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Happy Sunday, future bankers!

Hope everyone is doing well and having a great weekend! Today we’re covering the basics of IRRs, talking about a time you made a mistake at an internship, and talking about what’s changed since Silicon Valley Bank collapsed one year ago.

🚀 Let’s get into it.

🔢 Technical Question

What is an IRR?

The Internal Rate of Return (IRR) is a key financial metric. It’s defined as the discount rate that makes the net present value (NPV) of a project or an investment equal to zero.

Here’s a more detailed explanation:

1. Concept: IRR is the expected compound annual rate of return that will be earned on a project or investment. It’s the annual return that makes the NPV equal to zero.

2. Calculation: When calculating IRR, expected cash flows for a project or investment are given, and the NPV equals zero. This means the initial cash investment for the beginning period will be equal to the present value of the future cash flows of that investment.

3. Decision Making: Once the IRR is determined, it’s typically compared to a company’s hurdle rate or cost of capital. If the IRR is greater than or equal to the cost of capital, the company would accept the project as a good investment. If the IRR is lower than the hurdle rate, then it would be rejected.

4. Uses: IRR is used to rank multiple prospective investments or projects on a relatively even basis. In general, when comparing investment options with other similar characteristics, the investment with the highest IRR would be considered the best.

Remember, while IRR is a useful tool, it’s not the only factor to consider when making investment decisions. Other quantitative and qualitative factors should also be taken into account.

🗣 Behavioral Question

Tell me about a time that you made a mistake at an internship.

Here are some best practices for responding to questions like this:

1. Choose a Real Example: Start by thinking of a specific and genuine instance when you made a mistake during an internship. The example should be significant enough to be considered a mistake but not so grave that it raises concerns about your competence.

2. Describe the Situation: Provide a brief context about the situation. What was the project or task at hand? What were your responsibilities?

3. Explain the Mistake: Clearly articulate what the mistake was. What went wrong? What was the oversight or error in judgement?

4. Discuss the Impact: Talk about the consequences of the mistake. How did it affect the project, the team, or the client?

5. Highlight Your Learning: This is a crucial part of your response and arguably the most important. Discuss what you learned from the mistake and how it helped you grow professionally. Did it improve your attention to detail, communication skills, or ability to work under pressure?

6. Showcase Your Problem-Solving Skills: Explain the steps you took to rectify the mistake. This could involve how you owned up to the mistake, communicated with your team, and worked on a solution.

7. Talk About Preventive Measures: Finally, talk about the measures you put in place to prevent such mistakes in the future. This shows that you take your mistakes seriously and are proactive in learning from them.

🗞 Industry News

📉 1 Year Since the Silicon Valley Bank Collapse

The collapse of Silicon Valley Bank (SVB) in March 2023 created a ripple effect of fear in the startup world. Deals were scuttled, and investors became cautious. Trust had to be rebuilt with SVB itself, even as startups changed their banking habits, diversifying their assets. For some fintech startups, this crisis presented an opportunity to step up and gain customers. Despite the bank's eventual rescue and a return to normalcy for many, the tech industry has been marked by the experience.

Read more about this story below.

Refer 3 Friends ➡️ Get Access to Database of 100+ IB Career Pages

1. Refer Friends: If you manage to get three of your friends to sign up for Finterview, we have a special offer for you. We’ll send you a curated database of links to the career pages of 100+ (and growing) investment banks. This way, you can streamline your search for new internships.

2. How It Works: All you need to do is reply to this email and list the email addresses of the friends you referred. Once we receive your reply and verify the sign-ups, we’ll email you the comprehensive list.

3. Questions or Clarifications: If you have any questions or need further assistance, feel free to reply to this email. We’re here to help! 🌟

Thanks for tuning in today! Best of luck to everyone working through recruiting right now. If you sign an offer, reply to this email and let us know about it! Like seriously, do it—we’d love to hear about it!