Finance Interviews

1. Finance Interviews Darren Wray, Finance Sector Manager Madison Investment Fund 2/26/07

2. Agenda • I. Basic Interview Tips -Ground rules for all Finance interviews • II. Areas of Interest -Investment Banking, Sales & Trading, Research, Structured Finance, The “Buy Side” • III. Investment Banking Recruiting Profile and Interview FAQ -Typical path of entry into I-banking as a JMU student -What to expect in an investment banking interview • IV. Sales & Trading Recruiting Profile and Interview FAQ -Why Salespeople/Traders are inherently better thanbankers

3. Agenda (Cont.) • V. Research Profile and Interview FAQ -Highlight the different opportunities in research -Illustrate common pitfalls in research interviews • VI. Structured Finance and Buy Side Profiles/FAQ -What is Structured Finance? -Brief overview of Buy Side interviews • VII. Conclusion -List of resources for interview prep -Closing Remarks

4. Basic Interview Tips • Dress professionally, keep it conservative • Know every line of your resume • Interpersonal/communication skills • Accomplishments: Must be measurable • Be able to tell “your story” in 30 seconds or less • Build a rapport with the interviewer • Thank you notes • Have intelligent and relevant questions prepared

5. Investment Banking Interviews • Investment Banking Business Segments -Corporate Finance: FIG, TMT, Energy etc.. -Mergers & Acquisitions • Typical Path of Entry for JMU Students -Very difficult industry to enter. Must be persistent. -Multiple phone interviews followed by “super day” • Expect to do most of the work independently -JMU has no formal recruiting arrangements with any bank

6. Investment Banking FAQ • Why I-Banking? What is I-banking? Why do you want to work for this bank? Various “fit questions” • Are you prepared to effectively sacrifice your social life by working 100+ hour weeks? • How do you value a company? • Tell me about a recent deal we completed • Explain how the three financial statements fit together • What is your biggest weakness? • Long stock recommendations • Brainteasers • Where else are you applying/interviewing? • Computer Skills

7. Attitude • “We don't hold it against people who have advanced degrees, like MBAs, but we do prefer people with PSDs: poor, smart, and a deep desire to become rich.” - Ace Greenberg

8. Sales & Trading Interviews • Sales & Trading: -Often the most profitable area of an I-bank -Traders buy and sell financial products with the goal of making an incremental amount of money on each trade. -The sales force primary job is to call on institutional investors to suggest trading ideas and take orders. • Personality Conflicts between Salespeople and Traders • Path of entry almost identical to Investment Banking • Interviews focus on your ability to work under pressure

9. Sales & Trading FAQ • Expect Rapid Fire Questions from Volatile Traders • Long & Short Stock Recommendations • Impact on Markets Following Economic Data Release • What is the square root of .1? • Why should I hire you as a trader/sales person? • What would you do for a career if Wall St. didn’t exist? • Where are the major market indices now, and what have they done over the past 3, 6, 12 - month periods? • What financial publications do you read?

10. Research Interviews • Equity Research -Division which reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. -Sell side research aids the firm’s traders and sales force as well as its institutional clients -Buy side research is typically less formal • Fixed Income Research -Ratings companies such as S&P, Moody’s, and Fitch evaluate corporate and sovereign debt instruments

11. Research Interviews FAQ • Despite popular belief, research analysts are not hermits that enjoy going over 10-Ks in the dark by themselves. • Long stock recommendation…Very important • How do you value a company? • Explain how the three financial statements fit together • What financial publications do you read? • Do you stray away or look forward to client contact? • How has GDP trended over the past year? • What does the inverted yield curve mean for our companies? • Writing skills are VERY important on the sell side.

12. Structured Finance • The securitization of an asset with a steady stream of cash flows. Ex. Mortgage Backed Securities (MBS) and Collateralized Debt Obligations (CDO) • Big four accounting firms all have established structured finance groups which recruit actively at JMU • Interviews tend to be more personality fit based. • Computer skills, especially Excel, are highly valued. • Math skills may be tested.

13. The Buy Side • Institutions such as mutual funds, pension funds and hedge funds that buy large portions of securities for capital-management purposes. Private equity firms can also be included in this definition. • Very limited opportunities for JMU students. • Buy side interviews will be very similar to sell side. Private Equity interview = Ibanking interview on roids. Hedge Fund Research = Sell Side Research – Writing.

14. Preparation • Vault Guide to Finance Interviews -THIS IS NEEDED • Become familiar with Wall Street pop culture. Books: Monkey Business, Liar’s Poker, When Genius Failed, and The Bonfire of the Vanities Movies: Wall Street, Boiler Room, American Psycho • As MIF analysts you should already be reading WSJ daily. Start reading more obscure/industry specific publications. • Practice with friends, fellow analysts, and your manager.

15. Questions & Comments?