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69 Sa & T+ad$(" T+ad$(" Q-$)( . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
reseArcH/InVesTmenT mAnAgemenT
87
S%$ )+ Ra+c# a(d I(-'(- Ma(a"'(- . . . . . . . . . . . . .89 Ra+c#/I(-'(Ra+c#/I( -'(- Ma(a"'(Ma(a"'(- Q-$)( . . . . . . . . . . . . . . .92 .92
FI nAnce glossAr
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109
INTRODUCTION Vault Vau lt Finance Interviews Practice Guide, 2012 Edition
Vault Finance Intervies Practice Guide Introduction
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A guide to this guide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Vault Finance Intervies Practice Guide Introduction
> > , = > >. A>, > >= >> > @>= = = > = K > < =>= = > @>= = = == =, == >= == > >N > >= ( =>< . @ . , .) = > > = =. <> > @>= = ==- (=) @>= >N = = = = >>=. H>, = > LM @>= K = >< =, = == >>=, > < >>>= > >- L>M @>=. < > @>= = >= = .
Vault Finance Intervies Practice Guide Introduction
“Fit” Questions B> >< > <> ><<>= LM @>=, > > > = > > > > => > =. 1. > >> > > > > > =? 2. > <> = ? 3.
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9. > > >>=? 10. > = > > > >? 11. D <> = = < = > >= > > @ > >. 12. < <> > > = > = >>=? 13. G < = < > < >>= > ><. 14. G < = < > > > = > > > =. 15. G < = < > > > >< > > = = > >. 16. G < < > > . 17. D > = > = >= > >. 18. = <> == < >= > ? 19. <> >?
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Vault Finance Intervies Practice Guide Introduction
20. = > > > =>? 21. D ><= > > ==> = >< > <. 22. < > > >= > = =. 23. > > ><= = >? 24. D > = =>=<= > >? 25. > > > > => > > > <>=? H> > > > >>=? 26. H> > > = = > > > <= ? 27. D > >. 28. G < > > > > . 29. > <> =? 30. = > <> = ><<=? H> > ? 31. > = > = >< > > = > = @>= > <? 34. < > . B = > > @>= == >= >=, N > >= = > = @>= = . H>, > = >< < = > > @>= = . > > > = > >< > > @>= > @>= >== >= = >>. >< = > ><<>= @>=. ">>= > > >= = > @>= > > = =. > > = == LG>! =N = / !M == > >= @>= > = < > < => = <> >, = > = == > > > <.
Vault Finance Intervies Practice Guide Introduction
Sample “Fit” Questions and Answers
1. W( $ ! + (%%?
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
> > = > = > > > > < (> >= < > > > => == > < <>=).
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Vault Finance Intervies Practice Guide Introduction
2. W(! +) #! ")' (% !"%?
> = > < <=>= >. > => == > = >=, = >==, == > >=>< > > =, > = > =I >< >> > = >. > = >= == > >= > E* > . E<I = =>= > >= = == > =. (H > = <>=, > = >, > = C> > <, > = > > > =?)
3. W(! !" )'( "% ! $)!$!!'% ! () )?
>= > > L=M @>=. > > = = > = = => >. F> <, = > >> > = = > > > > >= >> >=.
4. A (! (% ) !% +)'?
=> @>=. E= > >>= <> <, = <=> >=, > = = > > >, = > () = > = > < <. F> <, #>= = > = > > = > G><= > . #>=. .. #>= > = > #>= =, G><= , > C . => > =, = = =. H>, > G><= > == >= G><= = C => = = #>= =, > > C> = < = "I, > = < >> > =. , <> L=M > > <, <> > > > =. > == 12 <, = @, > = <> => = > == >. > < < = = >, <= =>=.
Vault Finance Intervies Practice Guide Introduction
> <> > . D> => > = > , >, = > > > = > < = > . > == > = = > == == >, > < = > <=>= > =. > > > > ==. A.
5. H $ ! ) #!% (%% (%: ?
= > > > > => > =. > > <>= > < > => > < > == = ><>= > == > = > > => <. B<>= => = >= >> ><.
6. W(! !% (% !* #)%)! (! ) % %%# ! %%?
> < > >= > L >= =.
7. W(%% $ %%# "% ) 5 %!? I 10 %!?
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Vault Finance Intervies Practice Guide Introduction
Basic Finance Questions
1. W(! $ ()+ ) ')' (!% )( )%% !% % (% % ) (?
=> > = L < = >=? > > = < > = ><= 12 <>=?M > = = The Wall Street Journal , The Economist , = >, ., > => > ><. =>, = < >.
2. W(! ) ! "'% "!#+% )?
LB M < >> = => >/=<= = < > ==. >, G><= , #>= =, C , .. #>=, C>, B, D B=, B C, = # "= ( > B>A) >= > . > <, > >= = = < > = . > = > = > = > <>= > => > > < > == <>= > = >>= >= = > . % > < = < = <= . % > > = > > < >>< > >. > == >@ > >= < ("I > , > <), > > <I > < > > = = >= >= = = .
Vault Finance Intervies Practice Guide Introduction
3. H $ ! (% !+%?
> = > <>= > >= (=, > >). The Wall Street Journal , Financial Times, The Economist , = DealBook > >= > = . > >= >= > = =N > ( >< < > ==).
4. W(%% !$ (! ) (% D? W(%% !% (% 1-%!, 5-%!, !$ 10%! T%!? W(! ) (% )#% '$? W(%% ) (% S&P 500? W(%% ) (% US !$% $%)#)?
> > > @>=, > > >< =>=== >=. > > > = > == =< >= . > > => > , > $ADA' >= 12,000 = $ > 400, > < > >== .. #>= > = = > == >.
5. W(! ) )% !" (% U.S. %! !+% . (% % (% $%" !+%?
= =, .. F >=<=N >= >= , = .. = = >N >= >=><. H>, = A 2011, = & > >= .. >< AAA > AA+. > > , > >= = @> = = > LM > .
6. W(! ) *+?;
C L-M >= =<= = (= = >), >= > =<= , = = = . B> =<= <= > > BB ( = & >>N) > B ( #>>N). >< -> ><= = = = > = = @ <.
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Vault Finance Intervies Practice Guide Introduction
><< - > =<= = = L> >M > . B>= >< < ><= >I L .M
7. T% % (! (% %%! G!-S%!'! %! % ! ! #!)! !+% !)#)!.
> > @>= < == > > < =- < => > . > < > >> > = = = <, =N = @>= >= =, > < = >. ><<>= > G- B= A > 1933, = ><< == = />. C><< == = == B= H>= C><= > 1956. G<<-"-B A = 1999. >= = .. > >- L= B=M = E>= ><< LB==M <. E>= > < > , .. (= 1999) = = >= <. E< > = = (=<= = == ><= = - ><< =) = C> = C . F< > =<= = ><< = = .. #>= C, B= > A<, D B=, = B. #= = = = =<> >> == >= == > = = > >= = > >= > = < = -<= #&A = ==. =, C> =, > =, .. #>= = B= > A< <> = = .
Vault Finance Intervies Practice Guide Introduction
8. W(! ) ! (%$'% $?
H = >> =<= >> ( < =). = >= >= > > =>=. H = <= > = > > <= > = = < =>=<=. H = < > >, , >>=, , > <> , <>= > =. H =, >, > => > >. >< = > <>= >= = < > 1990, > <. = = , = < =, = = = ( >= ) = > => > > > >> > < = >= < = <= <. = >=, < = >= = <=. F=, < > = 500 > 100 => (== >= > ), < = = >= > =>. = = <=<= = >= =>= =>, >= < < >< > > <.
9. W(! (! (% !+% "%% $)'? W(? W(! $ ()+ (% !+% ) $ ) #)' 12 (?
> = = > = >=, > > > = @>= = = =>< <==.
10. W(! ) (% $)%%#% "%%% %) !$ *) "$($%?
=> >=> (= >= > > = @). > = > = > = =: ><< (=>), <> =, > = =, => >=>, >= (=>) >=>, = (=) >, > >, = = @ (>>.)
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Vault Finance Intervies Practice Guide Introduction
11. W(! ) (% "% %!$ () %%+ )
The Wall Street Journal ?
@>= = = = > =. = = = > > <> = >= > Journal , = > . > => > > > > > => > <; > <=-= >. > >=N << = WSJ >, >== New York Times, Economist , > C$BC >.
12. T% % !" % #+ . S($ I " ! (%?
@>= >= >< = & = > = (>= > , L < >M) = > >< = == = > > = < =>. > < = > = > > >< > G# = = > = > <- > =>=.. =< =. > > => > > ><=: A .. ><=, <- .. ><=, =>=-.. ><= = >- (> > > > ><<= = => = ). > > > = > = > >= > ><=. A > > => =<, <>, CE%N =<, >= > ><=N = > =, = >= >= > <= ( > >= >= > > ). > > > => > ( =>=) > > < > == = =. > > > ( ) >= < (/E, > , .). > > > > = ><<>= < > > ( > >= > > >). (L=N G# = = = = >?M L, >= > > =, <=<= = <== > = == >...M, .) >= => > > > = > = <>= > => > <.
CORPORATE FINANCE
AND M&A Vault Finance Interviews Practice Guide, 2012 Edition
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
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Vault Finance Interviews Practice Guide
Corporate Finance and M&A
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Vault Finance Interviews Practice Guide
Corporate Finance and M&A
Corporate Finance/M&A Questions 1. ' C< F+ M&A ( *< +*)?
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Vault Finance Interviews Practice Guide
Corporate Finance and M&A
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Corporate Finance and M&A
C>I> LJ . A JGI ><I LG@ > #B'XH IGHJGN GII HH>HI > <>< I NXH H >KHIIH, >@ >IG >KHII <G. >IG > GHH>H L> H I>G I> I N > G G JI>, JI N G< >H L> (GN G >GN) GII > GHH>H IGJ< HKG HJ GH KG I JGH I>G GG. JGH, IG G H>I>H > HN>I>, >< NH>H, G>I G>H@ <I I I >KHII @H, JI <GN JHI >IGK>L G IH H>I>H HGIN G IG G >KHII @><. ";, ; ;<: #I >H >< HGI II >KHII @GH JI >
< JGH GFJIN JHI JI I>G GH >KH (U >I HXI G II NJ K L>< I < I. >H G<G H I < IGJ< L> I HI@ >H HI> G >IXH -I> ><.V) #I HJ H H HJGG>H II IH L < >I @>< I I <I ><G HG>H I I>G GH > >IG > (H>N > J>G >-K H>I>H). HH NJ G LG@>< G HIGI-J, IH L LG@ > <G > K HLI IN I JHJN K I LG@ 80 I 100 JGH L@ G IGK GH. DH >I FJ JI? I H NJG G>G>I>H. #I >H I HJGG>H>< II, <>K I K JG >II H I >KHII @G, IH > >IG > H>I>H G G >@N I K G @>< I I IG LN GJ (<>, GI>JGN I I J>G- >K). I IG , H>< N I> H J>G @G ><I I >< G> G H.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
3. L<; ; < ;; =; =;< + =<, < * < +;<; @+<. '< <; < ;<+ +; < ;<< < ?
B LH ><I G>K I G@I LG, JI > >IGHI GIH K GI>KN ><, HJ LH N I IGI I MI I G HGK I H IGN >N, L> IJN N J>H G I HI@ G@I. > > LH JHJN H I I H>< >IGHI GIH, I G L> L@ KGHJH HI >< G>< JGG>H, .. >H N >I, H >< FJ.
4. H = >= *?
KJ H G>K G I GHI KJ I MI NIH G H LH G , >HJI I >IGHI GI II GIH I JI G>H@ HH>I L>I I H LH. > I GHI KJ , I GJ >H: I=
B =
å I=1
CJI (1+G)I
+
J (1+G)
G: CJI = J MI > G> I, J = I KJ I , = JG G>H (JHJN NGH G -NGH) G = I >HJI GI G I H LH. G M, I JH HN II NJ 8% J, 30-NG IJG>IN L>I G () KJ $1,000 II NH >IH JH IL> NG. # I >IGHI GI I H < G I J (I 10%), LJ KJ I IJHN: I=60
B =
å 1
40 + (1.05)I
1000 (1.05)60
FJI> LG>II JI H $40 M AJ>IN IG (5%, 60) + $1,000 M IG (5%, 60) = $757.17 + 53.54 = $810.71. H JI>H N HIG >> JIG. (EIG = 60, ' = 40, = 1,000,
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
>IGHI GI = 5%, I >I I JII. J HJ <I S810.71 G GHI KJ, L> >H <I>K JH H I N I>H JI I L I .) >HJI GI H J JI G>H@. "><G GIH G JH G G G>H@N H LG GIH G HG H. I>< <>H >@ IG & GXH G 'NXH HH>< GI>< I H. ">< GI H >@ .. GHJG>H <GN N I LHI GIH, L> ><G G>H@ H (>@, HN IH AG<I> HI N) N ><G GIH. # I >H IG IJH H G@I G>, JI I >IG GI GIJG (#) G I (I GI I L> I GHI KJ I JH I KJ >H FJ I I G@I G>.) >H >H N I N> I IJG>IN I . GIJIN, # ' JHI JI N IG> GGG, IJ< >> JIGH K JI>H G JI>< I>H. > NJ L> HI >@N KG K I JI I KJ > HH IG>< >IGK>L N , >I >H >GII I >IJ>I>KN JGHI L >H KJ. AIG LN I I>@ >I >H H LH: HJH NJ K IL G>I GH IGJ< NJG @, >H, L> G<H NJ 10% NG, 'HIGCG, L> G<H 20%. J L $10,000 IGHG NJG I I G IG. > LJ NJ H? CGN NJ LJ JI NJG I I >H. L, L> G LJ NJG @ GIG NJ JH? $20,000 > I I 'HIGCG I 20% >H GN LGI G I I @. BH LG@ I H LN. N, >@ G>I G G>KH G @, GGHI JIJG >IGHI NIH G GH. "><G GIH G I H KJ >GH I MI GHI KJ G >HHJ H >< FJ.
5. '< ; < + *< ;<+ = ;<+?
>@ GH I HJG>INXH LG L>I FJ>IN HI@ > I N, JI H GK>H GI> ->@ FJ>I>H G I LG. GGG HGH JHJN N >K>. >@ N>H, GGG N>H < G JI, IJ< IN G <GN JI IG >K>H G I. J N GJ >I >> IGJ G < @GJI, GGG GH K G><I I G>I >IH H, G>H@>G >H JHI N GI>KN ><G N> >IH GGG HI@ > GG I IIGI >KHIGH.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
GGG HI@ GFJIN H KGH> I> > L>< I IG > I HJG>IN G HI@. ( I FJHI> G>>< KGI> H, . 14 > I>H IG.) #HI>IJI>H G I > JGHGH GGG HI@. C>H >HHJ GGG HI@ G JG GHH, >J>< I I II >H K>L >I H UGV G >>< I FJ>IN, II >I HIGJI H II >I >H K>L H FJ>IN N I GI>< <>H I N I IM JIG>I>H. (I: D not JH I>H L>I UCHH AV KGHJH UCHH BV HI@ G I >@. IIG HHH HI@ GG I KI>< -KI>< HGH.)
6. '< ; ;<<?
AG>< I I G><> JH< I IG H >HI > I Oxford Dictionary, >I H U GJI> > I JH G G @H HK>HI>IJI>H H >IG>G>H IL GH GGLGH; I IGHG HK>H @>< HNHI.V I, I IG H I@ L >I GIH I I LG >. LG H >IGN I GK >IG>G>H G I IG>< GHH, H II JNGH G >GIN L>I HGH. >H >H H @L H UJII>< JI I >.V D>H>IG>I> >H I JOOLG > N GH (UBN >H I G >H>IG>I>V; >GI H>< H IH >HJG >H IGK <>H). IG LH GI>JGN > K< G@G< JH>HH, N >GH K H IG>I> JHIGH K ILGH IG>< >GIN L>I I J> N I G I #IGI (HJ H L JH>< AG>IG, G L JN>< JIJ J >GIN G >>IN G C.D. G L > @ GIG I I NJG G). D>H>IG>I> >H JGG>< K L>I GGI >HI>IJI> >IH: .. GHJGN HJG>I>H G I IG IG>N L>IJI I JH J IGG G G@G< >G, GI> G< GGI>H K >HHJ HJG>I>H >GIN I >KHIGH L>IJI I JH >KHII @. A I>H >H LG>< HIH JI H>JIJHN LG>< G<>H >I>H>< N G@IH G >KHII @H ( I>G >IH).
