# 660

Analyst Capital Markets interview questions shared by candidates

## Top Interview Questions

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Capital Markets was asked...11 October 2009

### You have 2 buckets...one 3 gallon bucket, one 5 gallon bucket. How do you get 4 gallons of water?

fill 3 gallon bucket, fill the 5 gallon bucket with the 3 gallon fill the 3 gallon bucket again, fill 2 gallon of the 3 to the 5 gallon one, now there is 1 gallon left in the 3 gallon bucket empty the 5 gallon bucket and fill the 1 gallon into the 5 gallon bucket fill the 3 gallon bucket. now you have 4 gallon water, 1 in the 5 gallon bucket and 3 in the 3 gallon bucket Less

fill the 5 gallon &gt; fill the 3 gallon with the 5 gallon &gt; empty 3 gallon &gt; put remaining 2 gallons from 5 gallon to 3 gallon &gt; fill 5 gallon &gt; fill the last gallon from the 3 gallon with the 5 gallon bucket &gt; you are left with 4 gallons in the 5 gallon Less

Place the 3 gallon bucket upside-down inside the 5gal bucket...fill up the 5 gallon bucket and remove the 3 gallon to get the 2 gallons...then repeat. (This is assuming the 3 gallon bucket fits in the 5 gallon bucket.) Less

### What is the different between debt and equity?

First, some definitions The debt market is the market where debt instruments are traded. Debt instruments are assets that require a fixed payment to the holder, usually with interest. Examples of debt instruments include bonds (government or corporate) and mortgages. The equity market (often referred to as the stock market) is the market for trading equity instruments. Stocks are securities that are a claim on the earnings and assets of a corporation (Mishkin 1998). An example of an equity instrument would be common stock shares, such as those traded on the New York Stock Exchange. Less

### Describe a recent deal that has piqued you interest. Follow-up: Explain how an airline would raise debt to pay for such an acquisition.

Southwest acquisition of AirTran (in hindsight I should have mentioned an IPO or debt offering) Less

### How would you evaluate the stability and quality of a financial institution?

Beyond basic financial metrics such as liquidity ratios and bad debt ratios, the ability to meet and exceed capital requirements is key Less

Can you expand on what the 30 minute written test is about?

### Would you rather have \$1000 today or \$100 a year for the next ten years?

\$1000 today because of the time value of money.

You would rather have \$1000 now because present value of money is worth more than future value of money. Less

### You only have Net Income and Sales, which other financial number you would like to have to evaluate a company? (overall, i found the questions not very difficult)

expenditure. If the company is spending more than it is, its in trouble. Also, those figures are just snapshots. You need graphs of these over time to see if any trends are emerging. Less

EBITDA

### Not so much difficult as unexpected - he wrote down 4 2's on a piece of paper and asked what you could do with them to make the largest number.

2^(2^22) is bigger than all of those

If you only get two 2's I don't see what you could do other than 2^2...? I would really like to know what the answer to this is if anyone has ideas. Less

Maybe take (2 x 2) ! = 4 x 3 x 2 x 1 ...? Is that even allowed? I don't know.