San Francisco JP Morgan
1. Would a healthcare company have a beta greater or less than 1?
· Less than 1—blockbuster drugs are study revenue and people get sick no matter how the economy is doing
2. Would Coke or Pepsi have a higher multiple?
· The answer is coke because they have better brand, better company organization and etc. I said Pepsi because coke is everywhere and Pepsi has more international growth opportunities
3. What are strengths and WEAKNESSES of JPM?
· JPM’s international business is not as strong as others, such as presence in Asia. Strengths: entrepreneurial culture, diversity, hiring the best, etc.
4. What does an investment banker do, what qualities do successful bankers have, and how do you fit those?
· See M&I guide and know your own strengths
5. What do you think the market will do in the next year, and what threats are facing the US economy?
6. What is your favorite method of valuing a company?
· This one is essentially asking you about the strengths of different valuation method. I said DCF—not market based and looks at companies future performance, also it looks at the risk adjusted internally generated cash flows of a company.
7. Why would you look at a revenue multiple over a P/E multiple?
· Due to Negative profits or because revenue and EBITDA/EBIT numbers are independent of capital structure- P/E is not
8. How would you value Merck (healthcare company)?
· Merck is an established company, so you can use DCF. Then look at comps. You could also say that you could do a sum of the parts valuation because they are more of a conglomerate with ventures in not only pharma area but biotech as well. You could also say to do an LBO analysis to see what a P/E firm would pay and thus creating a floor valuation.
9. How would you value one Starbucks coffee shop?
· See different methods of valuation
10. Walk me through the changes you would make on the three financial statements in an accretion/dilution analysis.
11. Why are you interested in the technology industry? Tell me about a trend and a recent deal you have followed within the industry.
New York JP Morgan
1. If you had $10K to invest in a company, what would you invest in and why?
· Pitch a stock.
2. Say the US computer industry is experiencing declining revenue, but a particular company is experiencing high levels of sales and revenue. What are some reasons why this may happen?
· Possible reasons: International sales; or consider apple- innovative products and powerful marketing
3. If you have 10 minutes off work, what three websites would you go to?
· Test if you are an interesting person, so don’t list three finance websites. ESPN is always a safe one
Hong Kong JP Morgan
1. Why would EV/EBITDA yield higher/lower value than P/E?
1. If I promise to give you $2000 per year till you die, what is the maximum amount of money you are willing to give me now? Keep in mind that you need to be reasonable, or I will get it from someone else.
Los Angeles JP Morgan – (Superday)
1. Walk me through the M&A model, what line items would get adjusted?
2. How many gas stations are there in the U.S.?
3. A bear walks north for 1 mile and then walks west for 1 mile then walks south for another 1 mile and ended up where he started off from. What color is the bear?
4. Two trains on a parallel track. The distance between the front of train A and B are 100 miles. Train A is 3 miles long and Train B is 1 mile long. Train A speed is 24 Miles/Hour and Train B speed is 28 Miles/Hour. How long will it take for the end side of the trains to meet?
5. Show me the treasury stock method
6. What are views on the US economy? Global?
7. What stock would you invest in and why?
8. What makes a good acquisition target?
9. What is the beta for a Mexican stock vs. US stock
10. Why are you here?
11. What’s the difference between EV/EBITDA vs. P/E, which could be more volatile?
12. What is the adjustment you need to made when you value Mexican company?
13. What is the difference in value for Mexican company and American company, assuming 1 Peso = 1 dollar, and they operate in the same line of business? Assuming 4 Peso = 1 Dollar?
14. Company A P/E = 10x, Company B P/E = 20x, If A buys B, the deal is Accretive or Dilutive? Why?
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