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
7. H = = >= ;<+ +?
G IH JH G: D>HJI H L KJI> (DC), L> KJH N H I GHI KJ MI JIJG H LH GJ N II HHI (>@ KJ>< > GK>JH FJHI>); I>K KJI>, L> HI>IH KJ N @>< I I G> UGV >HX FJ>IN K> GI>H HJ H G>/G>H KJ/EB#DA, G G>/@ KJ; U I>V IGN, L> JI>>OH I> G>>< H. HI>I I KJ JH>< DC, >IG HJG H LH > I G G H LH I I >G (G C, L> >JH I KJ H LH KIJN N I I FJ>IN GH IJH KJH I L N), >K>H (I U>K> >HJI KJI>V G DD), G G H LH I FJ>IN (CE; DD CE KJ N I NXH FJ>IN). <GHH L> I HH, I DC I >H HHI>N I H H KJ>< : I=
J =
å I=1
CI (1+G)I
+
J (1+G)
G CI = I H L > G> I, G = >HJI GI (IG> N I G>H@ K I H LH > FJHI>) I = I > I HHI. KJ>< N JH>< I >K> >HJI I (L> >H <GN L N H>G GG>I > KJ>< >> HGK>H >H), I UCV LJ >K>H, L> I >HJI GI LJ I HI FJ>IN G I HHI. KJ>< H LH I FJ>IN, LJ H JH I HI FJ>IN (G ) G I >HJI GI. KJ>< H LH I I >G, LJ JH I L><I KG< HI >I (G ACC, L> >H I L><I HI I >GXH FJ>IN I) G I >HJI GI. KG>JH H LH IG> H LH: D>; = I # M NJI I>, L> I MI
>K>H = II> I> M IJG EFJ>IN. F C; F < E=< = I # - (C>I EM>IJGH -
DG>I>) M (1- DI I C>I I>) - C< > G@>< C>I M
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
(1- DI I C>I I>) L> I MI CE = II> I> M IJG EFJ>IN. F C; F < F = EG>
GI) - (C>I EM>IJGH - DG>I>) - C< > G@>< C>I, L> MI C = >KHII I M IJG >G C>I. GG>I >HJI GIH IG> H LH: C;< E=< = AGG>I >H@ G I + BI M EFJ>IN >H@ G>J 'ACC = CHI EFJ>IN M ('G@I J EFJ>IN/'G@I J EFJ>IN DI) + CHI DI M (1-M I) M ('G@I J
DI/'G@I J EFJ>IN DI) G>H@ G GI JHI I I >GXH H LH. # I .., I G>H@ G GI LJ I .. GHJGN GI L>I I HI H>>G IJG>IN, L> > I EJG-O >I LJ G (G N G) <KGI , H GI. BI >H HJG L <H > >GXH HI@ G> K>I G <H > I G@I. (# I .., JHJN >IG I & 500 G I >H>G I 'G@I #M >H JH H HJG I UG@I.V) BI >H IJH I GHH>KHH HJG>IN I G> KIH. ">< IH J > IH, HG >GH G > ><N N> >JHIG>H, L> LG IH LJ J > HIN >JHIG>H >@ H G I >H (H> > < G I>H I H@.) G KJI> JGHH, I >HIG> I (L> J JH>< I HGK>H >@ BG< G ! >) G I UBII-V I L> >H H I >GXH GHX I I >GXH KG< (I K). UBII-V I HJ JH JHH I N > FJHI> H G J>N IG GH (>@ EJGIJ G I BHI CI>H) G >H >> HGK>H >G. FJ>IN G>H@ G>J >H >IG I >HIG> G GHIN >> K KG< GIJG >KHIGH KG I G>H@-G GI > GG I >KHI > HI@H. IL NHIH G > GHHGH JH I H JG G I>H, JI L L> HN G II HI@H > .. <GN G 4.5 GI< >IH K <-IG .. GHJG>H. G>H@ G>J LJ ><G G G<>< G@I JIG>H. HI ( KJ) I HI>I JH>< >IG I
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
G@I >IGHI GI I >GXH JIHI>< I G I GGL>< GI HH>I L>I >GH II K I H I GI>< H I N > FJHI>. # IH IL IH I JH, JH I GGL>< GI I GI>< HH>I L>I >GH L> K I H>>G >> GI> KJH (HJ H EB#A/DI EMH, H I >IGHI KG< GI>) I I N > FJHI>. I GI >H @L, I I @H KJ I I>H GI >@ . # I K ACC GJ, L HHJ II >IGHI >H IM JI> (IJH I U1-M IV). KJ>< >G JH>< N DC I, JHI HHJ II I >G >H >IG HI>N < L> G> I>H LN GKG (>@ IN> ), G II >I L> G L NGH GJIN <> HIN @ H JI> >H), G II >I L> @ I
Steady Growth:
2-Stage Growth:
3-Stage
Growth
Growth
Growth
Time
Time
Growth:
Time
KJ N < GKG I I H GI, LJ H>N KJ I HI>I JIJG H LH JH>< I K GJ. G 2- HI< H, JHI HI>I I I H LH KG I >< < ( I IG> KJ) I I>H JI. G 3-HI< H JHI H JI I G I >IGK>< NGH IL >< HIN H I I KJ. L, I JH I@ H> M JH>< I C I. L> JH >I>I>JH .. J>N IG JIJG>< N (JI '>H, #.). LG G> HIN < > KJH G HJGH; > NJ JH UGV HJGH I@>< >I JI >I>, NJ JHI H IGJ<JI). N H H L>I $1 >> G@I
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
KJ IG I. H H JGGIN IG I 10% (L> >H H G). 10-NG .. GHJGN >H IG>< I 5%. >G, >@ IGH > >IH >JHIGN, H G<> IM GI 40%. >G JHI GGI GKJH G I HI GI NG $1 >> G>>. DG>I> MHH LG $25 >>, LG@>< >I >GH N $10 >>. >G JGH IGN G $30 >> IG >I M>IJGH JG>< I NG. C>H > JI '>XH H >JHIGN K KG< BI 1.2 KG< I/FJ>IN GI> 25%. >G JGGIN H 100 >> HGH HI@ JIHI>< IG>< I $20 HG. #H I>H I GG>I KJ I >GXH HI@? I JI G I I>G N? >GHI L L> IG> I G H L I I >G: F C; F < F = EG>
(C>I EM>IJGH - DG>I>) - C< > G@>< C>I EB# > I>H H J H LH: > I IM GI >H 40%, I >G G $50 >> IG IMH, G>>. @L I >G H $1 >> (G@I KJ) > I JIHI>< >H N>< 10%, IJH >IGHI MH = $100 >>. A>< >IGHI MH, L <I EB# = $183.33 >>. C = 183.33(1-.4) S (30-25) S 10 = $95 >>. II I GG>I >HJI GIH IG> H LH: ACC = CHI EFJ>IN M ('G@I J EFJ>IN/'G@I J EFJ>IN DI) + CHI DI M (1-M I) M ('G@I J DI/'G@I J EFJ>IN DI) IG> I ACC, L >GHI I IG> I HI FJ>IN. >H H L JHI IG> I II-J I I N. GJ G JKG>< I (G I IG> LI I I LJ > I H N I, JH H> G I @H >G G HH>I>K I G> <H) >H:
RJKG =
RKG 1+(1-IM GI)('G@I DI/EFJ>IN I>)
G-KG I, I GJ >H:
RKG = RJKG 1+((1-IM GI)('G@I DI/EFJ>IN I>))
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
> L @L I >JHIGNXH KG I D/E, L L> >GHI IG> I >JHIGNXH JKG I, I JH I>H I GKG >I JH>< JI '>XH IJ (>GI) I/FJ>IN GI>.
RJKG #JHIGN =
1.2 = 1.0435 1+(1-.4)(.25)
RKG JI '>H = 1.0435 1+((1-.4)(1/2)) = 1.3566 H II CHI EFJ>IN = AGG>I >H@ G I + BI(EFJ>IN >H@ G>J) JI '>XH CE = 5% + 1.3566 M 4.5% ( HII GK>JHN II L LJ JH 4.5% H I .. G@IXH FJ>IN G>H@ G>J.) = 11.1047% JI '>XH ACC = 0.111047(2,0000/3,000) + 0.1(1-.4) M (1,000/3,000) = 0.0740 + 0.02 = 9.4% L L G GN I J< I KG>H >I JG KJI> GJ. # I>H H: I=
J =
å (1+ACC) CI
I
I=1
> JI '>H >H MI I >N I GHH KJ I H LH >@ GIJ>IN: J I >G = $95 >>/((9.4%-5%) = $2.159 >>. > L @L I G@I >H KJ>< I I I $1 >>, L HJIGI I>H JI JI >K> I G>G N 100 >> HGH JIHI><. >G HJ IG>< I $11.59 HG, I $20 (N I>H H> NH>H.) >I >H IG>< K >G KJI>. # G >, I NXH <I IJN K MI I GI > I JIJG, IJH JG -HI< ><I K GK> I L KJI>. H>< 2-HI< G 3-HI< LJ GFJ>G N , IJH LJ I> I JH EM HGHI.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
AIG I JH I KJ I FJ>IN GI> N >H GI>K KJI> (G (G JH>< UGHV). UGHV). # NJ I H NJG G G , NJ ><I @ I LI LI H>>G GH G H H G. G. >>GN >>GN,, N NHIH G I KJ HI@ I I G@I KJH G HI@H JH>< GI>H HJ H G> I G>H KJ I EB#DA. X JH KJI> ' JG>< I HJG 2002 JH>< I>H I I >JHIGI: C#!$a",
P /E
P%ice '# B##k
P/E F#%*a%d
11.62
1.20
22.15
$47.62
$2.15
8.13
0.53
27.51
$12.38
$0.45
"A
4.35
77.14
$16.97
$0.22
H* !=; C., =.
7.14
1.03
15.61
$21.54
$1.38
"<<* !=; C., =.
11.29
"A
11.27
$14.43
$1.28
"A
1.69
20.74
$53.52
$2.58
7.64+
1.76+
29.07+
33.14
1.70
10.80
$59.07
$5.47
D*; AG F*= &..A F; !=; C*
'=* !=; C;;*= A)e%age
G;* !=;<
P%ice
EPS F#%*a%d
A $59.0 $59.07 7 ' GH I KGKJ JH>< /E H GMN. > ' $1.84 > I IG>>< ILK IH, >I HJ IG>< I 7.64 I>H I>H JI G $14.06 HG. ANHIH I JH GLG /E GI>H >HI. # I>H H, H, 'XH HI>I GLG E I>H I KG< GLG /E LJ I G>I G> $159.01, >< II ' >H JGKJ. H>< G> I @ H GMN, I >G @H @ H HG I >G KJ. 'X 'XHH @ KJ G HG I I>H I> LH $34.93. 'JI>> N 1.76, I>H <>KH JH KJ $61.48 G HG. AH NJ H, I>H >H >MI I. I. G I NH>H II >H I HIG><IGLG >H L> >GH I JH H GH: G L J K B' G JI, JI ' I I I> I>H NH>H L "J<H EIG>H, L> D>G L GI> H/GH H/GH N. N. AG IH IL GN I H H I IG GH II > I H >JHIGN? AH, G >HH LG I I I> I>H NH>H MG>>< IGJH, G>G GLG G><>>IN LG I I GHI I H >HI? A NHI H I @ J<I H IH HGIH >HHJH S IG >H GGI HLG. HLG. AIG IG II ><I @ >G > I>H H >H I I II >GH L>I ><G <G /EH I IH L>I LG JH I>H M.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
#I HJ I II >GI >GI HIG NHIH JH >GI >GI JI>H. GI L I>H JI>H N JH J H N KG>JH >JHIG>H. Cha%ac'e%i&'ic& #f C#!$a",
M('i$e
N#'e
C* !*>*=>;
/E * /E %*=? = = !*;=
A*<=< = ;* *;< = =* *= = *>=
H ', H G;@=
EG (/E ?; G;@= %*= E*;<)
< *>< =; *; = *; ;< ;@= ;*=<
H G;@= I><=;< @= " E*;<
/& (!*;= C* ?; '=* %?><), /& (!*;= C* + !*;= *> D=-C*< ?; '=* %?><)
'< *<<>< =*= *;< @ ;? = >=>;
H*? I;*<=;>=>;
/EBI'DA (!*;= C* + !*;= *> D=-C*< ?; E*;< B; I=;<=, '*< D;*= * A;=*=)
'< *< = *< <=;< =*= ;* < <<< *; *;< @ *;< ; *>< ; ;*= =<
%EI'<
;/C*< F@
<>*, =; *; *=* =>;< ; :>= *;<
F** &;?<
/B
' ?*> :>= < ;>*; *; = *;=
%=* % =* ( ( D/E D/E ? ?< < *; *; < < *; *;))
&
%=* % =* ( ( D/E D/E ? ?< < ?*; ?*; @ @ ))
&
>N, NHIH HI>H >N, HI>H JH I> IGN I KJ HI@. I> KJI> H II I N H I I> I N @>< >KHII, I JHI G IG GJI> H G>H <H, I M GJI> > I>< L, G I GIH > IN G I LGI HI><. G M, > N N K DC-H KJI> $10 >>, JI G@I $20 >>. MIG KJ N G I I I N H JJH G JGJI>>O > GHGKH II I HJ > G>H >GH; I >G H I I> I M. # I>H H, G I> KJI> JH>< I B@-H I N GG>I. II I FJI> (>J>< >K>H) >H: C () = -NI(1) - -GI(2) (JI) = -GI1-(2)- -NI1-(1) N (N>) = J >K>/G> I HHI
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
1 =
(/)+(G+ s2/2)I s ÖI
2 = 1 - sÖI LG = CJGGI G> I JGN>< HHI (HI@ G IGL>H) = IG>@ G> I I> (HI>H UV G MG>H G> >HI) I = > JI> I I> M>GH G = >H@HH >IGHI GI (HJ G I> G> HHI I >H I>)
s2 = G> D = D>K> N> # I H AG> > N L>I JI GHGKH, I G >JIH LJ : = I KJ I K GHGKH >HJI @ KG I I> KI I@H I I >K> GI (D L) = GHI KJ KI HI (>HJI I I >GXH ACC) I = L><I KG< I> JI> I I> I K IH > GHGKH M>GH G = GG>I G>H@HH >IGHI GI (> I > GHGK G><IH HI 5 NGH, I 5-NG .. GHJGN GI, G M.)
s2 = KG> > > G>H KG I GI HI (L> J H I >> KI>>IN G>H H > JIJGH.) D = I > GJI> GKJ G GHGKH / KJ GHGKH AH @G G >IG > GHH> LG@>< HJ KJI>H, NJ LJ I I> KJ > GHGKH I I DC KJI> HI>I I J L>I I II >G KJ. >H I>FJ >H H H JH I KJ IIH G GJI>, >I G IH, < IG I> LN DC KJI>H G HGI I HI@XH HH>< G@I G>.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
8. '< ; =< >;<?
>FJ>>IN LH >KHIG I K > JI HHI HH FJ>@N, >< I >I>O N JH> G FJ>@N <I JI I K> LH>. A H >< FJ, <I IIG G> G G >FJ> HHI H> IG >H HH G>H@ I >< I H >I. G M, HHJ>< NJ $100,000 H >>IN, LJ NJ GIG K I H $100,000 (> G@I KJ) > D>HN HI@ G $100,000 > (> G@I KJ) H GH?
9. I = < + >; = +, = = + < < < >;< +
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Vault Finance Interviews Practice Guide
Corporate Finance and M&A
$0 MIG GH G H>< >I G, KGHJH II>< MIG $250 > NJ K I I. >>GN, N >GI H LH HJ I@ >I JI L >>< >KHI>< > GI. DIG>>< GIXH >H HHI>N I H H KJ>< N G : I=
GI =
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Vault Finance Interviews Practice Guide
Corporate Finance and M&A
GG. # I I I I H >KHII >H>H, JI >H HI>H G>H. G M, NJ N GJ >I H>IJI>H LG NJG JI>H N> G I #. # IH HH, >I >H H>G I JH . # IG HH, # JI>H N I >GI >KHII GI>H L >>< IL G I JIJN MJH>K GI GI H>O. A G<G GI ><I @ IIG # H>H, JI LGH G >I K>L. LN I HK G I>H >H I @ I I G>I>>IN >M (#), L> >H /#>I> #KHII. A ><G # H IIG GI G HI GIH. # I >I IL LI # JI>H N> I GHK, >I >H HI I KG .
10. H ; < +=> ? '< ; < < ; = ;?
>H >H G >@N I J > >M > GHG G HH IG>< >IGK>L, JI I HJGG>H >I >H H@ > @>< >IGK>L (JHI I IHI NJG @L<). UN> JGKV <GN GGH I >IH G>/I> I IJG>IN JH .. GHJGN HJG>I>H. > N>H I IJG>IN H >GI IJG>I>H G I H>>G, N>H <GN >G. GIG IJG>IN H I I G LG N>H I IJG>IN L> <G-IG H I I G ><G H. >H >H HL N H I N> JGK, L> HI>H UI IG HIGJIJG >IGHI GIH.V G G L GHH LN N>H N >G H IJG>I>H <. IGN >H I UMII>H IGN,V L> HIIH II I H I N> JGK >H IG> N MII>H <H > HGI-IG GIH. "><G N>H <G-IG H GI > II GIH L> >GH > I JIJG. # I JGK >H LLG H><, I>H IGN H II GIH L> (GN JH I N >H HL><, H>< GH >I> G>H>< I MII> II GIH L> > I). # I JGK H I G>HH <>, >I N H>< II GIH L> < L IGG>N I G>H <> (GH JH IGN H>< N I J I > HLL). # I N> >H JLG H><, I N >H MI I L > I JIJG. A HGN G>H>< JGK HJ<<HIH . AIG HJH>I> >H I U>FJ>>IN GG IGN.V >H IGN HIIH II H> HGIG-IG H I I G >FJ> I <G-IG H, >KHIGH G G L>>< I HGIG-IG H K IJ< IN I N GI>KN >< N>H. A I>G NIH>H >H I UG@I H<II>V G UGGG >IIV IGN, L> HIIH II <- HGI-IG H IG
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
>GIN JH >GI INH >KHIGH H@ I JGH <>< H>H. #I >H >@N II IH IG>H G IGJ LG@ > I.
