JPM Superday Prep

What are the biggest regulatory threats faced by J.P. Morgan?

"Excessive" regulation has reduced growth and business formation for both large and small companies, without making the economy safer or better. The ease of starting a business in the United States has worsened, and both small business formation and employment growth have dropped to the lowest rates in 30 years. Policymakers should examine areas of our regulatory framework that are excessive, overlapping, inefficient or duplicative **

What is 16 multiplied by 243?

3888

What is a financial derivative?

A derivative is a financial instrument whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index). Common underlying instruments include bonds, commodities, currencies, interest rates, market indexes, and stocks

What is a treasury stock?

A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market.

How does your academic background apply to this position?

As an econ major...

What do you think are the challenges for the financial institutions in the next five years?

Cybercrime/data security as the world shifts towards a newer age of technological development, Customer Retention:greater personalization, more automated services, and easier access to services

What impact do interest rates have on a country's exchange rate?

Higher interest rates tend to attract foreign investment, increasing the demand for and value of the home country's currency. The impact of higher interest rates is mitigated, however, if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down.

What is something that concerns you in the current economy?

The FED lowering interest rates in hand with high corporate debt

You look at the clock. It's 3.15pm. What's the angle between the clock hands?

The minute hand travels 6° per minute and the hour hand travels 0.5° per minute -- [(180+15)x0.5 = 97.5]- (15 x 6 = 90) = 7.5 degrees

What's one divided by 16?

~0.06

How many planes land at an airport every day?

~130 gates in LAX airport and 24 hour landings so assuming 130 planes land every 2 hours, ~1530 planes would land every day

How many trees are there in Central Park?

~20,000

How many people enter LA every day for work?

~4 million people living in LA, so assuming half of that population works, 2 million people would work every day but if 20% of people commute - around 400,000 people would enter LA every day

What are the three most common methods of valuing companies? What are the advantages and disadvantages of each?

(1) DCF analysis, (2) comparable company analysis, and (3) precedent transactions Comps is a relative valuation method in which you compare the current value of a business to other similar businesses by looking at trading multiples like P/E, EV/EBITDA, or other ratios. Precedent transactions analysis is where you compare the company in question to other businesses that have recently been sold or acquired in the same industry. DCF analysis is an intrinsic value approach where an analyst forecasts the business' unlevered fcf into the future and discounts it back to today at the firm's Weighted Average Cost of Captial (WACC). A DCF model allows the analyst to forecast value based on different scenarios, and even perform a sensitivity analysis.

Where do you see the interest rate on US 10 year treasury bonds going?

10-year Treasury bond rates (yields) are presently at historic lows (1.7% at present). This is primarily because the Fed has been keeping the fed funds rate/prime rate very low to spur US economic growth (and because there has been very little inflationary pressure in recent years). I expect as people re-evaluate their concerns with the recession and as there is global tension easing between the US and China, and Brexit nearing its end, the treasury rate will increase in 2020 unless economic conditions get worse.

What was J.P. Morgan's price/earnings ratio in the past quarter?

12.62

If one mile is 1.6km, how many kilometres are in eight miles?

12.8 *

Sum of all numbers between 1 and 50

25 pairs x 51 sum = 1275

What is the expected value of a roll of a dice?

3.5

What is the sum of the numbers from one to 100?

50 pairs x 101 sum = 5,050

If you had a Rubik's cube with 10 little squares on each side, and peeled off the outer layer, how many little cubes would you end up with?

8^3 = 512

Tell me a time you improved the efficiency of something( at school, prior internship, etc)

@ MHG, I noticed that the company was buying personalized company products (blankets, bracelets, shirts) from multiple companies when they could have been buying solely from one company. When I told my boss, she said the other companies had slightly lower shipping fees than the one that carried all of the items. I called this company and was able to find out they offered discounts when you bundled items and mass produced them. This way MHG only had to rely on the one supplier and it brought down costs.

Can you describe how swaps work?

A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. For example, a company paying a variable rate of interest may swap its interest payments with another company that will then pay the first company a fixed rate.

Why J.P. Morgan?

Besides being one of the top financial service companies in the world, I think JP Morgan offers a culture that embraces diversity, and inclusivity which is why it is so successful. I would be honored to work under the best of the best and learn from the people who have been so successful in such a competitive industry while also being able to promote the culture that JP Morgan is built on. I want to be challenged every day while also learning every step of the way.

What is the current yield on a 10 yr Treasury bond?

CHECK

Where did the oil price close yesterday?

CHECK

Where's the S&P trading?

CHECK

Describe a project you previously worked on with a team. What made the team successful?

Engineering- We were tasked with building a contraption that was equal part building and coding. We split into 2 subgroups to work but communicated every class about what we had done and how the two parts fit together. We ended up being the only team that successfully completed the task and I strongly believe it was because we knew how to allocate our abilities the best and we ensured constant communication so nobody was left in the dark.

What is wrong with the US economy?

