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Happy Super Bowl Sunday, future bankers!

Hope everyone enjoys the big game today! Today we’ll be going over calculating IRRs, talking about the demands of banking, and the staggering costs of Super Bowl commercials.

🚀 Let’s get into it.

🔢 Technical Question

“What is an IRR? How do you calculate it?”

A confident and comprehensive explanation of IRR demonstrates your understanding of key financial metrics. Here's how to tackle the question:

1. Define IRR:

Start by clearly defining IRR (Internal Rate of Return). Explain it as the discount rate that makes the net present value (NPV) of all cash flows in an investment equal to zero. This essentially translates to the annualized return an investment generates considering both initial investment and future cash flows.

2. Explain the calculation:

Briefly explain the formula for calculating IRR. You can mention there are iterative methods involved to solve for the exact rate, but for the interview, focus on the key components:

• Cash flows: Emphasize that all projected cash flows, including initial investment, are used in the calculation.

• Discounting: Briefly explain the concept of discounting future cash flows to their present value using a discount rate.

• NPV: Mention that the calculation involves setting the NPV of all discounted cash flows to zero and solving for the discount rate (IRR) that achieves this.

3. Highlight key points:

Go beyond just the formula and mention key points about IRR:

• Internal vs. market rate: Emphasize that IRR is an internal measure specific to the investment and may not directly reflect market returns.

• Multiple IRRs: Briefly mention that some investments can have multiple IRRs, requiring further analysis.

• Limitations: Acknowledge that IRR has limitations, such as not considering the timing of cash flows or risk.

🗣 Behavioral Question

"The hours of investment banking are very long and demanding. How can I know that you are fit for the job?"

This is a common but tricky question in investment banking interviews. Here's how you can answer it effectively:

Acknowledge the demanding nature:

Start by acknowledging the reality of long hours and demanding work in investment banking. Show them you're aware of the expectations and challenges.

Focus on your strengths:

Instead of simply saying you can handle it, highlight specific strengths and experiences that demonstrate your suitability for the demanding environment. Mention:

• Work ethic and drive: Share past experiences where you demonstrated your ability to work hard, handle pressure, and stay focused under tight deadlines.

• Time management and organization: Explain your proven skills in effectively managing time and organizing your workload to maximize productivity.

• Resilience and adaptability: Describe situations where you faced challenges, adapted to changing situations, and maintained focus and performance.

• Passion for the industry: Convey your genuine interest and passion for the industry, highlighting how it motivates you to put in the extra effort.

Example:

"I understand and deeply respect the demanding nature of investment banking. In my previous summer internship at [Company name], I routinely took on challenging projects with very tight deadlines. I consistently delivered high-quality work while managing multiple tasks effectively. Beyond that, my experience playing competitive sports has instilled a strong work ethic and the ability to persevere under pressure. Most importantly, I'm genuinely passionate about finance and driven to learn. I'm confident that my skills, adaptability, and passion will allow me to excel in this demanding environment."

Additional Tips:

• Be honest and avoid exaggerating your capabilities.

• Maintain a positive and enthusiastic tone throughout your response.

• Ask clarifying questions to understand the specific expectations of the role and company culture.

• Show respect for the interviewer's time and keep your response concise and focused.

Remember, this question is not just about proving you can work long hours. It's about demonstrating the key qualities and strengths that will make you a valuable asset to their team in a demanding environment.

🗞 Industry News

$7 million for 30 Seconds 🤯

The Super Bowl, with its consistently massive viewership numbers, offers unparalleled exposure for brands willing to invest in advertising during the event. This year's edition, Super Bowl 58, promises to be particularly noteworthy due to the combination of factors such as the involvement of historic teams like the 49ers and modern dynasties like the Chiefs, featuring star players like Patrick Mahomes. The presence of high-profile figures and storylines, including the notable romance between Travis Kelce and Taylor Swift, further enhances the event's appeal to viewers.

Despite the astronomical costs associated with Super Bowl advertising, with a 30-second commercial slot commanding a staggering $7 million price tag in both 2023 and 2024, advertisers continue to see value in the opportunity. The significant increases in ad costs over the years reflect both the expanding viewership and the inflationary pressures driving up advertising expenses. While the price per viewer was less than a penny during the inaugural Super Bowl in 1966, it has risen substantially over the decades, reaching six cents per viewer in recent years.

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