11. $ = = *=< >= >< +;<=+< +?
J>< G>KI N >H HHI>N >GI I KJ>< J>N N (H I G>G FJHI> KJ>< N G HI@): JHH H >I> DC, GI>K (UGV) I> KJI> I>FJH G N IN >G. (G, LKG, II GI>K KJI> I CE G DD' IH DC KJI> HJ N JH I KJ I >GXH FJ>IN, I I >G H L.) G DC KJI>, LIG G I I JH , IL G IG-HI< KJI> H I G@I I N >H > I G> K>GI. A J>>< N > H <H GI>< JG>< > L> >@N K IL G IG HI<H G H>>O>< > GI>< HI IH > I GIHI .. ><I N GH > I I>H L >I H I KJ>< G>KI N > N >JHIGN, LKG. H >GH G>H >N L >I H I DC KJI>. >I H I GI>K KJI>, LJ L I H HIH H JI> > I HLG I I KJ>< HI@ FJHI>. G HIGJI> N, JH>< I /E JI>H J>N IG GH >H GN I HI >. I> KJI> ><I GG>I > I N H I MJH>K G><I I J> II>N KJ GGI>H. # H, I N >G IL J> G>KI N JH>< G I>H >H > I IG>I> I L><I KG< HI >I (ACC). G DC KJI>, I IG>I> I HI FJ>IN (CE) G I ACC L> H >G. G, I ACC >H H GIN I CE. HI FJ>IN HI>I> JHJN H >IG >HIG> G I (J BG< < IG I HJGH) G II-J I HI>I>. > >HIG> G IH G K> (G>KI >H I IG), JHI GG II-J I HI>I> JH>< KG< I G IH H>>GN H>O J>N IG GH H GMN. # I>H H, LJ @ I H>>G-H>O HIGJI> >H (H L > > I G>G FJHI>).
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
:
RJKG =
RKG 1+(1-IM GI)('G@I DI/EFJ>IN I>)
G-KG I, I GJ >H:
RKG = RJKG 1+((1-IM GI)('G@I DI/EFJ>IN I>)) # I LGHI-H HG>, LG I >G >IG H < GH G >H I H I G I J>N IG >H, ><I GHGI I JH>< H- UJI><-HV I. >H >H H LH: >GHI, LJ IG> I FJGIGN JI>< G>KI N H G @ H GGH <. # FJGIGN GGH G K>, HJ JH H>-J JGH > IH G I K>, J JGH. , HJ G< G>HI <H > G@I-L> >M (>@ I & 500) KG I H I> G>. >G, JHI IG> I H I G <GI JH>< IH >JIH. >H H >H I UJI><-HV I. >H G >H GI> H> IG L> G LG HGKI>H I IG LJ G G J>N IG NXH G I. AH, JIIH I I HI G>H G HJ N JH H HI GHGI. IG> I HI I ( >IH GI>K L><I) G ACC, I@ I GGL>< GI N KGN GI @ H HHJ II I I @H HJ KJ (>@ ) JH>< I>H GI. # I I >H KGN >GI G IG G GI H, ><I HI>I LI I GI>< G I >G HJ <>K I HH>< GI>GH H>>G H>O L>I H>>G >> GI> KJH (HJ H EB#DA/DI EMH, H I >IGHI KG< GI>). H>< I >IGHI GI HH>< I >H L>I HJ GI><, LJ KJ I I I @H >@ . # >H KJ>< I N H FJ>H>I> IG<I, ><I I >I> HI HI>I>< I CE G ACC H LI >I LJ I >G H GI I FJ>G>< >G; I ACCH HJ KG< I L><I KG<. # I FJ>GG >H N I>H G<G I I HIGJI> N > FJHI> H J LG ACC, I>H J HJHII>N G>H I HIGJI> NXH KIJ KJI>. EK > I >G >H I >< KJ G II> FJ>H>I>, ><I I HI < I
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
>G ILGH I D/E GI> >IH G >I >H JGGIN G JI >, IJH < I ACC H L.
R G>KI >G = RJKG
1+((1-IM GI)(#JHIGN AKG< DI/EFJ>IN I>))
H IG> I ACC, IG G L G >HHJH JHI I@ >I JI L KJ>< G>KIN >G. >GHI, G>KI >GH N K HGIG >HIGN I HI J>N IG >GH, > L> H G MIGI> >H GFJ>G L @>< JIJG H L GI>H. , G>KI >GH I JH JI>< I>FJH II LJ I I G J> >H. >G, N G>KI >H (H>N U V JH>HHH) >HI LI LJ IGL>H GH MHH H JH>HH MHH. JGI, H>>GN, LG/GIGH N IHKH HG>H N H N IHKH >K>H. HI JGH N IGG K I JHI I HL LI IN LJ K I >G J>; I>H >H IGJ I G GI>K KJI> I DC KJI> G>KI N HI I < J> G JGH N J> >G. JIJG H L N K I H JHI I GI I MH HG> NH G>< LG/GIGH. #I >H >GII I I II > I DC GI>K KJI>, >I @H >G H I LN >H KJ>< N. # I N >IH I HIN G>KI G >H >< G> G H I IG G>KI N, I KJI> L> >@N LG I > >I >H I H I J>N IG N G > >I >H >< #. >GHI, G>KI JH>HHH I J<I H H H>N H J> ; IJH JHI HI>I >>FJ>>IN >HJI G G>KI >G I G> > G>KI H. AH HGIJI N @GH LG I KJI> N 20% (I>H >H LI HI HIJ>H K HL I KG< >HJI I ) I G>IGG>N JHI I>H GI< JLGH G LLGH >< I H>O I >G > FJHI>. (JGN, JI>->> G G>KI >H LJ K LG >>FJ>>IN >HJI I HIGJI> N.) , I I H IG>, >I N I JHI JLGH JGIG H> I I HI>I> J>N IG >G >H HJG G@I G>H@, HHJH II I >GXH HI@GH G L >KGH>>. G>KI >G LGH I I K G< GI> > I I G>IN I>G LI I> J > JH>HH. # I>H H, > I HIGJI> >G >H >< KJ G JGH N IG G>KI N (G >H I <>< I JGH I ), I I HJ GI I >GH G>H@ HH>I L>I I>H @ >KGH>>I>. >H >H H LH: I BI = G>>GN BI / >GXH CGGI> L>I 'G@I.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
>H >H LN >I >H <GN GG G I LGH G>KI N H@>< I >FJ>I I>G > G JGH N J>N IG N GIG I J<I N IG G>KI >G; >< J> <GN H LG CE IJH ><G KJI>.
12. ' < <+ + * >= < < <; !/E < ;< + ;<+?
J N G G I FJHI> L I KJ HI@ II GI>K /E >H I N I G><, H@><, ><G H ( >JHIG>H) K ><G /E GI>H I LG N I>H HL N G@>< L I IH I GI> >I I>G FJ>IN DC IH: H>< I DD' : = D>K>H G G/(G-<). D>K>>< I H>H N E: /E = (NJI I>)(1+<)/(G-<) H>< I CE I KJI>: = CE/(G-<), /E = (CE/EG>< FJ, ><G ><G I FJI>) H ><G /E GI>H. HN HN HHJ II IH L> H.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
13. ' ;= + ; ; > =<? ' ;= + ; =; =; *
AH NJ N G: CHI EFJ>IN = AGG>I >H@ G I + BI (EFJ>IN >H@ G>J) N KGN L BI >H L> K HI FJ>IN II GH I>G HI I, JI > HI HH I >H G I FJ>IN G >GXH >I K>L.. (#HHJ>< HI@ >H I UG,V H> >I >JIH I LGH> K>L LGH> HI@H I >GXH M>HI>< LGH.) "LKG, J-G>< I GFJ>GH GGH L>I < H LH G IIG HJ>I G FJ>IN, L> IJG >H G IH L>I HIN HIN H LH I I JH G I. EK OG-J I, L> GFJ>GH N NI I IJG>IN, >H N GG>I G >GH II K >GN GI> JIJG G< H LH. LJ G<I LI I JH FJ>IN (HJ H L @>< FJ>H>I>) > HH LG <I >KH >IH L HI@ I KGN ><N (G K KG) KJ. KJ. # IG HH, M>HI>< @ G I KIH N GFJ>G GI> I/FJ>IN GI> G H , > L> H IJG N L>I I J I N >HHJ HI@ I @ L>I> >IH
14. H = + < < <; +><* *?
AIJ< I>H FJHI> I H J > HH IG>< >IGK>LH, N @H HI KGI> >I G@IH/G><>I> NH L>I @GH, H I>H FJHI> HI>H HI>H H J > GGI > >IGK>LH. # >I>, H @G NJ N I >HJHH II> KGI> G>I C; H >IG GGI > GHH> NJ N I > LIG NJG >G HJ G>H N K> FJ>IN, I G NG> HJG>I>H >@ KGI>H. >GHI, I IMI@ >>I> KGI> : A KGI> >H II <>KH GH I I>, JI I I ><I>, I KGI >I GI> JG HGH. >H I> >H JHJN IG><<G > I >HHJGXH HI@ >IH GI>, ><G G> > I JIJG. CKGH> H G >@N H I JGN>< HI@ G> >GHH. >GH GN JH KGI>H I LG I
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
>IGHI NIH, L H FJ, I G><I I KGI >I FJ>IN <>KH I G KJ. G IG>< HI>I, KGI> KH I >GI I>H >@: A *. >I >H U JI I NV (I JGN>< HI@ G> >H
G L I KGH> K) I KGL>< G>IN I KJ H G I >IGHI NIH; A <. > I I> I KGI >H >GI I II IG>I> HI@ I>, IG>I> I> KJI> I>FJH JH; #<< =<. I KGI> >H > I N (G I >HHJGXH
HI@ G K I KGH> G>) >I H G GI>IN II I G L> MG>H >H G G G><I I MG>H. G KJI> JGHH, KGI> G@ L >I HIG><I KGH> I>. KJ I I, I, I@ I J ( KJ >IGHI) GI I KGI> G >I I I >IGHI GI II I N LJ K I N > >I >HHJ HIG><I . >H HJ LI I N NH H>>G JIHI>< >HHJH. # I N H H JIHI><, >G G >IH GI>< LI I N ><I N.. H>< I IJ N IJG>IN G>IN,, J J GI GI I G@ G@II >IGH >IGHII GI GI I K KGI> GI> , HI>I I KJ K J I H I HJ I GHI KJ I JH I I G@I >IGHI GI I GHI KJ I KJ I I I G@I >IGHI >IGHI GI. IKG >H I KG >H I FJ>IN GI>. # >I LG KGI> G>< NI I >HHJ, LJ HI>I I G> I I>H > > I KGI> >HHJ (JH>< I I> G>>< IH >HJHH > GK>JH FJHI>) HJIGI I>H JI G LI I KJ G>GN FJ IJG>IN KJ LJ LJ . IG> I >IGHI GI I >HHJG LJ I I N, LJ > I GI, L> L J<< >I I G>>< FJI>, >H FJ I I>H L JI (G>GN HH I> KJ).
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
15. H = = >= -.#. +?
J>< G>< N >KKH I H HIH H JI> > I FJHI> L I KJ N G HI@. AH L>I I FJHI> KJ>< G>KI N, >I >H I H I>H II @ HJ KJI> >GI. N>< GI>K KJI>, HJ JH >H H GH LKG HH>. JH LJ G H G @H G> I @ H>H JH>< IG G @H (G > , IG E..-H @H.) # GI> HH, IG G GH G IG G N L NGH L GI <N (HJ H > I JI >JHIGN). # HJ HH, JH>< >IGI> GH >H GG>I, IJ< JHI @ > > >G II N JI G >H>HII GI> KH IL >H. EK > IL G@IH H>>G G>H@, >GI IGH ><I I LI ><I IGL>H G>H. G M, G>< I I D>K> D>HJI 'I JI>: = D/(G-<). # L >K> I H>H N E, <IH: /E = NJI I>(1+<)/(G-<) H>< I CE I KJI>: = CE/(G-<), /E = (CE/EG>< FJ, LG >IGHI H LG >HJI GIH IJH H ><G /E GI>H. G>< GH G G >GI JIG>H, HJ HJI >GH I KJI> N, L> N G< .. >H >@ N D>G GGI JH>< .. JI>< HIGH, N G I. HJ IGG @ GI> I JHI G N JI>< >GH IL I .. I N > FJHI>XH JIGN. # JI>>OH G I>H > -.. N KJI>, GG II IG I >JIH G: = (EMG>H G IG>@ G>) = GHI KJ KI HI (>HJI I I >GXH ACC).
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
G = GG>I G>H@HH >IGHI GI (> I > GHGK G><IH HI 5 NGH, I 5-NG .. GHJGN GI, G M).
s2 = KG> > HHI G>. E IH KG>H N >GI G -.. N. UV L> >G > I ACC >H >GI (G I>H H L >HJHH JH>< DC > G>>< G>< N). G>H@HH GI L> HI GI>N >GI I H>>G IJG>IN .. GHJGN HJG>IN. A I KG> N J I KI>>IN H>>G HHIH > I >GXH G@I, L> L> >@N >G G I KI>>IN HJ HHIH > I .. UV, UIV UDV (HIG>@ G>, I> >K> N>) G I I. >I H I JH>< DC IH, HJ @ GI> I JHI G N JI>< >GH IL I .. I N > FJHI>XH JIGN L @>< I HI JGH G @>< GLG >> HI>IH. JHI JH I GG>I JGGN G JI>H. JH, 'M> N HJ KJ > HH IGJ<JI L> I 'M> G>H@-G GI HJ JH. KJ H IG>, I>H IGHI >I G IGH. > JIH HJ JH JHH I N >H > KGN >< >I> K>GI; N I HJ JI JGH JH>< UGV G UHIIV (>I>-JIG) IGH. G -.. >HX HI I, LJ JH LIKG HI I >H GG>I <>K I >GXH GI><. # IG >H GI>< K>, HJ HI>I JHI I ACC N >< G>H@ G>J. >IJI GI><, I HI GI>K L><I I JI JH>< I >GXH >> GIG>HI>H /G >IGHI MHH, JHI H L>I .. >G. # I N >H > JIGN L>I LG I GI>< I I .., LJ <GN I I >G IL LG HKG>< I IGH > I NXH JIGN I .. G M, I JH I@ JIHI AH> G HII N > G<>< G@I JIGN LG 10-NG <KGI H IG I, HN 10.1% KGHJH 5.1% > I .. JH I H UDJI GV LJ 5%. # I>H JIHI AH> G HII N &, 'NXH G >I-HH>< GI><, LJ JH I HI I GG>I G >H L>I I>H GI><. # I, LJ @ I LI H>>G >GH > I .. H HI I I JI HG. # >H > I .. L>I H>>G >IGHI KG< GI>H GGL I 9%, L HJ HHJ II I G HII N J GGL I IIG I 14%.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
CE LJ H >G. G G HKG GKI IH G IG>>< N L J. ( GN I H>HI) LN I I>H >H I UB I> HKG>< GI>< N &, 'NXH >I I@ >I JI JIGN G>H@, HHJH II: JIGN G>H@ G>J = >H@ G>J+ (DJI G KG>< BH) FJ>IN G>H@ G>J LJ FJ I G ><G I > I .. JH>< I>H G. G M, I H JIGN >@ I .. G G LJ IG I I H >IGHI GI H .. GHJG>H, H JH>< I>H I I G>H@ G>J LJ HI> 4.5% (<>, I>H >H JG L G JH>< G K>). G G<>< G@I JIGN L>I 5% JI HG, I GG>I FJ>IN G>H@ G>J LJ 4.5% + 5% = 9.5%, L> LJ H><>>IN >GH I CE IJH I ACC, H >< FJ. AIG I >H I UI>K EFJ>IN 'G@IV I. > GI> FJ>IN G@IH G G G HH KI> I I .., I>H I HHJH II: JIGN G>H@ G>J = EFJ>IN >H@ G>J (sCJIGN EFJ>IN/s EFJ>IN) AH NJ N G: CHI EFJ>IN = AGG>I () >H@-G I + BI(EFJ>IN >H@ G>J) A -.. N L> >@N K >GI G>H@-G GI I. FJ>IN G>H@ G>J LJ ><G G G KI> G@IH LG G HH KI> JH>< I>H G. FJ>IN G>H@ G>J LJ H ><G G >H > AAA-GI JIG>H. A I>G I >H I JH I UB 'IV > JI> L>I FJ>IN G@I KI>>IN. "G HHJH II: JIGN G>H@ G>J = >H@ G>J(s'HI CGH>K EFJ>IN #M)/(s KGI <-G B) A JGI I >KKH G>I>< I >> FJ>IN G>J G@I. >H >H GIG >I I, JI > JIH >I HHJH II: I J A I@H = (D>K>H I@ BJN@H EMI MI G)/(FJ>G IJGH I@H - EMI GLI I) JH >M H GMN G I UI J A I@H.V JH NHIHX HI>IH G LI >K>H HI@H > I >M L> G UD>K>HV, NHIHX I G UGLI.V #I >H I
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
<G>N HH> I MIGI I MI GIJG HI@H. BN HJIGI>< JI I G>H@-G GI, > FJ>IN G>H@ G>J. > HI HI@ G@IH G J >H II L> , IL G IG HI<H, > G>IN I JI>H G J G >I. IIG L> IH IH G IG>>< ACC HH, HJ I@ >I JI LI GGI> >GXH GKJH GI>H G IJN I > I>G FJGIG JIGN. G M, CM, G< 'M> I JIJGG, <IH G< GI< >IH GKJ G H N >IH IG>H > EJG I .. 'N JI AG> >GH G >HI I I@ EM< K K I>G FJGIGH I , JI K HI I>G GI>H > G>K HI I>G GKJ G AG>. B, , HIP G GN G I JHI L>HH >H. # IH HGIH HH, N LI I L>< I CE GGI>IN H I G><> H LH I I> I >GXH GI>H.
