Module 8: Market Questions & Brainteasers
Recruiting | Behaviorals | Accounting | Enterprise Value / Comparables | DCF | M&A | LBO| Market questions | Brain teasers
Master the Unscripted: Market Views and Brain Teasers
This module prepares you for the most common market-based questions in investment banking interviews—whether you’re asked to pitch a stock, predict where the market’s headed, or explain how you’d allocate a portfolio. You’ll learn how to frame macroeconomic trends, analyze sector momentum, and connect your insights back to M&A and capital markets activity. With clear frameworks for answering “Where do you see the market going?”, structuring a stock pitch, and walking through the IPO or M&A process, this module ensures you can speak the language of the markets with confidence and clarity.
Lesson 1
Where do you see the market going in the next year
“Where do you see the market going?” is a classic interview question that tests your macro awareness and ability to tie trends to banking activity. This lesson helps you build a well-rounded answer by covering interest rates, recession risks, sector trends, valuations, and geopolitical headwinds—while connecting it all back to deal flow and capital markets.
In this lesson:
- Fed & Interest Rates: Expect continued rate cuts or holds depending on inflation and job market data.
- Soft Landing vs. Recession: Be ready to comment on the likelihood and impact of either scenario.
- Equity Valuations: Current P/E ratios may be stretched – highlight growth vs. defensive trade-offs.
- Sector Trends: Tech and AI likely continue momentum; cyclicals may lag if growth slows.
- Geopolitical Risk: Mention potential headwinds from China, elections, or Middle East tensions.
- IB Relevance: Tie back to M&A, capital markets — e.g., “lower rates could spur deal activity.”
Lesson 2
Stock pitch
A well-structured stock pitch is a staple interview question that shows your ability to think like an investor and communicate clearly under pressure. This lesson walks you through how to pitch a company by covering its business model, industry landscape, investment thesis, key risks, and valuation support.
In this lesson:
- Company Overview: Clear, 1–2 sentence explanation of what the business does and its end markets.
- Industry Overview: Overview of competitive landscape
- Thesis: 2–3 compelling points for why the company is an attractive investment — financial metrics, growth catalysts, defensible moat, etc.
- Risks: Address 1–2 key risks and how they’re mitigated to show conservatism.
- Valuation: Use comps (EV/EBITDA, P/E) or DCF to support upside potential.
Lesson 3
How to allocate a portfolio
“How would you allocate a portfolio?” is a common interview question that tests your understanding of markets, risk, and investor behavior. This lesson helps you structure a thoughtful response by discussing asset mix, macro context, diversification, and rebalancing—while linking it back to investment banking relevance.
In this lesson:
- Risk Appetite: Tailor portfolio to hypothetical client’s time horizon and goals.
- Asset Mix: Equities vs. bonds vs. cash — justify based on macro conditions.
- Diversification: Mix sectors and geographies to manage volatility.
- Equity Tilt: Growth vs. value, large-cap vs. small-cap depending on rate/inflation outlook.
- Rebalancing: Mention periodic adjustments to maintain strategic asset allocation.
- Link to IB: Show you understand investor mindset — useful when working with sponsors or clients.
Lesson 4
Industry trends
Interviewers may ask about industry trends to test your commercial awareness and ability to link macro themes to banking activity. This lesson helps you discuss major trends—like AI, healthcare, energy transition, and private capital—and explain how they impact valuations, deal flow, and sector dynamics.
In this lesson:
- Tech & AI: Disrupting industries and driving capex in semis, cloud, and enterprise software.
- Healthcare Innovation: M&A driven by biotech breakthroughs and patent cliffs.
- Energy Transition: Rising investment in renewables, battery storage, and grid infrastructure.
- Reshoring & Supply Chains: U.S. manufacturing investment rising due to geopolitical shifts.
- Private Capital: Dry powder driving sponsor-led M&A and minority growth deals.
- Valuation Implications: Trends affect growth, margins, multiples – tie back to IB themes.
Lesson 5
M&A process
Understanding the M&A deal process is essential for interviews, especially when discussing transaction experience or technical knowledge. This lesson walks through each stage—from initial outreach and NDAs to due diligence, final bids, and closing—highlighting how deals progress from teaser to transaction.
In this Lesson:
- Initial Outreach: Seller hires advisors, sends teaser to interested buyers.
- NDA & CIM: Buyers sign NDAs to receive detailed info through the Confidential Info Memo.
- IOI/LOI Stage: Initial bids submitted with valuation range and deal structure.
- Due Diligence: In-depth analysis of financials, legal, HR, operations, etc.
- Final Bids: Binding offers with price, financing terms, and proposed SPA.
- Signing & Closing: Public announcement → regulatory/board approval → deal closes.
Lesson 6
IPO process
The IPO process is a key topic in finance interviews, especially for roles involving capital markets. This lesson breaks down each phase—from kickoff and SEC review to roadshow, pricing, and the first day of trading—so you can explain how companies go public and how banks support the process.
- Kickoff Meeting: Company selects banks, begins diligence and drafting S-1.
- Filing & Review: S-1 filed with SEC → comments → revisions until cleared.
- Investor Education: Analysts publish pre-IPO notes, management starts roadshow.
- Bookbuilding: Investors submit orders, underwriters assess demand.
- Pricing & Allocation: Final price and allocations set night before trading.
- Trading Begins: Stock is listed and begins public trading.
Lesson 7
Brain teasers
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Lesson 8
Networking
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