1. Why Corporate Finance or M&A (or both if applicable)?
There are several good responses to this question, and you should tailor your response so that it is truthful and fits in with your goals. If you are interviewing for pure M&A or Corporate Finance positions at banks as well as rotational programs or internal Corporate Finance positions, you should be honest about this, although your first choice is always to be wherever you are interviewing. While you should not lie, you should omit any consulting, marketing or other completely unrelated interviews you may have lined up. Employers (especially the banks) want dedication.
You should also make certain that your answers mesh with the desired skills mentioned above. You should also not state that you want internal Corporate Finance because you think the hours are better (they are generally) because you don't want to come across as lazy. If you are going for a particular group or function, you should not deride an area you are not interested in. Many who aspired to be technology M&A bankers and started in 2001 or 2002 found themselves working on Food Industry corporate finance deals (if they were lucky enough to keep their jobs). Most banks place new associates in particular areas only if they have expertise (i.e. someone who worked at Disney before business school in the Media Group or a medical doctor in healthcare.) Financial Analysts are even less likely to get the group they want. Most likely, you will end up wherever there is an opening.
One questionable response would be that you want to make a lot of money. There are successful banking professionals who have said this in interviews and lived to tell about it, but most would advise against it unless the interviewer brings it up first. Even then it should be only one of many reasons why you want to work for a firm. The reason often given for this taboo is the idea that firms are looking for future leaders and team members, not those out for a quick buck. Of course, everyone knows Wall Street pays astronomical sums even to those just out of business school or a few years out of undergrad, and a good portion of the people interviewing you would not be working on the Street were it not for their 6-8 figure paychecks. It is, however, an unwritten rule that money is not discussed in an interview. This seems to be truer at "white shoe" firms like Goldman, Morgan Stanley and JPMorgan than at Bear or Citigroup/SSB.
~2. What is different about an internal finance position versus working as an investment banker?
The basic skills necessary for a successful turn in internal finance are generally the same as those required to be a thriving banker. Depending on the company and the exact job function, your day-to-day activities in an internal finance position might vary widely, however. Here are just some possible differences.
I. Specific Industry Knowledge: As a banker, you might start as a generalist or be part of a functional team (Mergers and Acquisitions, Structured Finance, Relationship Management), a geographic team (Emerging Markets, Latin America, Germany) and/or an industry group (Media and Telecommunications, Health Care, Financial Institutions.) Nonetheless, your work will be largely transaction-based; that is to say, you will "do a deal" for one client, then one for another, and then another, and so on. Even if you specialize by industry, the individual company dynamics will vary from deal to deal. In contrast, an internal finance professional will gain a much greater understanding of his or her company or individual business line, since he or she will likely work exclusively in one area for a longer period of time. For example, a Media and Telecommunications banker will get a better a bird's eye view of AOL Time Warner's finances while working on a bond offering than one of the Company's home video division financial analysts. Conversely, the banker will probably never learn as much about DVD sales. Similarly, someone working in AOL's treasury department will gain an even greater understanding of the Company's finances than either the home video financial analyst or the banker, but will likely also know less about DVD sales than the analyst and less about issues facing other Media and Telecommunications companies than the banker.
II. Variety of Job Functions: Again, as a banker, you might be a generalist, or work in a functional, geographic, and/or industry group. These groups all tend to be transaction oriented. In an internal finance role, there are several completely different roles in most large companies. In a strategic planning and analysis position at a computer firm like IBM, you might look at the performance of different groups, divisions, and business lines, and decide which ones have performed up to expectations. Based on this and other factors, you might then help decide how to allocate the Company's capital going forward. (For example: Maybe the Company should try to increase sales in one country, exit one product line altogether, and buy a company in an entirely new business.) You might then set a plan against which one could later judge the Company's performance. Another IBM finance employee might spend her time examining the financial statements of companies that IBM wants to sell products to, in order to determine credit risk and credit exposure and ultimately whether or not IBM should provide financing for the sale. A third financial staff member might spend part of his time acting as an a sort internal corporate and investment banker, structuring major financing deals for IBM customers, and then syndicating these deals in much the same way Citigroup or Bank of America would a loan. A fourth might work in IBM's treasury department and assist in managing the Company's cash and investments, like an internal investment manager. Some internal finance professionals will spend all of their time at a company in one area or function, but many large companies will (formally or informally) rotate finance professionals through several such areas over the course of their career. Of course, there are positions in loan syndication, planning and analysis, and credit risk management at the investment banks, but one generally must interview for each of these positions separately from each other and from investment banking.
III. Risk, Rewards and Lifestyle: It is no big secret that investment bankers put in long hours and frequently must put their personal lives on hold ("The client doesn't care that you have a wedding to go to! This merger needs to go through while the stock is still near it's all-time high!") It should also come as no surprise that those who go into banking tend to get higher salaries than their peers in internal finance (especially in junior and mid-level positions.) Unless you are working for a start up, those who work in general finance have somewhat greater job security and do not usually have to work 80-100 hours a week or travel on a regular basis. Does it equal out? That depends on your priorities. Nevertheless, it is not surprising that, given the level of endurance and commitment one needs to be an investment banker, those in internal finance positions are more likely to have come from banking than the other way around (again, particularly at the junior and mid-level.) On the other hand, spending any time as a junior banker might be too high of a price for some.~
3. Let's say retail sales figures just came out, and they were far below what economists were expecting. What will this do to stock prices and the strength of the dollar?
Bad news might drive the market lower, but if interest rates have been relatively high such news may lead to the Street to expect the Federal Reserve to ease monetary policy, which actually may be bullish for the stock market. Since bad economic news usually leads to Fed easing, interest rates will tend to fall and thus weaken the dollar versus most leading foreign currencies, all else being equal.
Do you have finance interviews? Prepare for questions just like these - or sometimes, these very questions.