WALL STREET PREP PREMIUM
PRACTICE EXAMINATION 2026
QUESTIONS WITH ANSWERS GRADED
A+
◍ Colgate declared a common stock split during 2013..
Answer: True
◍ When looking to do a transaction comp analysis, some of the merger-related
filings that should be looked at include each of the following except:.
Answer: Form s-1
◍ Cash from operating activities.
Answer: mostly indirect methodstarts with net income and includes the cash
effects of transactions involved in calculating net income. reconciliation of
net income. Net income (income statement) + non-cash expenses- non-cash
gains- period on period increases in working capital assets+ period on period
increases in working capital liability = CF from operations *for stable,
mature, plain vanilla companies, a positive cash flow from operating
activities is desirable
◍ Looking at Tesla Motors' 2013 10-K, in what quarter what was the
company's stock at its lowest price in 2013?.
Answer: Q1
◍ For 2014, Colgate anticipates its capital expenditures to be approximately at
what % of sales? Enter with 1 decimal place and with % sign (Ex: 9.9%).
Answer: 4.5%
◍ which of the following is true about senior debt.
Answer: None of the Below.Has the least restrictive covenants because it is
, secured by the company's assetsSince it is secured by the company's assets,
lenders prefer to have the debt outstanding over time in order to generate
more interestUsually uses PIK securities or come with warrants like
mezzanine debt
◍ Why are increases in accounts receivable a cash reduction on the cash flow
statement?.
Answer: Since our cash flow statement starts with net income, an increase in
accounts receivable is an adjustment to net income to reflect the fact that the
company never actually received those funds.
◍ Company A shares are currently trading at $20 per share. A survey of Wall
Street analysts reveals that EPS expectations for Company A for the full
year 2014 are $1.50 per share. Company A has 200 million diluted shares
outstanding. Company A's major competitors are trading at an average share
price / 2014 Expected EPS of 15.0x.Using the comparable company analysis
valuation method, Company A shares are:.
Answer: 2.5 per share undervalued
◍ how comfortable do you feel working with numbers?.
Answer: "Even though my university doesn't offer any finance or accounting
courses, I have taken numerous calculus, statistics, physics, and computer
science courses to help me develop strong problem solving skills. In
addition, as a member of the Rock Climbing Club, I work on budgeting and
have budgeted the next 3 climbing trips to the dollar using a simple excel
model that I created from scratch. I recognize that the position I am
interviewing for is an analytical position, that is very much part of the
appeal. I love analytical challenges and feel confident that I can handle the
analytical rigor of investment banking."
◍ Two companies are identical in earnings, growth prospects, leverage, returns
on capital, and risk. Company A is trading at a 15 P/E multiple, while the
other trades at 10 P/
E. which would you prefer as an investment?.
Answer: 10 P/E: A rational investor would rather pay less per unit of
, ownership.
◍ Telling a strategic anecdote in an investment banking interview (leadership
anecdote).
Answer: Great responses to this question include ones that clearly depict you
as a leader without sounding arrogant. You want to give responses like
"took initiative to go to each dorm and market the event to dorm reps and
bargained with vendors to get prices for food and drink - reducing original
prices by 15%. The aggressive marketing coupled with reduction in prices
allowed us to raise approximately $12,000 in funds for my class."
◍ As of December 31, 2013, Colgate had preference stock outstanding..
Answer: False
◍ enterprise (transaction) value represents the:.
Answer: value of all capital invested in a business
◍ When should you value a company using a revenue multiple vs. EBITDA?.
Answer: Companies with negative profits and EBITDA will have
meaningless EBITDA multiples. As a result, Revenue multiples are more
insightful.
◍ disadvantages of a DCF do not include.
Answer: free cash flows over the first 5-10 year period represent a
significant portion of value and are highly sensitive to valuation
assumptions
◍ Expenses.
Answer: netted against revenue to arrive at net incomeCOGS (directly
associate with good production), SG&A (indirectly associated with
production), interest expense (expense related to paying debt holders
periodic payments), taxes, depreciation expense (non-cash expense
accounting for the use of PP&E, often imbedded within COGS and SG&A)
◍ A company has the following information:• 2013 retained earnings balance
of $12 billion• Net income of $3.5 billion in 2014• Capex of $200 million in
2014• Preferred dividends of $100 million in 2014• Common dividends of
PRACTICE EXAMINATION 2026
QUESTIONS WITH ANSWERS GRADED
A+
◍ Colgate declared a common stock split during 2013..
