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Happy Sunday, future bankers!

We’re going to be going over a couple of interview Q’s, as well as highlighting 2024 market predictions that some of the biggest banks have made. 2023 mostly defied predictions, only time will tell if 2024 is the same.

🚀 Let’s get into it.

🔢 Technical Question

“Let’s say a company has 100 shares outstanding, at a share price of $10 each. It also has 10 options outstanding at an exercise price of $5 each – what is its fully diluted equity value?”

Its basic equity value is $1,000 (100 * $10 = $1,000). To calculate the dilutive effect of the options, first you note that the options are all “in-the-money” – their exercise price is less than the current share price.

When these options are exercised, there will be 10 new shares created – so the share count is now 110 rather than 100.

However, that doesn’t tell the whole story. In order to exercise the options, we had to “pay” the company $5 for each option (the exercise price).

As a result, it now has $50 in additional cash, which it now uses to buy back 5 of the new shares we created.

So the fully diluted share count is 105, and the fully diluted equity value is $1,050.

🗣 Behavioral Question

“What is the biggest obstacle or challenge you have faced and overcome in your life?”

• Describe any challenge you are comfortable discussing which you overcame after facing the challenge head on.

• If you can come up with a situation that relates to school or to a job you had, that is great. A useful story might be one about a time when you were instructed to do something you did not fully understand, figured it out for yourself, and got it done right. This exemplifies your desire/willingness to learn, as well as your initiative and determination.

Example Response: The biggest obstacle I have had to overcome was paying for college. I managed to do it in a combination of ways.

Initially, I took out student loans, but then I began paying my tuition in cash and paying off some of my student debt early. I’ve waited tables several nights a week throughout all my college years, and I now work at a very popular restaurant, which pays me pretty well on a consistent basis. However, what I have most enjoyed doing to support myself is graphic design.

In high school, I was into art and photography and my graphic design skills are pretty strong. When I began my business education, I didn’t have time for those types of classes, and I missed it. However, I have been able to earn extra money developing logos, letterhead, business cards, and presentations for student start-ups as well as some local businesses.

All of this extra work has helped me to pay for a good portion of my college costs.

🗞 Industry News

Today’s industry news is a link to a video from the Wall Street Journal dissecting what many of the major banks expect from the economy and markets this year. We enjoyed it, and hope you will too!