16. '< ; < >?
GI>< KG< GGH I GI< HIH II G >M KGHJH KG>. A >G>, JIJG>< G I N L>I IH <-IG GGIN HH J>>O NH JHI @ H HGN NIH LIG HH G>H G . I IG MIG, HJI>< >G II H N NH LG@>< H>I L>I >IH G II >< &D M>IJGH ><I K I M>>>IN I N- NH G LG &D MHH HJ HH IG, G I >GH NH G H>< G > HH G>H. I IG , >GH L>I >< < KG< <GN MG> H><>>I >GHH > GI>< > H HH >GH. A >GXH < KG< >H > H: D = 1+(>M HIH/G>IH) = % < > G>IH/% < > HH.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
17. = +< <; < *= < *;. ; < < 12@ !/E, < < <; < 16@ !/E. '+ ;= = +< < < *=? D = > > = < < < <;?
G G IL LNH > L> I>H FJHI> >H IG>@N. >GHI, /E >H JHJN NO > GI> I MI JIJG G><G H I I K ><G /EH, H >< FJ. > L I @L I @HX . , > I HLG > G>G FJHI> L HII II G> I @ >H IIG HJG GI>K KJ G I >> HGK>H >JHIGN, H> I @ KJ FJ>IN >H GHJG >H. GG, L JXI @ H < K > I IN >H I KG> L> HI IH /B. 'II>N I>H H HL H LH: AG>< I I >K> >HJI , = D>K> G G/(>HJI GI S G>IN (E) = E / B@ J EFJ>IN, N >>< IH IL GJH I KJ FJ>IN >H: =
B(E)(NJI I>)(1 + < ) (G-<)
G /B =
E(NJI I>)(1+<) (G-<)
G GLI = (1 - NJI GI>)E E>IG LN, ><G GIJGH FJ>IN ><G <G /B IJH ><G KJI> G I >> HGK>H >G > FJHI>, H >< FJ.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
18. '< ; ; < < + < * +< ;?
H>HI I, JGH, >H I @ I LI I GI>< <>H (&, 'NXH, /G >I) HN JI N; >I >H I>G I NO HJ G>H@. H GI>, LKG, G NJ N L>H I JGIG J >><. G G HKG II> HJGH G>H@ N N H. NO>< I G>I G>H@ II> G>>I >><, HJ M> IH G HJI>K HI>I. G G >IGI>-GI G>H@H (HI <KGI <H > L, >I> JGHI, JGGN G>H@); HI> G>H@H (GHH>, >I> G I>, >IGHI GI G>H@, H>IH, >I> GH@); >JHIGN G>H@ (I<> <, >GH I>I>, >GH>< HJN HIH, J>>OI>); N-H>> G>H@ (<I (>)I, HIGI<> JI@, < I>). A>I>N, JHI I>KN @ G H><H II N HJI>KN IG> G>H@ HG>H L> I I >H N. GI-IG >FJ>>IN G>H@ NO N @>< I H I L>< JI>< FJI>H: CJGGI I> = CJGGI AHHIH/CJGGI >>>I>H >H GI> H K>< L 2 G HI .. >H, H >JHIG>H KG< L 1. GN, >I >H HLG IL 1 2. LG I>H JG >H K><, I IIG I >G >H I <>< >KIGN. A HG G>H >IG H MI > JH>HH G KGHI@ LGJH. J>@ I> = (CH + 'G@I JG>I>H + >KH)/CJGGI >>>I>H # H >JHIG>H, LG >KIGN FJ>@N >FJ>I, J>@ I> = (CH + 'G@I JG>I>H + >KH + #KIGN)/CJGGI >>>I>H J>@ GI>H G JHJN GJ 0.5 S 1.0. ><G I JG, I HIG N N I > LGH H HG>. A >GH>< FJ>@ GI> N H II I N >H I <>< >KIGN G G>KH H L H >I J. IG HGI-IG HJGIH (I GH L> KGN G >JHIGN I >JHIGN) G: <= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
GI>< CH L (C) I CJGGI >>>I>H (C) = C/AKG< C AJIH >K (A) JGKG = H/AKG< A #KIGN JGKG = CHI H /AKG< #KIG>H AJIH N JGKG = JGHH/AKG< AJIH N # I N > FJHI> >H G G >IH >JHIGNXH G G HJ GI>H, >I N HGI-IG G>I G>H@. A N ><I HGI-IG G>I G>H@ JI H I <G-IG (G K>-KGH). AJI>< GI>H JH I IG> <GIG G>H@ >J: <-G DI I> = <-G DI/(<-G DI + GGH EFJ>IN) DI/EFJ>IN I> = <-G DI/ GGH EFJ>IN >>>I>H/AHHIH I> = I >>>I>H/I AHHIH GI>< CH L I I >>>I>H I> = CH L G CI>J>< AI>K>I>H/AKG< I >>>I>H GI>< CH L I C>I EM>IJGH I> = CH L G CI>J>< AI>K>I>H/C>I EM>IJGH A<>, > N IH <G-IG GI>H G G LGH I LI IN G G I >JHIGN H L, NJ N K <G-IG G>I G>H@. HI N JH <-IG G>H@ HJG >H I #IGHI CKG< I> (#C) (JH I>H > NJ K I >@ N ): #C = EB#DA/#IGHI EMH >H GI> >H HH GFJIN @ I H: #C = (I # + #IGHI EMH + # M EMH+ '>G>IN #IGHI > EG>H, & JHJN HH><H >IH HI GI>< AAA I >GH L>I #C ><G I 8.5; >> HGK>H >GH JHI <GN K #C K 3 HG >GH K 12.5 I <I AAA GI><. G<G >GH L>I #C L 2.5, >> HGK>H >GH L>I #C L .8, HG >H L>I #C L 3.5 I I <I BB G LG GI>< IJH G HH>> H I G>I-LGIN G UJ@.V
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
19. H ; += ? '= I * *<< < 10% =, ;-=, ?
D>N LJ N I HI. > H>JN, $1 >KHI I GI UGV L> IN, $1 >KHI I GI UGV L> N II I G<G JG J>< G>H <IH, I G<G I > KJ $100 <IH. # J N >IGHI KGN >HII, $100 LJ I GI, L >H GM>IN 2.71828. JI >I IG LN, NJG G>I G N N G< NJ 1.5% I, JI NJ H II I>H HIH NJ G G NG I 18% (L> >H LN I UA...V >H >HI >H $19.56%). GN >I NJG JIG H.
20. '< ; =<?
A >GH MI I>G @GH I @L< JI H (GI>JGN > NJ G > I >I G@IH/G><>I>). G, HI G<G GGI>H >HHJ G I I FJ>IN. >@ NIH >@ >G HHL. # NH $10 NG G 29 NGH, I > $400 I 30I HI NG, I LI >I LJ I GHI KJH IH H LH > IN LG >HI >G I H-HL? DJGI> >H I>H HJG.
Duration (An Ilustration)
$10
$10
$10
$10
$10
$400
N >H JGI> >GII? G IL > GHH. >GHI, L G>H G>H G , >IGHI GIH G G>H. G H <H > >IGHI GIH, I JGI> L> L NJ I > L> <. #I >H HJG >IGHI GI HH>I>K>IN. , @L>< JGI> G GI> H (G H) >H >GII > GG I I HHIH L>I
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
>>>I>H. A HH> M >JG I H HG@ I K>HH > I .. > I I 1970XH. B@H I@ > H>IH, L> LG <GN L>IGL > L JG >K NGH. 'L>, IN JI I H N > I G 30-NG GI<<H G >KHI > <-IG .. <KGI H. >IGHI GIH H>@ > I 1970XH, &H J IHKH N>< JI J-><>I >IGHI HGI-IG H>IH L> I>< L H>< ><>I >IGHI H H. >H LH HH> H UJGI> >HI.V GH K, NJ N K MG> I> L NJ LG KIJN <>< I G>K G N I NJ L, JI NJG G>I G IG >H LG J G NJG H >LH GG>K; I>H >H HGI JGI> >HI. BN JI>< I JGI> HX GI>, < G IGL>H HIGJIJG I >HJG II H >LH I H JILH. CHH>, G U'CJNXH DJGI>,V HJGH I I>K IJG>IN , > H I L><I KG< I I>H JI> NI, L>I L><IH GGI> I I GHI KJ I NIH. JI IG LN, >I >H L < KG< GH L> K I L>I I <I I>G N @. 'II>N: LI =
CI /(1 + ')I
G: L = L><I C I = CH L I I> I A JGI> (G D) >H: I=
D=
å IL I=1
G M: ' = 10% = $1,000
DJGI> =
CJ = 8% (JN) = 4 NGH (IJG>IN)
80 (1) 80 (2) 80 (3) 1,080 (4) + + + (1.1) (1.1)2 (1.1)3 (1.1)4 80 80 80 + + (1.1) (1.1)2 (1.1)3 +
1,080 (1.1)4
= 3.56 NGH
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
AIG JGI> FJI> HHJH II @LH I H I G> < G < > >IGHI GI . >H GJ >H LG>II: D=
-(H)1+N/2
G = G> N = N>. AIGI>KN I>H HII H: D=
d/ dN/(1+N/2)
>I d/ >< I GI< < > G>. G I>K >I G I, H IH I> >IGK>LH): . JGI> OG J FJH >IH I> I IJG>IN L> JGI> >H LNH HH I IJG>IN G J-G>< H. JH IG-NG J-G>< H LG JGI> I IG-NG OG. . ">< I J GI HII, XH JGI> >IGHI GI HH>I>K>IN <GN >GH L>I I> I IJG>IN. . H JGI> H HH I (JGI> >GHH N HH I NG G NGXH >GH > IJG>IN). (>H HIII >H IGJ N G J H. G OG-J H, JGI> >GHH -I- H>H L>I IJG>IN.) . ">< I> I IJG>IN ' HII, XH JGI> >IGHI GI HH>I>K>IN >GHH H I J GI GHH. BJH G FJHI>: '< ; < + *< M+C=; =<? (>H >H IJ FJHI> H@ > @>< >IGK>L.) AHLG: '>> JGI> >H I GI< < > G> G < > N>. 'II>N: '>> DJGI> = -
d/ dN
G '>> DJGI> =
DJGI> (1+N/2)
G = J>< GFJN G NG.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
21. '< = < +; ;<+ < =+ ;; = < <- ?
>GHI, LI >H U<L>?V >G JGHH IG, I FJ>G>< >G JHI I HHIH I I L, > NXH HI. J >H HH>< I >I>> I<> HHIH >@ , J>>I >GHI. MI, KJ >H HH>< I >I>> >I<> HHIH >@ IIH, JHIG >HIH, G IG H. G>G >H >HI I HI H U<L>.V # HGI, NJ JHI HN <L> >H I >G IL I @ KJ I JGH N I IJ G> >. IXH HN G EIG> JGHH KGI>H>< N >@ > G-G>K >G >@ C-C. JI <L> I I HI I > N LJ J E J<I G 'IGH G EFJ>IN > GGI>H. >H >H JH GI>KN G<G GI> 'XH EFJ>IN >XH KJ >H G>K G I>G LGH> G IG>H G > J>> G>KH J >IH KJ G I H@>H @L< >IH NH. AH J H <GH IJI UJ >IV IH NH, IG >H HI >I G I IG. >>GN, I G>IN C@XH KJ H G >IH G H UHGI GJV (L> >H I II). .. AA (GN AI AJI>< G>>H) JH I GFJ>G >GH I GI>O <L> J I H LN IN G>I I<> HHIH. >H >H <G GFJ>G: >GH JHI L ULG>I-LV <L> N L >I H U>>G.V G M, > IG E JGH C-C, H>I>HIH >HKG II G< J> JHH G, I >>IN E I G N I '>JI '> G LJ >>G. JH H I JIJG > II GI I G I '>JI '> >K>H> C C/E LJ K I HJIGI G <L> I HI. >H HJIGI> LJ H I@ G I > H -I> HH. CHFJIN, > N JH >< LG>I-L <L>, I>H H II I N <G MIH I G H J N H >I G I >I<> J>I>> HHIH > FJHI>. >H LJ LG I >. "LKG, I>H >H H>G -H G<, H> >I H I I IJ H >< >I I >G G I FJGIG I G< >H I@. #, >I N I I H LH G HKG FJGIGH G K NGH. # NHIH >KHIGH GH HJ G< >< I@ (L> IN I ), I>H HH>K HH >H ><G, N UGI>< G>G.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
22. '< ; +>@<?
AH G>H G>H < L>I >IGHI GI <H, IN I H > I >G LN HHJ N JGI>. A HIG><I-> GM>I> >H K> G H <H > >IGHI GIH. G G<G JH, IG HJG >H . CKM>IN >H H G>KI>K I G> JI> HJGH I IJ JGKIJG I G>-N> JGK . Price
Actual bond price changes measured by convexivity
Price1
Tangent
price change line estimated from duration
Yield1
Yield
CKM>IN >H <GN H>G H>G > , H> I H L> >GH L N>H GH HH L N>H >GH. CKM>IN H HHJH II H N>H G>H, I G>- JGK H IIG. CKM>IN >H >GII JH >I LH I >GK I JGI> HI>I> G <H > G>H. 'II>N, >I GGHI H HL L:
å[ C /(1+N) (I +I) ] I 2
I
I=1
CKM>IN =
1 (1+N)2
G = I> JI> IJG>IN I , C I = I H L > I I G I I> I, = G>, N = N>. J L> KG K I @L I>H
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
FJI> > >IGK>L, JI IH NJ >>G L>I JJH ><I > I>H FJI> J > JGHI>< KM>IN.
23. '<; <@?
A GG IM >>>IN >H -H HI >I HI>< G >GH IL GGI JI>< > IM >. JIJG IM JI>H HI>< G H>>G >GH G HH>> H GG IM HHI. A M >H L JIJGG KJJ GH >GHH I HI>I JG LGGI>H I G, J I I J > I H>< . >H LJ >>IN LG JI>< G>H G< LJ I IM-JI>. #I LJ >HI GI GG IM HHI H> I >G LJ I I JI I MH G IM JGHH JI> I LGGIN G>GH LG IJN .
24. '< ; ;+=<<?
JG>I>OI> >H I >>I I>O>< JIJG H LH. G>G, > JG >HJHH> JGI>, L H> II L >IGHI GIH H>@ > I 1970XH, &H J IHKH N>< JI J-><>I >IGHI HGI-IG H>IH L> I>< L H>< ><>I >IGHI H H. >H LH HH> H UJGI> >HI.V LN JI I>H HH G N &H LH I H I G><IH I JIJG GI<< NIH (K> >KHII @H) I >HI>IJI> >KHIGH JHI >@ H (L C'H G IG>O GI<< ><I>H). > I GI<<-@ G@I LH HIGI > I I 1970XH, K>GIJN N HGI G>I H L II HJG>I>O H . EMH >J G>I G NIH, JI H, HIJI H, K HI>< GNI>H (UBL> BHV) HKG HIIHX I H HIII N. KI< I I HG I >H II >I G>KH H >>IN >I><IH N G>H@ HJG>< G JIJG JIH N IGH.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
25. "; .#. < +<; *. ' < < = +< . D = ?
>H>< >>IH G I HHG>N G. AIG , IG HJGJH IGJ<JI I 1990H L> >< >G > GHH>, L> I .. I LGXH HIG<HI N >< >>IH JG>< I>H I>. IG >>I >H > H LH: G B = EMGIH - #GIH H = . # I >H <I>K, L K IG >>I. J HJ G G H> >H II D = C + # + + (L>I C = HJG H><, # = >KHII, = <KGI H><). LG JHI HI N ><G C, #, G . # I H I .. JG>< I 90XH, C (HJI>) # (>KHII) LG I ><G. II GH >KHI > I .. N JG>< I>H I> >J HH>K JIH >KHI N G><GH. HI < >H >@ I .. G I H- UAH> ><GHV IIGI G>< >KHII L> K>< IG >>IH. ", ><G IG >>IH G I HHG>N H>< > L@HH JI H>< > > N N < >KHIGH (HHJ>< I >>I >H >>< >KHII I HJI> G <KGI J<I >>IH).
