37 Investment Analyst Interview Questions (With Answers)

During an interview, the interviewer evaluates your knowledge, experience and readiness for the new role. By taking time to prepare your answer ahead of the interview, you can present yourself to employers as qualified and professional investment analysts. Anticipating the commonly asked questions for an investment analyst role can help you prepare responses to impress the potential employer. In this article, we list general, experience and in-depth investment analyst interview questions and provide some sample answers that you can use as a reference while preparing.

General investment analyst interview questions

During the start of an interview, an employer might want to learn about your work style and personality. General questions help them determine whether your goals align with the company and whether they are culturally fit for the job role. Here are some general investment analyst interview questions to consider when preparing for an upcoming interview:

1. What is your favourite part of being an investment analyst?

2. What personal characteristics do you think are suitable for an investment analyst's position?

3. Where do you see yourself in ten years?

4. What are your hobbies and interests outside of work?

5. Outline your strengths and weaknesses as an investment analyst.

6. What is your ideal work environment?

7. How do you value a company?

8. What would you want to accomplish within 30 days of joining the organisation?

9. According to you, what is cheaper equity and debt? Why?

10. What does leadership mean to you? Can you provide some examples of bad and good leadership?

Questions about experience and background

Apart from understanding your work style, employers want to know whether you meet the job requirement. They often ask questions about your background and experience level to understand your technical knowledge. Here are a few experience and background questions you might encounter:

1. What experience do you have working as an investment analyst?

2. Have you previously worked for an investment firm?

3. According to you, what is one rewarding aspect of working as an investment analyst?

4. How do you manage difficult situations in the workplace?

5. What certifications and technical courses have you completed that help you make investment decisions?

6. How do you handle a colleague in a team who is underperforming?

7. What research and analysis process do you follow for a potential investment opportunity?

8. Why is the investment career the right choice for you?

9. How do you think your previous experience can help you prepare for this role?

10. How do your skill set and experience differ from other candidates?

Related: Top 20 Finance Interview Questions And Sample Answers

In-depth questions

Often, employers might ask such questions to understand your ability to complete specific tasks and processes. These questions help them assess your proficiency in creating an analysis report, calculating the cost of equity and analysing financial statements. Employers might ask situational awareness questions, so prepare answers in advance. Here are some questions an employer might ask:

1. What steps do you use for calculating the cost of equity?

2. What is EBITDA and why is it useful?

3. Outline the difference between revenue multiple and EBITDA multiple.

4. What makes a good financial model?

5. How do you explain solvency to someone who has no financial experience?

6. Why is a positive cash flow necessary for an organisation?

7. Have you ever advised a client against making an investment in a company they wanted to?

8. Based on your experience, what are the best evaluation metrics for analysing a company's stock and share?

9. Explain the major components of the weighted average cost of capital (WACC).

10. What do you know about the three financial statements?

Related: 5 Common Tricky Interview Questions (With Example Answers)

Investment analyst interview questions with sample answers

Below are a few interview questions with sample answers that can help you prepare for your next investment analyst interview:

1. What motivated you to become an investment analyst?

When applying for your first job role or entry-level position, an employer might ask this question to know your short- and long-term goals. When answering this question, include your work experience, educational background and certifications you completed. Also, tell employers why you enjoy this type of job role.

Example: "After completing my BBA in finance, I was enthusiastic to know-how companies earn money by making intelligent financial decisions. Also, since my childhood, I have loved numbers and like to analyse critical details. Due to this reason, I pursued my MBA in finance and completed a two-month-long internship at a reputed investment firm. The internship helped me gain knowledge and increased my interest in becoming an investment analyst."

2. When it is required for a company to issue debt instead of equity?

Technical questions like this help an employer understand your knowledge and capabilities in investment analysis. Your answer shows your financial analysis knowledge and decision-making process.

Example: "There are various reasons an organisation might prefer issuing debt over equity. Issuing debt results in less risk and ensures a cheap source of financing than equity. Also, when the company has taxable income, issuing debts provides numerous tax benefits. Another reason a company issues debt is that the WACC is lower than issuing equity. Also, companies that issue debt are better positioned to make their interest payments on time."

3. What have you done to improve your knowledge of this role?

One way to improve your knowledge is to advance your education for this role. Employers often prefer hiring goal-oriented candidates who show a desire for continuous learning. By asking this question, they want to reassure you that you are taking concrete steps to upskill yourself. When giving an answer, mention any course or training you completed regarding your professional development.

Example: "I recently completed my chartered financial analyst (CFA) course to develop my financial and investment knowledge. It is a three-year certification course that I completed alongside my full-time job. To further enhance my skills, I attended various investment-related seminars from experts in the financial sector. Both these have helped me create investment strategies for this role."

4. What profitability model is helpful in understanding a project's potential success?

This question helps an employer understand your ability to forecast investments opportunities for their clients. When giving an answer, use examples from previous job roles and how you fared with previous tasks.

Example: "The profitability model I used in my previous job role involved calculating the net present value. Net present value or NPV is critical for finding the difference between the value of cash flows over time and the present value of cash flows. When a company is looking for an investment, it is essential to include the required return and the number of cash flow periods. When the answer from the simultaneous equation is positive, the project is worthy of an investment."

5. What happens to the earnings per share (EPS) when a company issues debt to buy back shares?

EPS is an important concept that helps make an intelligent investment decision. An employer asks such financial questions to understand your investment knowledge. When giving an answer, provide a detailed and in-depth answer.

Example: "When a company issues debt to buy back shares, it lowers the EPS because debt issuance increases after-tax interest expense. Also, when a share repurchase reduces the number of shares outstanding, it increases the EPS. The EPS might increase or decrease on issuing debt to buy back shares based on the above two factors."

6. What are your two strengths that could benefit your career as an investment analyst?

An employer might want to know how your professional capabilities could help you function as an investment analyst for the new company by asking this question. Focus on providing an answer that focuses on your key strengths related to this career.

Example: "I believe that discipline and self-motivation are two areas I could apply for an investment analyst's position. When I was reviewing a company's financial data in my previous job role, I focused on one task alone until I completed it. While completing the task, I self-motivated myself and tried to avoid time-wasting activities. This helps me achieve my end goals without facing issues."

Related: Interview Question: 'What Is Your Greatest Strength?'

7. Have you ever analysed something incorrectly? What did you learn from that experience?

An employer might ask this question to understand your ability to learn from your mistakes. When answering this question, try using the STAR technique to describe a previous experience.

Example: "In my previous job role, while analysing the investment opportunity for a client, I accidentally used data from an unreliable source. The results confused my manager and he did not know how he would explain the investment decision to the client. Later, while rechecking the source file, I notified my manager about the incorrect details, so that we could rectify the error before the presentation with the client. Though the error did not have any negative impact, I made sure that I cross-verified the details several times with the original file to avoid such mistakes."