Answer: True
◍ When looking to do a transaction comp analysis, some of the merger-related
filings that should be looked at include each of the following except:.
Answer: Form s-1
◍ Cash from operating activities.
Answer: mostly indirect methodstarts with net income and includes the cash
effects of transactions involved in calculating net income. reconciliation of
net income. Net income (income statement) + non-cash expenses- non-cash
gains- period on period increases in working capital assets+ period on period
increases in working capital liability = CF from operations *for stable,
mature, plain vanilla companies, a positive cash flow from operating
activities is desirable
◍ Looking at Tesla Motors' 2013 10-K, in what quarter what was the
company's stock at its lowest price in 2013?.
Answer: Q1
◍ For 2014, Colgate anticipates its capital expenditures to be approximately at
what % of sales? Enter with 1 decimal place and with % sign (Ex: 9.9%).
Answer: 4.5%
◍ which of the following is true about senior debt.
Answer: None of the Below.Has the least restrictive covenants because it is
, secured by the company's assetsSince it is secured by the company's assets,
lenders prefer to have the debt outstanding over time in order to generate
more interestUsually uses PIK securities or come with warrants like
mezzanine debt
◍ Why are increases in accounts receivable a cash reduction on the cash flow
statement?.
Answer: Since our cash flow statement starts with net income, an increase in
accounts receivable is an adjustment to net income to reflect the fact that the
company never actually received those funds.
◍ Company A shares are currently trading at $20 per share. A survey of Wall
Street analysts reveals that EPS expectations for Company A for the full
year 2014 are $1.50 per share. Company A has 200 million diluted shares
outstanding. Company A's major competitors are trading at an average share
price / 2014 Expected EPS of 15.0x.Using the comparable company analysis
valuation method, Company A shares are:.
Answer: 2.5 per share undervalued
◍ how comfortable do you feel working with numbers?.
Answer: "Even though my university doesn't offer any finance or accounting
courses, I have taken numerous calculus, statistics, physics, and computer
science courses to help me develop strong problem solving skills. In
addition, as a member of the Rock Climbing Club, I work on budgeting and
have budgeted the next 3 climbing trips to the dollar using a simple excel
model that I created from scratch. I recognize that the position I am
interviewing for is an analytical position, that is very much part of the
appeal. I love analytical challenges and feel confident that I can handle the
analytical rigor of investment banking."
◍ Two companies are identical in earnings, growth prospects, leverage, returns
on capital, and risk. Company A is trading at a 15 P/E multiple, while the
other trades at 10 P/
E. which would you prefer as an investment?.
Answer: 10 P/E: A rational investor would rather pay less per unit of
, ownership.
◍ Telling a strategic anecdote in an investment banking interview (leadership
anecdote).
Answer: Great responses to this question include ones that clearly depict you
as a leader without sounding arrogant. You want to give responses like
"took initiative to go to each dorm and market the event to dorm reps and
bargained with vendors to get prices for food and drink - reducing original
prices by 15%. The aggressive marketing coupled with reduction in prices
allowed us to raise approximately $12,000 in funds for my class."
◍ As of December 31, 2013, Colgate had preference stock outstanding..
Answer: False
◍ enterprise (transaction) value represents the:.
Answer: value of all capital invested in a business
◍ When should you value a company using a revenue multiple vs. EBITDA?.
Answer: Companies with negative profits and EBITDA will have
meaningless EBITDA multiples. As a result, Revenue multiples are more
insightful.
◍ disadvantages of a DCF do not include.
Answer: free cash flows over the first 5-10 year period represent a
significant portion of value and are highly sensitive to valuation
assumptions
◍ Expenses.
Answer: netted against revenue to arrive at net incomeCOGS (directly
associate with good production), SG&A (indirectly associated with
production), interest expense (expense related to paying debt holders
periodic payments), taxes, depreciation expense (non-cash expense
accounting for the use of PP&E, often imbedded within COGS and SG&A)
◍ A company has the following information:• 2013 retained earnings balance
of $12 billion• Net income of $3.5 billion in 2014• Capex of $200 million in
2014• Preferred dividends of $100 million in 2014• Common dividends of