26. H = ++=< < +<< +?
'JI>N I JGGI HI@ G> N I JG HGH JIHI><. G M, > ' >H IG>< I $52/HG IG G 5,415.46 >> HGH JIHI><, I G@I LJ JI H $52/HG*5,415.46 >> HGH = $281,603.9.
27. H = ++=< < < >= ?
I >G KJ () FJH I HJ I G@I KJ I >GXH I (D) FJ>IN (E). G, = D + E.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
28. '< ; < *= >= ?
G@J KJ I >G >H IG> N NO>< I >FJ>I> KJ I<> HHIH (A) >>>I>H (). H G II (>.., A - ) I GHJI >H I GH>J KJ GJ>< I HGGH.
29. H + + ; <; ;<+ +?
G G N LNH > L> N J I>H. H >J: Q #>I>I> G< J> HI@ GJGH. >H HH H>< I I G@I II I N H II >IH HI@ >H JGKJ. >H H II I N XI > IIG >KHII IGI>KH I >IH L HI@. >> GI>H HJ H G>GH H> IG G LG JIHI>< HGH (GGI HG GJGHH < >I I IGHJGN HI@ JI, L> >H I >J > I JG HGH JIHI><). Q AJI <H I G<>OI> HIGJIJG, HJ H JI>< G HI JII>< ><, H>I> G GJH>< GJI >H, @>< <I <H H . Q IGJIJG <H, >J>< G<GH, FJ>H>I>H >KHI>IJGH. Q AJ>< >GH > >K>H. > I HG G> HJ KJ H I DC JIJG MI H LH, > H LH >GH, I HG G> HJ >GH.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
30. '< ; ;; +; + =< ;?
A G<G JGH L IL >H GI>H < GLG H H>< N. HHIH >>>I>H I IL >H G >. N JG G KG>IN GHH. B>IH >J HI GJI>, >H H G I >>IN I IG L G@I I M>I L GIJ>I>H I LG HI I LJ HH> L>IJI I G<G. G G >GI @>H G<GH H L. Q H< : G<G II I@H IL IL I>IGH (>H > I H > JH>HH), HJ H >G> JGH>< IG. "G>OI G<GH GHJI > >JHIGN H>I>. # >JHIGN I>I> >H HJ>>IN >JI IG I G>OI G<G, I L N N I G>H G>H @ I ><. G M, I G G C>HH> GGIH II G<G IL IH ( > HJN HIG) > DI L I < IGJ<, IH LJ K I N > HJN HIG > N GH, LJ K I G>H G>H 13 GI. Q <+ : G<G -I>< >H, LG @H I N I IG. H >GH K JNG-HG GI>H>. EM: >-GGXH G<G L>I JGG BGHI>< NHIH. GI> G<GH >GH GG>GH I IGN N >IG GJH>< I H GJI> >JIH I I>IGH G G>H>< I>G G>H. H INH G<GH H GHJI > LG G>H II I>IGH I I, HNG<>H > GJI H><, G >>I JH GHJGH. Q C< : >I> IL >H > JGI JH>HHH. H <GI G<GH >J >KGH>>I>. IGN: I >H G LGI G I<IG I HGIN. C<GIH K JI KG > GI NGH; >KHIGH IN GG I >KGH>IN GI>H, I JGH >KGH>> >H. D>KHI>IJGH G@JH J< <GIH J>I JG>< I 1960H 1970H G L .
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
31. '< ; +=;<?
A FJ>H>I> >H LG N (I FJ>G>< >G) H@H I <> IG KG IG (I IG<I). A FJ>H>I> N I HI LN I JN H>G HHIH G <> IGN >I GI>JG >. I@KG N G>N G HI>. # G>N I@KG, I FJ>G>< >G @H G I I IG<I >GXH <I G >GIGH I HI>H >IG GI-HJH>>GN GI>H>, G<G G H>I> I IL >GH. # HI> I@KG, I FJ>G>< >G GH <>HI I L>HH I <I/G, GN N JJI>< HI@ @>< IG GH >GIN I I HGGH.
32. '< ; < ;> <+<+; << << < *+ ;< <>?
G G KG>IN HIGI<>H IG<I >G N N, N H>< I @ I I@KG >N JIIGI>K I I IG<I. Q C < *; < +< T G M, N >I>< HI<<G G H II N 1/3 I >GIGH G I NG /G GFJ>G>< HJGG>IN (G M, 75%) I GK G<G G FJ>H>I>. Q !; ; <; T I IG<I N JHH I>H II> I @ >IH HI@ HH IIGI>K I I II> FJ>GG. AG>< I I DLG JG CJGI, UA >H > >H H>K >H I N GGI>H II L>H I GKI JLI I@KGH. I JGG GI> WIG><<G>GGXH JGH GI> GI< I IG<I GGI>XH HGH, G I JI IG G, M>HI>< HGGH, MI G I LJ- FJ>GG, <I I G><I I JGH I G HI@ I IG<I I >HJI. >H I> >JIH I LJ- FJ>GGXH HI@ > I N >GHH I HIH FJ>H>I>.V Q G +=<; T JGI>K >IH, HJ H HI@ I>H, HKG N H , <>K I I <I > I KI HI> I@KGH. I N H I>H >GH I HI I G<G, JI H GHJIH > HH II <GH IG NH, L N HHIH KI N I FJ>GG.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
Q E #<+ < ! (E#!) T LH LG-K NH I JGH HGH >I IGJHIH L L> (GHJN) HJGI <I > H <>HI HI> I@KG. Q # #<+ !=+; ! (##!!) T G< HGGH I JGH >I> HGH I L G> HJ IG><<G>< KI JG. IG><<G>< KI , G M, LKG JIH> I>IN FJ>GH G I 20% I HI@. Q D;> << T H@ G I JHI> DGII I I>-I>I>K. Q '< < T IG FJ>GG G I I <I.
33. ' ; B B ; ; +; * < ;;? H < ;<+ < * +< =+; +; <;< <;?
B BG@ >H I C>G I G HGK BG. " >H HN L N I GHH JH I G HGK BG H JG IH >I JH I HI>JI G HL > H I >>IN I IG I >IGHI GI G< IL @H G KG><I H. >H >HJI GI >H L>N JH H G@ <>HI L> IG GIH G G. I G>H > >IGHI GIH H LIG I J >GH LH I>>I G I. # I G@IH I>>I GI >GH 50 (50 H>H >IH, G GI) > BG@ JH GI >GH 50, IG HJ < > HI@ G>H, H> I HI@H LJ GN K G> G>< I I>H MII>. I IG , > GIH G>H ><G I MI, HI@ G>H JHI < I GI I L G>IN I KG G@I >>H J MI I . (AIJ<, G M, HI@H >> GGI>H HJ H @H IG GH N G>H > H><>>I GI I>G GKJH G >IGHI NIH.)
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
34. ' ; ; +< < <
G>I GI>< N I G GI>H ('NXH, &, >I). >GH G>H H N <>< I I FJ>IN G@IH (#, HGN G><, I.) G IGJ< I I G@IH (G> G, H, I.). G>I GI>< >GIN IH I >GXH HI I. LG I GI><, I ><G I GGL>< HI. # I GI>< >H L J<, I >G N GI ->KHII >I N >HI>IJI> >KHIGH L> G>>I G L>< >I. G G I>H L >G L> I I>KN << > I >I G@IH. # >G >H GI AA, G M, >I G>H H LKG >I LIH N GGL><.
35. ' = +; ;<-< > -< *
GI-IG I >H <GN G H>G I I>, JI G>H@N JH I G JI NJ I N I>, G M, > NJG G>I GI>< LGHH. # NJ GGL I I>< GI, I G>H@ HGI-IG I >GHH JH K>< I GKG T I HGI GI >H L G KG> >J N JIG IGH HJ H >I>. GI-IG I >H GG>I N G HGI I> G>OH G L HHIH G >FJ>.
36. I ; < ; +; * ;;= *, *=< ; *=< < +< << <;< <; < =<=, < ;<< ;= < ?
#I >HHJ <-IG I > >I >H G JI @>< > >< >IGHI GI.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
37. '< ; > *==< (LB)? ' >-=?
A KG< JNJI >H HIGI< GGL JH. FJ>G>< N JH >IH L HHIH H IG > I>>I> II JIJG H LH G I GHJI>< FJ>H>I> L> KG I >IGHI NIH. BH HGGH I < I >I HIGJIJG I >G. N JN J I HI@ GI>G HI >I, K>< I GGI> L>I HIGJIJG, G M, 90 GI I 10 GI FJ>IN. B>IH N >J >GK GGI <KG: H> I NIH K I , IG G <G> >I>KH G < GG, IJH IIG ><>< <G> HGG >IGHI.
38. H = = >= + < ;, ;=+ ; ;<<-=?
J XI JH I DD' G DC. J LJ JH JI>H HJ H G>/H G GH. KIH > JH>< GH: > JH>< GH NH>H, I @N >H I H I G><I GH. IL >H G MIN >@. CGI>N >I >H HHGN I H >H > I H >JHIGN, JI H H>G I >I HIGJIJG, H>O, GI>< G<>H N HH>IN IH.
39. = *;; =;; < ;+=< +; < >= < ;<+; < ;. '< = < <; ;<<?
#I >H KGN <GJH I KJ ><-H N I IG>I> DC . >GHI , I >HIG>JI>H >GII >> KG>H HJ H G>I G<>H, LG@>< >I GFJ>GIH, GKJ HIG>JI H IN ><I G G HI >H, JI GIG G >N >HIG>JI. GIJG HJ N >H JHJN J IIG G J LGH I MI, H IG>I> IH II IG MI GIJG L>I MI G>H@ I LG@. >H@ >H KGN ><, @>< >I KGN >>JI I IG> GG>I >HJI GI. >H >H I H G N KIJG >I>HIH, L >HI ><I JHI JH KGN >< JG GI (I >>J GIJG II H JHI G>K
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
G INX >KHI > HI><) , HN, 50% G H. AH, >I >H KGN >>JI I IG> I KG L> I JG, I >>>H I HI IN > IH G>I> KG>H H II DC NH>H GJ KGN >H>< >JGI GHJIH.
40. ' < -<+ ;<+; > +; > <= < > << ;?
#KHIGH G MI>< >< JIJG
41. H = ++=< ;+=< <?
J LJ JH I CA'. > I >H >IIN L HI>I G>H@, >I >H I HI G>H@ HJG L K. C>I AHHI G>>< ' HNH II I GG >HJI GI I JH >H I G>H@-G GI JH I N G>H@ G>J, L> GIH I GI>JG NXH G@I G>H@ G I.
42. '< ; *<?
BI >H HG HJG G>H@ GI>K I I KG G@I. A >> >HIGJI L>I I 1 >H G>K I H G>H@N H I G@I, KH L>I I G@I. I: BIH (bH) G LNH I L><I KG< G@I KJH, I @ KJH.
43. H = ++=< =< *<?
J GG >G G I >HIG> HI@ GIJGH <>HI G@I GIJGH. H I G > >H I. J >, & H G I GK>GH FJ>IN I. # NJ XI <I I (G M, > I N >H G>KI), JH I I G N H HI>I.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
44. I; *< +;<< ; < > > <?
AH >H IJG, I HJ G > I >>I. H I (G M, BGG) JH L><I KG< I, <>K>< 2/3 L><I I I G I L><I>< I GHI I 1 I I@ I>H >I JI. JH
R=
2 3
R>HI +
1 3
(1)
45. '< = < < *< G M<; ;? '< *=< -<+ ;<+, ;=+ ; C;+ #;<;?
> I HJGH I HH>I>K>IN I HI@ I I KG G@I, IJG >H HJ H ' G <GN MI I K IH H I 1. >H H II IN G JI H G>H@N H I KG G@I. A ><-I HI@ >H G>K H G G>H@N I I G@I LJ GN K I ><G I 1, GH HG I 2. I II I G GJ I II> I >G/>JHIGN, I ><G I >H >@N I . BIH KGN H><>>IN IL >JHIG>H.
46. ' = => *<?
J >HJI GI G G H LH, L> I> IGJ< I CA': EG >G = EG + b>G(G - G ). I >G >H HJH I J>H HJG I >GXH G>H@. >G KJ HJ >I I JI >> KG< H NJ JKG JI N >HJH I. > I >H II> KG< LG I G>H@ I >G >H IGI < I G>IGH HGGH, > I >G @H G>H@N, >H >I G>H@N JH I IJG I JH>HH G I IJG I >>HH G>H@.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
47. '< ; < < > +;< +< = ++=<
L><I KG< HI >I, ACC, >H I MI GIJG GI> H>HI>< I I>INXH HJG>I>H. #I >H JH H I >HJI IG > >I J<I>< >H>H, GIH I G>H@ I N. ACC = G A = G E E/ + G D D/ LG G E >H I MI GIJG FJ>IN (GIJG HI@), G D >H I HI I, E D G I G@I KJH FJ>IN I, GHI>KN, >H I G@I KJ I >G, = D + E. ACC >H JH H I >HJI GI > KJI>.
48. H = = ++=< 'ACC >< +?
# I N >H I J>N IG, NJ LJ IGN I > G >H JI >J IG G>J.
49. ' = < < < <; +< ;<=+<=?
> G, J I '' ('><>>-'>G), >H II IG >H I> >I HIGJIJG G >G. >I HIGJIJG >H I >M IL I FJ>IN. # I >I HIGJIJG >H I>>O, I GIJG FJ>IN (E) HJ H I>>O, JH I >G HHHHH I I> JI FJ>IN I GJ >IH >. AG>< I '', >GH HJ GN HI MJH>KN I I > I>G GI>H. N XI I>H, > GI>, G KG>IN GHH, >J>< GJ >FJ>>IN, >GH G>H@ >> >HIGHH, <N HIH, I.
50. '< ; =+<; >;<< *?
Q "H GK> >>< G N N G><>< L >HHJH J>. >H >KKH GG>< J >>< KJI> NH>H > GG I G> I >HHJ.
Vault Finance Interviews Practice Guide
Corporate Finance and M&A
Q AIH H >IG>GN IL I >KHI>< J> HJG>IN >HHJGH. Q GK>H K> I HJG>IN >HHJGH IGJ< HJHFJI I G> IGGN HI>>OI> > G> JG>< G>< >HIG>JI> G>.
51. H + ; +;?
#I < I I >I G@IH (H>< HI@ IGJ< # G HGN G><), >I >HHJ I, G >I H HHIH.
<= ***.)a('.c#! ; * ;*<, ;*=< * ;?@< = *; @*= =<
SALES AND
TRADING Vault Finance Interviews Practice Guide, 2012 Edition
Vault Finance Interviews Practice Guide
Sales & Trading
Skills for Sales & Trading '@ @ @ >@ > @ @ @ > @@ > @HI I@. @ I, > @ @ @>, @ @ @@> @>K >> IK @@ , @ H>>K @ IK. @ > @ K> @ >, I @ >@ >K @ >, S! @ ! @ I @J HK K @J I K?T A , I @ @ @>K @> @ @ I K H. !@ @, >> K @HI @. !@ >, > @, @HI I>> I@ >: D @ H @@> >>? !@ I, I>> K > : P @ @>@ @-@? P >>K > I @@ >@ @ -I? P AH >@ @ @@ @ @H@ @? P @ @ J@ K >@ @ >K? P @>K @ ? P @> H>K >> @ ? K I>> > I@: D K H @ @@> >>? >> K > : P @@ I @@> H I>> >H > > (.. @ J@, , K )? P C@ @ @H @H@ >@ ? D K H @ @>K> >>? >> K > : P @ U @>K @ @ > @ >K @ ? C@ K >K @ >K >K K >@? P EH> U @ @ H>K @ @?
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Vault Finance Interviews Practice Guide
Sales & Trading
F @ @, @HI I>> > I@ @I K H @@> >> I>> >>I@: P A K > I @>K @ ? P C@ K @> @ L >> @ ? C@ K >K K? P A K H? P C@ K @ > @>K? P C@ K >@ I@ >> ( H) ? > H @@> @ @>K> >>: P D K @@ I @@> H I>> >H > > (.. @ J@, K )? P >> K > @/ @ @ H ? P >> K @@ H @ @ >H>? P C@ K @>KL @ H @@ >I @ , >@, @ >> @ H @ ? >> @ @, > H @ K> @ @ H @I K @ @ @ > @ @. @ @ K , @ K> >@ I>> >>K @> @ @HI @ J > >K @ @@>>K (> @ > >@).
Vault Finance Interviews Practice Guide
Sales & Trading
Sales & Trading Questions
1. #+< +$ < &+ $ $' $'*?
@ @ @ @ @HI, @ > >K >> K @ K >>K @. > H K I@ @@ @I I@ @ K I@ >> @ @. EH@ , I@ @ K I@ H @ H >> >@ . !@ I, K > >@ I > > @ @, K > - @H@@, K I I>> @ , K > @@> @ >, K > I@ @ , K @ @ . (D@U > > @, @> K @I HK >>I- @.)
