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Happy Tuesday, future bankers!

Hope everyone is doing well! Today we’re covering the interest tax shield, feedback at your last internship, and why Oracle’s stock jumped 10% on the day.

🚀 Let’s get into it.

🔢 Technical Question

Explain to me what the interest tax shield is.

The Interest Tax Shield is a concept in finance that refers to the reduction in income taxes that a company or individual realizes through the use of debt.

Here’s how it works:

1. Interest Expense: When a company borrows money, it pays interest on that debt. This interest is considered an expense and is deducted from the company’s taxable income.

2. Tax Deduction: Because interest expense is tax-deductible, it reduces the company’s taxable income. This means the company pays less in taxes.

3. Tax Shield: The reduction in taxes due to the interest expense is known as the interest tax shield. It effectively ‘shields’ a portion of the company’s income from taxation, hence the name.

The value of the interest tax shield can be calculated using the formula:

Interest Tax Shield = Interest Expense × Tax Rate

In essence, the interest tax shield is a benefit of using debt financing. However, it’s important to note that while debt can provide a tax shield, it also increases the company’s financial risk. Therefore, companies must balance the benefits of the interest tax shield against the potential risks of increased debt.

🗣 Behavioral Question

What feedback did you receive at your last internship?

Here's a breakdown of best practices for answering this question:

Understand the Intent

This question isn't designed to catch you out if you received some constructive criticism. Interviewers want to see:

• Self-awareness: Do you understand your strengths and areas for development?

• Receptiveness to feedback: Can you take feedback to improve your work?

• Growth mindset: Are you actively focused on professional development?

How to Structure a Strong Response

1. Start with Positive Feedback: Begin with a strong point of feedback you received. This demonstrates confidence and sets a positive tone.

2. Address Constructive Feedback: Choose an area where you received feedback for improvement. Frame it as an opportunity for growth.

3. Demonstrate Implementation: Show how you turned feedback into action. Highlight how the feedback enhanced your performance.

Additional Best Practices

• Specificity: Avoid generic statements. Support your examples with specific details.

• Maintain Positivity: Avoid speaking negatively about your previous internship.

• Stay Relevant: Tailor your answer to highlight skills directly valuable for investment banking.

Example Answer

"Overall, the feedback during my internship was very positive. My ability to learn quickly, especially when understanding the models, was consistently praised. One area my analyst suggested I develop was my ability to anticipate and communicate my workload better. I took this to heart and started providing more frequent updates. This led to more efficient time management on my part and allowed my team to allocate resources more effectively."

🗞 Industry News

📈 Oracle Stock Jumps 10% From Cloud Revenue

Oracle's stock experienced its biggest surge in over two years after reporting strong cloud computing bookings. This indicates progress in the company's efforts to gain a larger share of the cloud market. Positive indicators include a higher-than-expected remaining performance obligation ($80 billion) and cloud revenue outpacing estimates ($5.1 billion).

Oracle is aggressively expanding its cloud infrastructure business, competing directly with industry leaders like Amazon, Microsoft, and Google. Despite recent setbacks, the company's cloud growth appears to be stabilizing. Oracle CEO Safra Catz emphasizes significant investment in constructing data centers to meet growing demand. Oracle's overall sales for the fiscal third quarter were in line with expectations, totaling $13.3 billion.

Read more about this story below.

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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!