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Message: <blockquote data-quote="Andrei Radu" data-source="post: 226455" data-attributes="member: 36777">Hi [USER=30998]@flower1[/USER] that is a really good question that I also used to struggle with. Firstly, I will clarify that generally you will not be expected to know as much about finance as you will be expected to know about M&A, so you should not worry a lot simply because your knowledge of finance seems more basic when contrasting it with your knowledge of M&A. Secondly, what you need to know about finance will be highly depended on the firms you are interviewing with - the types of finance matters a firm specialises in should significantly influence the scope of your research while you prepare. That being said, I think there are a number of basic finance concepts that you should understand irrespective of the particular firms you will have ACs with, in that they are foundational enough to be "fair game" regardless of the particularities of a firm's practice. I will list here the ones the come to mind right now, but this is by no means an exclusive list:<ul> <li data-xf-list-type="ul">Equity finance vs debt finance, and the main advantages and disadvantages of each;</li> <li data-xf-list-type="ul">Elaborating on the above, explaining what bonds, loans, and IPOs are;</li> <li data-xf-list-type="ul">Interest rates and how those are impacted by inflation;</li> <li data-xf-list-type="ul">Securitisation (how debt can be packaged to be sold on secondary markets); </li> <li data-xf-list-type="ul">How lenders protect against default risk (securing a debt over fixed/floating assets);</li> <li data-xf-list-type="ul">A basic understanding of how banks work and what their role (and the general role of lending) is in sustaining and contributing to the growth of the global economy;</li> <li data-xf-list-type="ul">The downward spiral risks of financial crises and the fundamental importance of trust in the stability of banks, ensured through financial regulation (ie why are stricter capital and liquidity adequacy requirements necessary, how the banking sector changed post the Global Financial Crisis), </li> <li data-xf-list-type="ul">A basic understanding of how the process of restructuring and insolvency works;</li> <li data-xf-list-type="ul">A very basic understanding of different practice areas within finance (ie you should know how to explain the difference between traditional banking and finance, leveraged finance, project finance, asset finance, DCM, funds finance, and derivatives & structured finance) </li> </ul></blockquote>

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