Is Financial Market Knowledge Needed for Investment Banking?

Posted by Dilkash Shaikh on

Is financial market knowledge needed for Investment Banking

If you ask any investment banker what is the most important thing to enter into Investment Banking, they will answer financial knowledge! If you do not understand macro-finance, how ill you assist at the micro-level? Even during the interview, you will be asked about the current and financial affairs. So if you are aiming for the IB realm, financial knowledge is a must! An IB is a financial institution that suggests wealthy individuals, corporations, and government bodies in raising capital by underwriting or acting as the client's agents in the issuance of securities. An investment banker also assists companies with mergers and acquisitions and provides them support in the market regulation. The core service of IB includes corporate finance, M&A, equity research, sales, and asset management. These banks earn profit by charging fees and commissions for providing these services and providing other financial and business ideas.


Getting into IB is very challenging. There are far more applicants than there are positions. So here are a few skills which are prioritized during the interview.

Financial Modeling - Performing a wide range of financial modeling activities such as building 3D models, DC models LBO models, and others.

Business Valuation - An investment banker must know to use a wide range of valuation methods such as comparable company analysis, precedent transactions, and DCF analysis.

Making Effective Presentations - Building pitchbooks and presentations to pitch ideas to prospective clients to win new business.

Sales and Business Development - If you want to bring profit to your business, you must constantly meet your prospective clients and pitch ideas. Apart from pitching, an Investment Banker offers them support and provides value-added advice.

Negotiation - It is one of the major qualities an Investment Banker must possess. An Investment Banker must use the negotiation tactics between buyers and sellers in a transaction and helping clients maximize value creation.