2. H ' '$ ?
DHH @@> @@ H H> @@> H>, H@ , @ , @ @, @ H@ HH. @ > HH , I, I @ @. F @ I @ IK I (K > @ @>H #>>U) @ . C@ K @> >, > @ .. K @ . @ @ I@ I @ @ @ (> @) I I H @. I > @ I, @ >> @ . F J>, @ @@ @K K @ @ >@ K I@ @ K J @ @. @ I> >I I U > @ @@ @. '@ @ I I > @ (S>T @ K @ >@ > ). ! K , S>>.T ! >> , S.T
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Vault Finance Interviews Practice Guide
Sales & Trading
DHH @ . D @@-@ >@ K >IK J, H>>, @ @>>K HK >H @@> @@, K @>K H @@> @@. A > , @ J> @ @ @> @@ @ @ @ @ @ > . F@>>K, > >@ > HH. !@ @@ >, K I>> @>K H @, @/ H> > I>> J>K >J HH @@ @ @ @@> @@.
3. #+$ $&$ $ $ < ' ?
> @ @ @I@ @ K > >>I @ @ IH () K @. , I @> @K->H> @>K @ I@ K @ @K @ . H@ K H J@ @ > . F >> , K K I>> I@ K @ .
4. #+< ', <, &&< $' &'? #+< &$+ '$?
A@, > @I @>K. D ( J @ @ >>) HI @H @ K. > @ @ @, @ @ @ GD . EK HI SK >>@T @ @ @ @. DHH HI HK @H @ @K I> K @ @ @K @ HH I @ I@. '@ > > I@ @I@ , IH. EK @HI @ I@ K &' @H, @ @H> @ @>>K U K H@ @I> , @ A&D HH. >>K, @ >@ SK >>@T J @, >>K @ K> @ @ >.
Vault Finance Interviews Practice Guide
Sales & Trading
5. #+$ ;& +$ < +$' +$ $ $ $' $'*?
>>K K @ @ K J@ > >> > @@@ . A@K > @@> J@ >H@. EH@ K H @ > I @KI @ S ,T > K @> J@ @@ K E*ADE @, > - @ - @H@@ <, I K H @ @ > @ .
6. D < $ $'?
A@I @>K (K @U I@ @ I K I>> > ). A@, I @> I@ @I K @ H@.
7. #+$ $ < + < &$ ?
> > @ K H >> @@ @@@ . ! K H @ > >H@ , IK @ I K H > @ .
8. H ' < & $ ?
> @ K>>K @ > @ @ @HI, K > @ @@ @HI K @@> @I>. ! K > I HH @H> @ > /@@ @@ @ . !@ @, ->> S> '@T @@>K @ K H>@, >>K @ H>@ >/ @ @> -@@ @. I @ IK @ @. '@ @ @> @ >. B@> @ @ (I > I- @-@ >) @ K @ @ I>> H>>, K , K I>> >K IK. F
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Vault Finance Interviews Practice Guide
Sales & Trading
@ @ 1979, @> @ @ H@ >K @ > K >> @ K. @> @ @ > @>>K @ @ I>> H I@ @ H@ @ @>K @ I > IK. F J>, > >, I- @> >, I @> 100. @ @ @J 110 I@ 90. @ - @ 2%. I I> I I 95? ( , >> I 95.) = 100, = 1.10, = 0.90, # = 95, @ = 1.02. @> ST > > >>I@: 11 10 0
121
0 99
90
81
@ K ( I K I> @ J @> K) : = J M0,#-2N = 0 = J M0,#-N = 0 = J M0,#-N = 0 = J M0,#-2N = 14 !@ I, @>K I@ I S@ @KT >I $95 . 'I, I>. @ =1.02, @> >K : = (-)/(-) (1.02-0.90)/(1.10-0.90) = 0.60 ! I > =90, H> J @ (#) 5; = 110, (#-) = -115. H> @ J@ I> 0 = 14 I@ @. @
Vault Finance Interviews Practice Guide
Sales & Trading
-@> >K @ @@ K - , H> @ J@ : (1/1.02)(0.60)(0) + (0.40)(14)=5.49 ! J =100 > K JM#-,0N = -5; @ @ > J I @H >, H>K JM#-,0N = 0. & J@ > = 0 >, @ = 5.49 >. @ (@) @ > J >K , @> H> : = (1/1.02)(0.60)(0)+(0.40)(5.49) = 2.15 &I @ @ @ H@ @ . @ IK K I>> @ >H > > @ @ @HI. A @ @ >@ , >J @>>K >> @> @. IK @ K @ B>-> @, I I @ 1973. @> H@ @ >> @ I SE@T (I @ K @@ J K) @ @ K H@. A >> @ @ H> K B>-> @ @ H>: = C@ @>K@ ( I) # = @ ( >> ST J @) = @> @ J = > @ (> > >@ @)
s2 = @ @ >-@> H> @>K@ (H>>K) '@ @ H>, @ > @ @: >> = &( 1) - #- &(2) = #- &(-2) - &(-1) @ 1 =
>@(/#)+( + s2/2)
s Ö
@ 2 = 1 - sÖ V##-
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Vault Finance Interviews Practice Guide
Sales & Trading
DH@ K@ (K K H @ U > >IK >@ @ J-H@ K). @ I > K H@ K@ @ @. ! H@ K> @ @>K@ J @ @@ H > @, @ . C (>>) = -K &(1) - #-&(2) () = #-1-&(2)- -K1-&(1) @ K (K>) = @@> H@/ @ 1 =
>@(/#)+(-K+ s2/2)
s Ö
@ 2 = 1 - sÖ S&()T >K H> I>> > @ ST @ @ @> @. H> @ @ ( J) @ . A >K , K I>> @H >>K H @ @ @ @ @HI, @ K > >> K @HI I @ @ (B@> @ B>->) @ >@ @ @@ @ : @ @>K@ , @, @> @ J@, - @ , H>>K @ @>K@ , @ H@ ( >>).
9. ! +$ $ $ .
BK , @, @ @H@ @@ @>>K H@@, @, @H> @H ( S>T > > K@ I >> K@ H H @ > ".. @ HK I>K) @ @@> @H. !@@> @H @@-H@@> @@ @ @ @H @K >H . K @> > @, I > @ @ @K > > @H; @@ @, I @> @ @K
Vault Finance Interviews Practice Guide
Sales & Trading
@KU U @ @ @ >@; @@ @, I @H @ @ K > @ >>; @ @I@ @ (> U >-H @@ @K @HK @I@). C@ @> @H@ (> F>K) @ @K @ @ > >@ > @ I>> @@ > @I@ H@@ >@. > @>K @@> @H. @ @ > @ I @@> @H. > H (>>K @ HH) @ ST (@@-@@->), S@@T, S @T @ S@@>T (HK@ > H @H> @H).
10. D + & $ * ' + $ ?
> @ @ I IK. F, @HI H >> @ I@ @ , @ I@ @ H H. , K @ K S[email protected] D@U @I @ R @ @, @ @. @, @I @ @ I @ @ @ >@ . ! >>, I>> I@ @ . ! , I>> . '@ @ J>@ H> IK. ! K HK > I @ B>-> @, K ST , SCT I>>, I> ST . C (>>) = -K &(1) - #- &(2) () = #-1-&(2)- -K1-&(1) @ K (K>) = @@> H@/ @ 1 =
>@(/#)+(-K+ s2/2) s Ö
@ 2 = 1-sÖ
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Vault Finance Interviews Practice Guide
Sales & Trading
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
Vault Finance Interviews Practice Guide
Sales & Trading
Change
In
InPuts
and
affeCt
on
InPut Change
UnDerlyInG optIon
asset4s prIce Goes Up
strIke prIce Goes Up
VolatIlIty
In prIce of UnDerlyInG
asset Goes Up
tIme
to expIratIon Increases
Interest
rates Goes Up
Increase
In DIVIDenDs paID
oPtIon ValuatIon Call Value
Put Value
Goes Up
Goes Down
Goes Down
Goes Up
Goes Up
Goes Up
Goes Up
Goes Up
Goes Up
Goes Down
Goes Down
Goes Up
11. #+$ ' +$ + & $ I$ $'' K$ $*$?
!@ @ H>>K @ , >> > @ >, < @, >>K @ @ I>> J S@ @K.T , @ @H@, @ K, I> @ H> >> @. !@ , H>> >@, I> @ I> ( @ @ @K). @>>K >> > I> @ >. ! >>K @>K@ I> >> @ @ @ (> >@ ) @> IH @ I K @ H>>K. , @ @ @I @.
12. #+$ $ $ + B$&-&+ $?
B>-> @ > @>K E@-K> @. A@K> @ @>>K H>> (>> > @ >) @ E@ @ @ > @ A@ @ @ J @ @K K (E@ @ > @ @>K J K). !@ @, B>-> > @ >>I >@> @. !@ >K, , @ < @ @ I @> @ I> , @ > @ @ H > @ @> @. @
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Vault Finance Interviews Practice Guide
Sales & Trading
@ @ @ @ J @ K >. , @ (E@- @ A@-K>) @ >>K @ > I>.
13. #+$ ' < ' ?
>K @ @ > @ @ @HI. > K @ @ > K @@ I>> > K @ . , >> @ @ @ @ K, >, H, @ >>K @ > @ @ @ I> H @, K, O.
14. #+$ $ <' & $' + &&'?
A K> H > @ K> @ K. K> H @ @, @--@ @ . A@ J> K> H I@ >I.
A @ H>K, K> H @ I >@ (@>), I@I >@ ( @H), >, @ @. S@T @-K, -K @ @ K @ K >@ @>@. !@ H>, I K>
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H @ I >@ @. @ @-K H>, @, I> K @>@ I@ > H@ @ @ . !@ , I H J-@ K> @ I-K K> @ @@ @ I@. @> @>@ > H K> J@ , I @@ @@ K>: f ( x) = x0 + f’ ( x0)( x - x0) &I, I HH f’(x0) =
D y = D x
y1 - y0 x1 - x0
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15. D + & $.
@ >@ I@ K> K - L @ (>>K ) @ . K> @I>K - L @ @ ( @ @) >> , @ >@ I@ @ @ >> K> H.
16. #+$ $ $?
I K > K. @ , @, @ .
17. #+$ $ $' $?
A I @ @ H>@ > @ > @ K. F J>, I @ @ @-K >@ @ @ KU , I > @ K @ > @ I I>> K. @ @ U @@ I I I>> K >>@ K> H.
18. D $' $ '& + $ +$ $< $ $ '?
&. J@ I @ , @ , @ ( @>K @ K F @ 1976 @ @ K F @ 1984) H I@ I H HK >I H I H >@ . F @ J > H @ @H>: J>, @ @-@ I H H I @ @ . @ I I >@ Q J @ Q KL > > @> @ I . @> @>>
Vault Finance Interviews Practice Guide
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, I K < @ @ U @@ .
19. I &' +$ I &$ $ 3.872% $ -<$ ' + ".K. $' &$ $ 2% + + ".. C$ I $ $ < '* +?
& @>K. @ @ @ @ >K @ J@ @>@. @ @ .#. >H .. @ @K J >H .. >>.
20. I < $'* $ ', ' < &' $; &$ '? #+
C. @@ @ >K J-J I> H@ @H @ J- @, I >I @ J- .
21. #+< $ <' &$ ' +*+ +$ $< ' + $ $
B @H>H. K @ S K >> @ @ GH@@.T C @ I>> @H>H >, I@ @ @, @H @ K> (>I ) @ @ @ @.
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22. D $< & & '''? I &'' $ &$$=$ $ &$ ROE +$ $ &+$'?
K @ H H@. ! @ @> @ >L@ @K, @ @> @>K @@ . @ @@> H> 'E @ E @ @ @@ , @ @@ H>, .
23. #+$ LIBOR? #+< $?
@@ !@B@ ' . ! @ !B' K @ @ E. EH@ @ .., @K >@ !B' > @ . F J>, @ I >@ K K K@ !B' + 25.
24. #+$ $ ' &?
D@H @K @ K I@@ @ @K. ! K H@ >@ @ >@ >. D@H K>>K @> @ @ @ @>, , >@, >, @ @, I > I> >> @ H@ @ @. '@ @, @ H, HK @@ > >K @H @ @@.
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25. A ".. G ' * + $ $ 96.25. #+$ + & + '?
@ @ S32@T, S96.25T @ 96 @ 25/32%. 25/32 > 24/32 = 6/8 = W 96.78% , K S96.75% $1,000 T $967.5 $1,000 . @ @, @@ >> >I .
26. A $ ;&' , $ *** + , $ * &+$& . H $ * 100 $, 50 $& $' 50 +, $' ' ' + < $< $< + '. H ' + '$ $ $ $ $' + , $' + ' $' + $ +. L*' +$ +$ + ' $ + $ $' $ $'. #+$ $*< &' + +$ ' $;= + &+$& &&?
! < >> H@>K @ I @, @ @ I> H @ 50-50 @ I @ I. @ I >> @ @ A @ 49 I >> @ @ B, >@ I @@ 50 > >>. ! I @ @ A, @K I@ I >>, @ @ @ B, @>K >>K > @ 50-50 (49/99, J)@ I@ I >>. > >K I@ I >> I V J 1 + V J 49/99 = 74/99, < >>K > @ 75%.
27. I < +$ + $ 40% &+$& $* $ 10% $ &, $ 50% &+$* * 5% $' $ 10% &+$& * 20%, +$ + ;&' *$/() + &?
J @ I H > @ @, @
E =
å
IE E = 0.40(+10%) + 0.50(-5%) + 0.1(-20%) = -0.5%.
=1
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RESEARCH/INVESTMENT
MANAGEMENT Vault Finance Interviews Practice Guide, 2012 Edition
Vault Finance Intervies Practice Guide
Research/Investment Management
Skills for Research and Investment Management EJ HIH DOIJ FEIJEDI H J I. E D MJ, DOIJI DHO MEH ED J ST EH J SBKOT I, DD JO MEH JH EH DLIJDJ DI/HEH HI JJ I IKHJI, EH EH KJK KDI, DIKHD EFDI, KDI D EJHI JJ KO IKHJI. AJ I-I HI, J DOIJI ME ELH IJEI O J J EIJ FHII ELH, KJ E J HH HI IE L DOIJI ME ELH LHEKI JOFI E EDI D OH IKHJI. AJEDO, JO L DLIJDJ IJHJIJI D EDEIJI, ME D EDIH DOIJI. LH HI IE L SIFJOT GKJO IIFEF, ME H HEII JMD DIJJKJED IIFEF D DOIJI D ME EKI ED HE IJEHI IK I JH EH JDEEO. D J KO I, JH H DOIJI D/EH FEHJEE DHI ME KO IJEI, EDI, HLJL FHEKJI, D LD H IJJ. HJD JHJI H IH O JEI ED J KO D I I, D M DO DOIJI IFD J ED EJ II E J L KHD JH HHI, M L IFHJ J IH II DJE JME IJEDI.
Bu!-side skills EKH NJ KJI M LHO FDD ED MH OEK H FFOD. EDJII, OEKH DJHLMH M EIJ O JHOD JE JHD: Q OEK JE DOP D GKO KDHIJD ID EFDO DEHJED, DKIJHO-M IIKI, D HE-EDE JHDI? Q AH OEK EE J KD EDED HJEDIFI MJ, D JJD DEHJED HE I-I DOIJI D IIFEF, EFDO DDJ, IKFFHI, DKIJHO NFHJI D EJHI HE ME OEK M D J? Q E OEK KDHIJD LHEKI LKJED JEI (IEKDJ I EM JDGKI, EFH EFDO DOII, J.)? Q AH OEK D NFHJ J EKDJD (EH EDEI, FF)? Q OEK JE KHJO FHE@J HDDI, I EM IJJDJI, D IJI, D/EH ELH DKIJHO, HJ D EDE JHDI?
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Q CD OEK JLO EKDJ DLIJDJ I D HEDJEDI JE OEKH HUI DLIJDJ EJJ D J ? CD OEK D JEI I I? Q OEK E FHJ E OEKH HUI IED-D FHEII, M OEK JE IKIIKO LKJ DLIJDJ HEDJEDI? Q AH OEK FHIEDO FIIEDJ EKJ J HJ? Q AH OEK JE KDHIJD HI LI E LHEKI DLIJDJI D D OEKH HUI NFEIKH JE LHEKI IJEHI D EHH JE F HI LI JEH? Q AH OEK IIHJL, KJEDEEKI, FHED D DDELJL?
Sell-side skills JH ELHD IJEI, EDI, J DJH HJ EH J EDEO I ME, OEKH DJHLM M IIDJO JHOD JE D EKJ: Q OEK JE DOP D GKO KDHIJD ID EFDO DEHJED, DKIJHO-M IIKI, D HE-EDE JHDI? Q AH OEK EE J KD EDED HJEDIFI MJ, D JJD DEHJED HE EFDO DDJ, IKFFHI, DKIJHO NFHJI D EJHI HE ME OEK M D J? Q AH OEK IIHJL, KJEDEEKI, FHED D DDELJL? Q OEK JE J ED MJ DHI, IIFEF, D JHHI? Q AH OEK LHO EE J DD ED, IFO MD KID N? Q E OEK KDHIJD LHEKI LKJED JEI (IEKDJ I EM JDGKI, EFH DOII, J.)? Q AH OEK D NFHJ J EKDJD (EH EDEI FF)? Q OEK JE KHJO FHE@J HDDI, I EM IJJDJI, D IJI, D/EH ELH DKIJHO, HJ D EDE JHDI? Q CD OEK JLO EKDJ DLIJDJ I D HEDJEDI JE DIJJKJED DJI, HJ KIJEHI, J , DHI, IIFEF, JHHI, D DHI, D FHIED, L D ED J FED? CD OEK D JEI I I?
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Q E OEK L EE FHIDJJED D HJD II? Q OEK JE HD D DM KIDII JE J H (JH DM DIJJKJED DLIJEHI EH DD DJI)? Q CD OEK FHEK M-MHJJD EHDD DEJI, KFJI D HIH HFEHJI ED EFDI, DKIJHI D/EH EDEI KDH JJ DI? Q AH OEK IJH EH J D NJHO M EHDP? Q AH OEK FHIEDO FIIEDJ EKJ J HJ? EEMD FI DK IE IF GKIJEDI I KHD FIJ HIH DJHLMI ED MJ FEII DIMHI.
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Research/Investment Management Questions
1. +>- <. <-< (; ;<*)?
H H ILH EE HIFEDII JE JI GKIJED, D OEK IEK JEH OEKH HIFEDI IE JJ J I JHKJK D JI D MJ OEKH EI. OEK H DJHLMD EH EJ KO D I I FEIJEDI, OEK IEK EDIJ EKJ JI D J EKJ OEKH DJHIJ D KDELHD KDHLK IKHJI. EK IEK IE HJD JJ OEKH DIMHI I MJ J IH II DJED EL. OEK H ED EH EDO KO- EH I-I FEIJEDI, OEK IEK DEJ H J H OEK H DEJ DJHIJ D. DO E OEKH DJHLMHI M L IFDJ FHJ E JH HH ED EJ II E J L. EK IEK IE DEJ IJJ JJ OEK MDJ J KO I KI OEK JD J EKHI H JJH (LD JEK JO DHO H) KI OEK EDUJ MDJ JE E HEII I PO. EK IE EDUJ MDJ JE IO JJ OEK MDJ J I-I KI OEK MDJ JE EKI ED FHJKH DKIJHO. EIJ HEHI EDO F DM IIEJI D FHJKH HI JO L NFHJI (.. IEED ME MEH J IDO EH KIDII IEE D J HEKF, EH EJEH D J H). "DD DOIJI H LD II O JE J J HEKF JO MDJ. EIJ O, OEK M D KF MHLH JH I D EFDD. E LD OEK HO MDJ EJ, FHFH JE ELH J KJEE DKIJHO. (EJ: D II D JHD D D DD, I-I HIH HI @KIJ EKJ E KDHH H DHO SDD DOIJI,T SDOIJIT EH S".A.I.T DNJ L I IIEJ (KIKO JEI MJ BAI D/EH C"AI), M SHIH DOIJIT H DHO JEI ME H J J IIIJDJ L FHIDJ (A) L EH EL.)
2. *= >;<< * > =*/@ =* = ;*; > ; * *;; *<<= **=/;<*;?
AD, IKII DO EKDJD, DD EH EDEI EKHII OEK L JD EH M J D J EEMD OH(I) J I IKH FEIJED. E DEJ EHJ JE IKII EJH II-ELEKI EKHII, SCEDJ IEKJEDT EH J , ID
Vault Finance Intervies Practice Guide
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JO JEE D HLDJ. OEK L DO FHEIIED IDJEDI (LD FDD) CA, C"A, EH , HJDO DJED J.
3. *= @> > +>? *= @> > <;=?
I I LHJED E J HH IJE FJ GKIJED. OEK H DJHLMD EH FEIJED D N DE, HLJLI, EH IJHJO HIH, OEK J MDJ JE L IE MJ IEHJ E EDI EH HLJLI DOIJI D JJHJL. "EH NF, OEK L JJ JH M DHI JDIED D J IJ, OEK J HK JJ ED IEK E ED ED LEJJO D J E IJEH. OEK NFJ DJED JE F KF, OEK J IKIJ IEHJD DJED-IDIJL EDI (ID D DHI D DJED DHO I JE D DHI D DJHIJ HJI D JKI HI D NIJD ED FHI.)
4. *= > = *+>= > <>+<;+ = = #* * =;?
EI ME JEKJ DN KDI (KDI JJ E DEJ F IJEI KJ HJH FHJKH DN J & 500 EH J EM EDI KHEIJENN 50) D J KJEH E A Random Walk Down Wall Street (BKHJED #EHED ) DJD JJ ED LH, EIJ JL FEHJEE DHI D I-I DOIJI KDHFHEH J HEH IJE HJ. DO IJKI L IKFFEHJ JI JEHO (EJD J SDJ HJI JEHOT). KFFEHJHI E JI LM DJD JJ DLIJEHI IEK DEJ FO J NJH I JJ JL KJK KD DHI D IJEHEHI H, KJ IEK IFO KO DN KDI. EK E L D DLIJEHI LHIOD JH EDI, KJ KDII OEK H DJHLMD J DKH EH DEJH DN KD/H, OEK E L D MJ J KJEH E Random Walk IOI EH JJ DLIJEHI IEK KI DN KDI. EK L JJ EE IJE (EH ED) FH D D IFH IKHJI D/EH NFEJ J HJUI EIED DDI. KIJ JD EKJ J: LHOED L D J DJ HJI JEHO, DE ED MEK KO KJK KDI, DLIJ D KDI, EH KI J L E I-I DOIJI. EKH DJHLMHI MEK EKJ E MEH. E DEJ DJE JI JHF KHD D DJHLM, DE JJH MJ OEKH DD FHEIIEH JE OEK D II.
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5. =< <=;* >=;; +< ; = =;. I I * * -=; <=;, I = * +< ;=. ;> ; *<?
I I I. J I JHK JJ IKH EJ HJJO D EJHO, IJEI D J .. (I IKH O J & EH EM EDI DKIJH DNI) L EKJFHEH J LHEKI O ED JEHI ID J IJ 1926. EMLH, MD J HEH IJE HJ HII, EDI JD JE E EMD, D L LHI, D JH I DEJ FHJ ELHD. EK IEK H MJ J FHI SE HI, DE HMH.T H HJKHDD IIJI JD JE HIH JD EMH HJKHDD IIJI. BO LD HJD EKDJ E EDI D FEHJEE, ED D NFEJ J E FHJ ELHD D EHH JE HD J I HJKHD MJ EMH HI. JUI J J IF NF E JME-IKHJO FEHJEE JE KIJHJ: "HIJ, JUI IIK JJ JI IKHJI L ID FHE DLIJDJ EHPED, JJ HJKHDI H DFDDJ JMD FHEI, JJ JH H DE JHDIJEDI EIJI, D JJ J IIJIU HJKHDI EEM DEH IJHKJED. NJ, JUI IO JJ m F = 1m1 + 2m 2= J FEHJEEUI NFJ HJKHD MH m = J D HJKHD D MH = J FHEJO E EKHHD IE D JI I, 1+2 = 1. JUI IE IJJ = HJKHD E J IKHJO EH FEHJEE D GKIJED. "KHJH, J LHD E J HJKHD ED JI JME-IKHJO FEHJEE I HFHIDJ O J JH: s2 = 12 s12 + 22 s22 + 2 1 2 CELHD ( 1, 2). (EJ: LHD (s2) D IJDH LJED (s) E J FEHJEE H MJ LH E J DLK IKHJIU s2 D s ID 12 + 22 ¹ 1.) "DO, JUI D r I r=
CEL ( 1, 2) s1 s2
MD: H = +1 JH I FHJ FEIJL EHHJED, H = 0 JH I DE EHHJED MJIELH, D H = -1 FHJ DJL EHHJED KI: s2 = 12 s12 + 22 s22 + 2 1 2 r s1 s2
Vault Finance Intervies Practice Guide
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JUI J IF I MH J IKHJI D HJKHD 0 EH 100: r1
r2
X1 = 1
0%
100%
50%
H IgH
100, 0
X2 = 1
0%
100%
50%
H IgH
100, 0
X1 = 0.5 X2 = 0.5
0%
100%
50%
L ower
100, 0,50, 50
2
e[r]
Possible
results
D JI I, HI I EMH LD JEK J D HJKHD I J I D JH II. r < 1, ED M L J I NFJ HJKHD MJ LHIJED. #HFO, J HI-HMH JH-EI D IEMD D J EEMD JH KIJHJEDI: R
R
µ2
µ2
X1 = 0
X1 = 0
X2 = 1
(µ1+µ2)/R
X2 = 1 X1 = 1
X1 = 0 .5 X2 = 0 .5
µ1
X2 = 0
J
µ1
X1 = 1 X2 = 0 σ σ
2
(σ1+σ2)/2
σ
r = +1; H I FHJ EHHJED JMD IIJI 1 D 2 D DE D EH EII HE LHIJED. s 2 = 12 s12 + 22 s22 + 2 1 2 s1 s2 s 2 = (1 s1 + 2 s2)2 s = 1 s1 + 2 s2
σ σ
2
1
σ
2
r = -1; H I FHJ DJL EHHJED. H, J FEDJ ST, I PHE. D D L H HJKHDI MJ II HI! s 2 = 12 s12 + 22 s22 - 2 1 2 s1 s2 s 2 = (1 s1 - 2 s2)2 s = 1 s1 + 2 s2
1 s1 - 2 s2 = 0 1 = d2/(s1 + s2) r=0
#DHO, ELHD I JMD 1 D 0, IE J HI-HMH D M KHL HJH JD DKH. J, I ED I IKHJIU HJKHDI H DEJ FHJO EHHJ, ED D EDIJHKJ JME-IKHJO FEHJEE MJ H HJKHD D II HI JD ED EK HD MJ @KIJ ED IKHJO.
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R
B
µ2
X1 = 0 X2 = 1
C X1 = 1
µ1
X2 = 0 σ σ
1
σ
2
I DEJED D NFD JE DK FEHJEE MJ EPDI, KDHI, EH LD JEKIDI E IKHJI. HEH, D JEHO J IJ, ED D D J FFHEFHJ KDEHHJ IIJI (E JDEEO IJEI D HEHO IJEH IJEI, EH E IJEI D DH D EDI, EH E EDI D E, J.), FEHJEE DH D KI EDI JE EMH J HI D I EH H FEHJEE MJEKJ EMHD HJKHDI.
6. H@ @> > <= $1 =*?
EK IEK JE ML D IF HEDJEDI EH ED EH IEHJ FJI MJ D ELH DLIJDJ J. EK IEK DEM MJ OEK H JD EKJ MD OEK DIMH JI R EDUJ B... AI HDI EH KD D J DKIJHO EH JH L ED JI EH H DLIJDJ IJHJO HIH HFEHJI OEK D. A JOF DIMH J IEJD : S MEK DLIJ $200,000 D JI EKH IF IJEI L H LHIEDI E OEKH FJI OEK L DEJ HO, $300,000 D .. I FI, ID JO JD JE EKJFHEH H FI D J HO IJI E HELHO, $200,000 D IJ AID GKJI, ID J . HELHO IEK JE DHI NFEHJI EH J AID EDEI, D $300,000 D NJKH E DLIJDJ-H D -O EHFEHJ EDI.T
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7. *= <== < > <>+<;+ = * @?
H H ILH D DLIJDJ IJHJI: Q A;<< ;@= DLIJEHI MDJ JE NP HF FJ FFHJED. I FI HDII EH HI. J O IE FO J KI E JHDJL DLIJDJ LI FHLJ GKJO, LDJKH FJ, HLJLI D KDI. Q G;@= DLIJEHI I FJ FFHJED, KJ MJ II HI JD SHIIL HEMJ DLIJEHI.T (AD JKI EMH HJKHDI.) I IJ KIKO DI IJEI HJH JD EDI. Q I DLIJEHI EDDJHJ ED KHHDJ D IJO DE. K DLIJEHI KIKO L N E EDI D FHHH IJEI. O O IE L LD FOD IJEI D EKFED-HD EDLHJ EDI, KIKO HE SK FT EFDI B EH #.. Q G;@=- EH +** DLIJEHI I N E S#HEMJT D SDE.T Q C<;*= EH < DLIJEHI I FJ FHIHLJED J EIJ. I DI DLIJD D EDO -H EDI D J . H H M D DLIJDJ IJOI, DKD: Q '*> DLIJD, M FIPI IKHJI (DO IJEI) JJ L HJ FH H EM MJLH LK DOIJI L EFKJ EH J IKHJO, MJH I ED C", /, EH MJ L OEK. Q C=;*;* DLIJD, M DI DLIJD EDJHHO JE J KHHDJ HJ HJED EH I. I I D NHJ LHIED E LK DLIJD, ID EDJHHDI I EKJ-E-LEH DLIJDJI MJ J FEJDJ EH H DI JHEK JKHDHEKDI. Q => <=;< EH *;= =;< KI EDE KHI EH JD DOII JE DLIJDJ IEDI HJH JD KDDJ DOII. I JE DLIJ MD FHI H HID, D I @KIJ I J HJ DI D. I IJO DHO KII JD DOII JE J D DLIJDJ D FHJKH IJE EH ED. E I JE DLIJ J J MD J IKHJOUI FH ELDJ D DJFJ.
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AJED EED JHI: Q F>*=* **<< DI KID C", /, JD MJ DDJ, NDD J DE IJJDJ D D IJ EH EJH SKDDJT JDGKI JE LK IKHJO. Q * **<< DI ID DLIJDJ IEDI O DOPD FH HJI, JHD LEK, SHIIJD LI,T D J . D DOIJI E DEJ H EKJ DDJ, J D IJ, HDDI, EH EJH KDDJI. Q I EH *<< <= DI DEJ FD DLK IKHJI KJ HJH D FHJKH DN J & 500 EH J EM EDI KHEIJENN 50. AHDJI DJD JJ, ED LH, EIJ JL FEHJEE DHI D I-I DOIJI KDH FHEH J HEH HJ. DO IJKI L IKFFEHJ JI JEHO (EJD J SDJ HJI JEHOT). H I DE ED EHHJ DIMH JE JI GKIJED J KO-I DJHLM. EK IEK IKH OEK DEM M IJOI D FEIEFI J H FEOI EH J DJHLM D IKH OEKH DIMH I D D MJ MJ J H IFEKII. D J I I, EIJ DOIJI MEK EDIH JILI KDDJ DOIJI, KJ H DEIJ MD J EI JE HEMJ LHIKI DE. "M L D JD DOII (ID J DI JJ MJ JO E I DDII), JEK DO I-I HI L JD DOIJI, IE HK DEJ JE EMDFO DO ED JDGK, IJO EH FEIEFO.
8. *= @> > * <= > ><= ; <= 10% 15% =< *>?
JKJEDI JI FFD GKJ HGKDJO ED J KO D I I . EK IEK FHFH D DIMH JE GKIJED JI ED JJ EDIJHJI JJ OEK H L , DOJ, HJKJ, D JE HD HE DO IJI OEK O L .
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9. A; > * =-@ ; +==-> <=;?
EF-EMD DLIJEHI LKJ J EDEO I ME D D M IJEHI JO L M EKJFHEH J HEH HJ D DLIJ D JI. "EH NF, J EDEO I DJHD HIIED, IK DLIJEHI O I SHIIED-FHEET IJEI 'HJ EH F EHHI. E FHI H NFJ JE HI, JO J I DHO IJEH DLIJDJI. BEJJE-KF DLIJEHI I DLIJDJI JJ H EFD LKI I ED KDDJ DOII (C", HJL LKJED EH EJHMI) HHII E ELH EDE EDJEDI. DO FEHJEE DHI H EDJED E EJ. OEK H DJHLMD J KO-I H, OEK IEK HIH J HUI FEIEFO D J OEKH DIMH EHDO.
10. *, = &" < =;* *= * "/E >= > ; =* = @*< = 1970< ; >; = + 1980<. D< =< * =*= <=< *< * @ *; >;;= ;*>?
J EI DEJ DIIHO D JJ JO H ELHLK. JJO, M D IEM JJ / D HED EMD I EEMI: ID J LD IEKDJ JE E KJED, =/(H-). M L EJ II O , ED JI: / = OEKJ JE(1+)/(H-) ID J "C" JE E LKJED: = "C"/(H-), D / = ("C"/HDDI)(1+)/(H-) A I D GK, H HEMJ DI H / HJEI. A I D GK, EMH DJHIJ HJI D EMH IEKDJ HJI D JKI IE H / HJEI. D EK HK MJH EHFEHJ HDDI MH HEMD IJH JD D J 1970I D 1980I. DJHIJ HJI JEO H HO H EMH, EMLH, M EMI IJEI JE JH J H KJFI.
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11. *= < =< * * <= =; *= = <;= =;?
DHJDJO EKJ J EDEO EH J IJEH JJ IJE I D; LHOD DMI HE EFJJEHI (EH NF, "EH IOI KIDII I M KJ # IOI J I IJHED, CHOIHUI IJE O EL EKJ MO KDJ J IKIII JI EKJEE); J H O D O O IJEH ( IEDKJEHI EH E); EJI E EDJK FOHI D J IJE (JI H DLIJEHI ME J JJ J HJED E IJE M EDJDK HJH JD JEI ME FHEH KDDJ DOII); J EFDO O D DMH, II FHELD D/EH HEMJ DKIJHO ( EJ); D IJL KDHJDJO (M J ELHDDJ HI EH EMH JHI EH IJ HI?).
12. H@ > *>*= = ;=>; * <=?
HJKHD ED IJE I KJ I J FHDJ D D FH ELH J DLIJDJ EHPED. 0 I J FH J J DDD E J DLIJDJ EHPED D 1 I J FH J J D E J EHPED, JD H=
1 + - 0 0
MH I J JEJ E LDI F ELH J FHE.
13. *= < * =?
AD EFJED I EDJHJ JMD KOH D IH JJ FHELI J KOH J HJ, KJ DEJ J EJED, JE DJH DJE JHDIJED J IE KJKH J, M J IH I E JE EDEH J JHDIJED. FJEDI H HLJLI JJ FD ED J LK E J KDHOD. "EH DIJD, ED D KO EFJED ED IF IJE. EFJED M D O J NHI FH (IJH FH) D J J JE NFHO. AI D NF, OEK KO KD EFJED ED B IJE MJ IJH E $80 MD B I JHD J $75. I LI OEK J EFJED JE FKHI B J FH GK JE J IJH FH, EH EH J J NFHJED J FDD ED MJH J EFJED I KHEFD EH AHD IJO.
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14. *= < >=-* *;=? H@ < = ><?
KJ- FHJO FHELI HJEDIF JMD D FKJ FHI ED IJE JJ IEK E D GKHK. J I I ED DE-HJH HKDJ, D IIHJI JJ F + 0 = + -H, MH F D H J FH E J FKJ D , HIFJLO, 0 J IJE FH, J IJH FH, H J HI-H HJ, D J J JE NFHO E J EFJEDI. J I KI JE D J FH E FKJ LD IJH D J JE NFHO , J FH E J MJ J I FHJHI I DEMD, D L LHI. J D IE KI JE JHD MJH HJH EFFEHJKDJI NIJ: LD EIHL FKJ D FHI, IJE D NHI FHI D J JE NFHO, ED D KI FKJ- FHJO JE JHD D F DJHIJ HJ. CEFHD JE J L HJ M EM IED JE ED MJH J HJ FHI FHJ D HJH EFFEHJKDJO.
15. C* > <;+ * <=>*= @ = @> + =* = ;< * A;* * = +; = ; *=? D< = *==; @=; = <= *< < ; =?
J E OEK JD: I J LH EFJ JE NHI D EFJED HO? KHI E D AHD EFJED HJH JD KHEFD EFJED EDHI J HJ JE E JI, KJ J EI J H FHK EIJ. E JH KIJ IE FEDJ J M HO NHI I EFJ, EH DE ED MEK KO AHD EFJEDI. H D EDO ED FEII DJ R J JO JE HL I EMI HH JD J NHI J. EMLH, J EFJED I D I FHJ E D IJHJO, ED LI KF J SDIKHDT FHEL O J EFJED MD J I NHI HO. CEDIH JJ OEK E H E E IJE D FKJ JE DIJ FH DI. J FKJ I IE, OEK H JD NFEI JE LHI FH ELDJI EM J IJH FH E J FKJ. D OEK HP O HO NHI KIJ J IJ EIJ J EII E J DIKHD.
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16. *= *; = ;=*= *=;< *= = *> * =?
FEHJDJ JEHI DK: Q << * = R EM EI J KDHOD I JE J IJH FH. Q = ;*= R J EDH J J JE NFHO, J H J FHEJO JJ J EFJED M DI D J EDO. Q '*== R JI DHII J LK E J EFJED EH J I HIED I EL. JH JEHI DK HI-H HJ D LDI F (EH EHD DJHIJ HJ HL LKD KHHDO EFJED).
17. I = ; * <= ;*<< + $1, @ <> = ; * * = *? *= *+>= * >= =?
J FDI ED J (DEJ O D, J I J D D LK E D EFJED EH D D LK E J KDHOD IIJ). J IJE I J EH D J EDO, D = 1 D JH I 1-EH-1 HJEDIF JMD D . BKJ F EKJ E J EDO, J EI DEJ JJH J IJE FH EI KF O $1, J EFJED M IJ LKII. DO MD M J IKDJO EI JE IE JJ (1) = D > 0 M DI D J KDHOD J J LK E J EFJED. I HKDJ EI EH FKJ, KJ J FKJ I LK EDO MD <.
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18. *= < * @*;;*=? D @*;;*=< *= * ;< ** ;*=< <> *< #!E?
A MHHDJ I IKHJO IH JE EFJED ED IJE, NFJ MHHDJ KIKO I K EDH J JE NFHO. HHDJI O EJD JJ JE IIKI E FHHH IJE EH EDI D EHH JE J IIK EH JJHJL JE DLIJEHI, I JO EH J EFFEHJKDJO EH IE FHJFJED D IJE FFHJED. D J MHHDJ I NHI, J EMDH FOI J IJJ IJH FH D ND EH IHI E IJE. KI, MHHDJI HIKJ D J IIK E DM IHI E EED IJE D H KJL. A EJH JDI GK, IKHI IK I D IEK HI I J DKH E IHI DHII.
19. I ;<= *>< * @ <<> 2,000,000 >=< *= $120, @= * >= <<= <*; , <*; ;;; * * @*;;*= ; * <*; , @ * @ <*;< @ + <<> *<<> =*= = ; < <><<> * * @*;;*=< *; ;<?
MHHDJ DJJI J EMDH JE H J EH V IHI, IE ID JH MH 2,000,000 MHHDJI IIK, JH M 2,000,000 (V) = 500,000 DM IHI E EED, D JED JE J 2,000,000 DM IHI E EED IIK MJ J KDJI, EH JEJ E 2,500,000 DM IHI.
20. *= @> + * <=;>= = >< = * ;= ;;; <=?
D FHHH IJE I IH JE EDI JJ DLH JKH (FHFJK EDI), J IJ D DIJHKDJ MEK ED-JKHJO, HI-H DIJHKDJ IK I -ED EFJED I ED ED-JH JHIKHI.
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21. I > *; +> ;;*= +<, @ < ; <>*=: A, A*, B** ; B?
B I J EIJ IFKJL E JI EEOUI HJDI.
22. I * = >;*<< * 6%, $1,000 + < *= * = *=>;= 7%, @*= < = *>= = <-*>* =;<= *=?
I KDFEHJDJ H. JUI FEHJDJ I J EKFED FODJ: 6% E $1,000. E OH J FOEKJ I $60, EH $30 LHO IN EDJI (IDDKO). EDUJ J EDKI J DJHLMH I NJH DEHJED JE J GKIJED.
23. >< > * * <== *; 1% ; =. H@ > ;= =< = * *>* ;*=?
I GKIJED I IF, KJ ED D DJHLM, MH OEK O DHLEKI, JI IF GKIJEDI D HO JHF OEK KF. D IEK DEJ IIK JJ OEK MEDUJ I GKIJEDI E JI JOF @KIJ KI JO FFH JHL. J I EE JE J JHEK OEKH JEKJ FHEII EKJ EK D KI E F D FFH L. I SJT J E IEJD J EEMD: AIIKD JJ J DJ M HD J HJ E H EH EDJ ELH J OH, JD, H I J EDJO HJ, JI DI JJ D DLIJDJ E $ M MEHJ $ + DJHIJ ED $, EH $(1+H) JH ED EDJ. I EKDJ I DLIJ J J DDD E J IED EDJ, IE OEK M L ($(1+H))*(1+H) J J D E J EDJ. I FHEII EDJDKI IE JJ O J D E J OH, OEK L JEJ E $(1+H)12. DDKP DJHIJ HD I JD (1+H)12.
24. I > *; 6% * *; >< < >, @ @> > *>*= @ > > @> *; * 90-* ;?
EK MEK @KIJ @KIJ JI JE EKDJ EH J HDD FHE. OEK HD 6% KID IF EFEKDD, IIKD ( IKH JE IJJ OEKH O EKDJ IIKFJED H I O EKDJI H LHO FEHJDJ ED ED GKIJEDI) 30/360
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O-EKDJ EDLDJED, OEK MEK HD 6%*90/360 = 1.5% ELH ED-GKHJH FHE KID IF EFEKDD.
25. > * * = =*= @<< = + <= * + ;=. > > ; <;=- ; -=; +< ; =< =, * @?
J FDI ED MJ OEK NFJ J O KHL JE E. I J KFMH IEFD DEM D NFJ JE JJD? KHD J HEKD ED J DJHLMH (JEK JI D DHEKI I JO D JD JKHD J ED OEK) O ID, SJ E OEK JD DJHIJ HJI H ED JE E?T BKJ D DH, HH JJ FH E ED ELI DLHIO JE O. KI DJHIJ HJI H NFJ JE HI, J FH E ED IEK . IKO ED-JH EDI H K EH IDIJL JE DJHIJ HJ ELDJI JD H IEHJ-JH EDI. E OEK MEK JD JE IJO ED J ED D E J KHL D EHH JE J J NK FHEJ HE HJ ELDJI (IE, E EKHI, J NK NFEIKH/FEJDJ EII). E, J DJ MDJ JE FHEJ HE HI D DJHIJ HJI, OEK J IEHJ J ED EDI. HJI H NFJ JE D, OEK EK KO J ED EDI.
26. A = =< = *;= = <*= * @*=< = **<= =; ;=. *= <=;*= @> > ;? E*.
A IJH. I MO, M FHEJ DE JJH M MO J HJ ELI. EJ JJ J HJ EI DEJ EL, EH ELI KJ DEJ O LHO K, J IJHJO M FHEK EII. A IJH EDIIJI E J FKHI E EJ D FKJ LD J I IJH FH D NFHO J. KFHEDJ EIJI, FHJ HE JHDIJED EIJI, H J FHKI JJ L JE F EH J D FKJ.
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27. A = >;*< * 10-*; 5% *; + =*= @ 6% * *= = ;<= * *= 2 *;<. I = = < = + = *=>;=, @*= @ = = + +? *= << = + ;; = *=>;=?
EI J ED JE JKHJO, J DJ M HL O GK JE J IJJ EKFED HJ E 5%. I I KI M HL FH, F FH D I JJD 5% SHJKHDT D J EH E EKFED FODJI. MEK EDO HL O EJH JD JI J ED I IKHHDH FHEH JE JKHJO. J ED I JH JME OHI, MEK HL O E 6%; EJHMI, J O MEK L JE KJ I ED J FH E J ED MD IE.
28. A ;;*= =;*<>;; < +;;@ *= LIB!# = > *>=+ *<. @*=< = **<= *=*= ;<< = <;= ;*=. *= <=;*= @> > ;?
DJH D DJHIJ HJ IMF I J N HJ FOH/B HLH MJ IMF JI HHD JE ED MJ EHHEMD JI.
29. *= *=;< > = ; * +?
D JEHI H J FHL HI E J ED, JI O D J IIKHUI I EMI.
30. I * = < =;<= *=* *;*=, @*= = =;<= ;*= ;= <> +> +
"EH FJ FFHJED OEK D J ED FH JE HI. D ED FHI H DLHIO FHEFEHJED JE OI, OEK D D DJHIJ HJ DLHEDDJ.
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31. A = = 28% =*-+;*= *< * +=@ * =*-; >* + 7% * * ;;*= + 8.5%. <> <? *= @> = = ;;*= + * = + ;; = + >*= = = =*-; +?
L JE EFH J DIJHKDJI ED J I II D EHH JE . D J KD ED I JN-H, J JH-JN O E J EHFEHJ ED I J EFHJEH. JUI J J EHFEHJ ED HIJ D EDIH ED-OH FHE EH IFJO. KFFEI J DJ DLIJ $1,000 D HD 8.5%. JI, 28% M JN IE I D I (1-J)O$1000 = (1-0.28)0.085*$1,000 = 61.2. I I GKLDJ JE JN-H O E 6.12%. E, ID J O E J JN-H ED I HJH JD J JH-JN O E J EHFEHJ ED, IEK EEI J KD. E JHD J O JJ M L FHJO JMD J EHFEHJ ED D J KD ED, KI J EHK SJH JN O ED EHFEHJ = JN-H HJT EH, (1-J)OEHF = OJN-H, JD OEHF = OJN-H/(1-J). "EH JI NF, J O ED J EHFEHJ ED MEK L JE 0.07/(1-0.28) = 9.722% D EHH JE GKLDJ JE J JN-H ED. EHFEHJ ED OI H EMH JD 9.722%, EEI J KD; EJHMI, EEI J EHFEHJ ED ID J H O M EIJ J EIJ E J JN.
32. A ;=+ + < < *= $1,200. I= < ;=+ = 80 <*;< <=. *= @> = <= ; * = + ; = ;=+ + = + *= *;= @= = <=?
LK E J ED D J EED IJE KIJ GKLDJ J FHJO, IE J IJE KIJ IE MEHJ $1,200. D J IJE FH MEK $1,200/80 IHI = 120/8 = 60/4 = $15/IH.
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33. .. ;*<>; << +< *= 1-*;, 2-*;, 5-*; * 10-*; *=>;=<. > = * 7-*; ;*<>; +. H@ > = =?
EK MEK DJHFEJ JMD DEMD LKI. E J J LK EH J 7-OH O, OEK MEK DJHFEJ JMD J 5- D 10-OH OI. DH DJHFEJED MEK FHEO IKDJ, KJ IFDI D EJH IEEJD JDGKI H IEJI KI.
34. *= *; = *=;< *= ;* * ;*=< ;=*
EJ EDO J KHHDJ L E DJHIJ HJI, KJ IE J FJ E HJI: J L HJL JE FHEH LI D DJFJ LI. #DH EDE EDJEDI: FEF JD JE HDD D EMH DJHIJ HJ DLHEDDJI. EMLH, JH I SKHD-EKJT J MHO FEF L HDD, JD HJI HI D EMH D, J FEE E FEF HDDD O DI KI JEI JE HDD L HO ED IE HH. DFHJ LDJI IK I HI, LEHI, HHI, HEJEDI, MDDD J EJJHO D IE ED O IE DEKH FEF JE I EI D KO DM EDI.
35. H@ * > ;> = ;< * ;=?
EK DIJHKDJI EH LHIJED. EFKO JI DIJHKDJI H DEJ M EHHJ MJ EJH IE ELH JO HK HI. "EH GKJI, JEHJO, OEK D EKJ 30 HDJ IJEI EH DJ LHIJED. H H DO EHI E HI: HJ HI, GKJO HI, EKDJHO HI, HJ HI, H-IF HI D IE ED. EK D IE DK D DIJHKDJI. "EH NF, OEK EMD FHJKH GKJO, OEK EK KO FKJ EFJEDI ED J.
FINANCE
GLOSSARY Vault Finance Interviews Practice Guide, 2012 Edition
Vault Finance Interviews Practice Guide
Glossary
A$$35*7 33: A ? <@ > > > >. B""$ S5: # ? @ > 7 >???>, ? B7 ? >?> ? 7 >? ? ? ?, 7@ A>>?>, 7?>, E<@?. B5": A 7@ ?? >?> ? 7? 7?7? >?? ? >? ? ? 6?. B% 3*$: ? 7 (? 7) > ? >>@ (? ) ? 7 ? (.., ? 7 ? > 7> @? ? ). B% 43"%4: ? ? 7 ? .. >@ >@? >7 ? ? ?@?. B6-4*%: 7?> >?? 6> (@?@7 @>, > @>) ?? @ ? >?6>, > >@?> >7 ? >?? 6>. ( >?? 6> ?? >77 ?> @?> ? >?> 6 > ? >77->.) C""# #%: A ?? @? 6 ? >>@ > ?? ? > ? ?? ? 7 @ ?> ? @?@. C" 5*: A ? ?? > ? 7 ? ? ? @> >>? > > ? ?. C"*5" A445 P3*$* M% (CAPM): A 7 @> ? 7@7? ? >@? ? > > 7>. C3$*" #": A 6 ?? 7>, ? ? >> . F 7, ?> $30 77 ? @? 7?, ? 7 6 76 B6 A C?6 7. (I>7, 7 6> 7> >?? 6 >> ? 7?>.) C3$*" "3: ?-? ? ?, ?77 ?@ ?> 7>>. C%*5*4: A>>?> (@>@77 @7?@7 @?> ?7>) ?? 77 ?7 ? ? ? > . F 7, , ?, @ 77 ? ? ? 6?> 7.
Vault Finance Interviews Practice Guide
Glossary
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
Vault Finance Interviews Practice Guide
Glossary
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isit
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
Vault Finance Interviews Practice Guide
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Vault Finance Interviews Practice Guide
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