Even though the economy is doing well, there are a few points of concern. U.S. economic growth slowed to 1.9% in the third quarter, dampened by a dip in business investment and federal spending // Just a lot of uncertainty in the economy: Trade wars, impeachment, flat corporate earnings and a looming presidential election. Add to that muddy mix a slowdown in global growth and central banks worldwide cutting interest rates to shore up sluggish economies. // Record high corporate debt (reminiscent of 2008 financial crisis in housing market debt) threatens the bond market, the stock market, and the broader economy, in the opinion of several respected analysts. And looking abroad, the situation is even worse, with the global economy slowing and the International Monetary Fund warning there's little ammunition left to fight a possible recession.--> drop in stock prices from this high

You have a 3 liter and a 5 liter bottle. How do you measure 4 liters of water exactly?

Fill the three liter bottle and pour into the 5 liter bottle. Fill the 3 liter bottle again and fill the rest of the 5 liter bottle so there is 1 liter in the 3. Dump out the 5 liter, fill with the one liter, fill up the 3 liter again and pour into the 5 liter - there will be 4 liters.

Which are the most important/interesting subjects within FX markets at the moment?

Forex is the largest and most liquid market in the world. The U.S. dollar itself has been under pressure since the Federal Reserve cut rates last Wednesday and left the door open to more if needed, while all but ruling out the risk of a tightening. "Global policy rates are converging once again at the bottom. That probably means less volatility among currencies as interest rate differentials shrink and the likelihood of any change in policy diminishes," said Marshall Gittler, an analyst at ACLS Global. "It's also likely to mean a weaker USD, CAD, AUD and NZD as these are the currencies with the highest interest rates currently and therefore the greatest leeway to cut rates. This is probably why USD and CAD were the big losers last week." Equally, the main gainers last week were the Swedish and Norwegian currencies as interest rates in both countries are seen on hold or even rising in coming months.

How do you prioritize tasks and projects when scheduling your time? Give some examples.

How much is this task worth? When is it due? How much time is it going to take? What is most important to me?

What do you think this job will entail exactly?

I think it's primarily about ensuring solid financial statements to help ensure the company is healthy and working efficiently so that the banks goals can be met. -advising and supporting different departments of the bank - looking for areas of potential improvement - critical insight for decision making

What's the probability that a pregnant woman has a baby boy?

I think there are statistics saying boy births are slightly more common than girl births, but i'd say the probability is around 50%

Describe a time when you received difficult feedback. How did you respond?

I worked at a small gelato store and I was often in charge of closing the store for the night. One day my boss had told me that I had done a poor job cleaning the night before and she was disappointed because it took her longer to open that morning. Luckily she knew this was a one time problem but it was definitely difficult to hear because I worked really hard at the job. I told her I would definitely take her words into account and not let her down again. I made a checklist of all the tasks I had to make sure to get done so that I didn't miss anything for the next times I closed.

Describe your experiences with creating presentations for school, internships or volunteer activities. How did you know your presentation was successful?

I would first say I measure success by just feeling personally confident in my actions, not always just grade wise. I had to make a presentation for my french class and already I know I am not the greatest presenter (something I am really working on) much less in another language. I put in a lot of time towards knowing exactly what I wanted to say so I would be prepared and after I presented I had never felt better about a presentation. I knew it was successful because I felt very confident in my work and overall product even though I didn't get the absolute highest grade.

You're about to give a PowerPoint presentation in a meeting and you notice it has a mistake in it. What do you do?

If it's a small mistake, then I would try and fix it quickly before. If I can't fix it quickly, and it's a simple error that doesn't take away from the rest of the presentation, I would still present but be truthful and give the correct information. If it is a big mistake, I would delete the slide but try and note the important parts the are correct so I could spread those points across the other slides. The next time around I would be much more thorough in checking my presentation before the meeting.

Would you use EBIT or EBITDA to value a capital-intensive company?

In capital-intensive industries like oil and gas, mining, and infrastructure, EBITDA is a near meaningless metric. The extensive amount of capital spending required means that EBITDA and cash flow will often be very far apart. In this case, EBIT may be more appropriate, as the Depreciation and Amortization captures a portion of past capital expenditures. For a company or industry with relatively low capital expenditures required to maintain their operations, EBITDA can be a good proxy for cash flow.

A company's depreciation expense goes up by $100. How does this affect its three financial statements?

Income Statement - Increase in expense by $100 to represent the increase in depreciation. Pre-tax income is down by $100. After tax (assuming a 40% tax rate), net income will be down $60. Statement of Cash Flows - Net Income flows onto the statement of cash flows as down $60. Then depreciation is added back due to the fact that it is a non-cash expense. -$60 + $100 = cash up $40 Balance Sheet - Cash is up by $40 on the assets side but PP&E is down by $100 as depreciation is making that less valuable. Assets are down by $60. On the SE and Liabilities side, net income flows into retained earnings, making it down $60.

Who is our CEO? CFO?

Jamie Dimon, Jennifer Piepszak

A natural disaster occurs in Manhattan. What impact does this have on markets?

One of the biggest problems for areas affected by natural disasters is business disruption. With road, communication infrastructure and building damage, it's not uncommon for local businesses to be shut down for some time after the disaster occurs. Some smaller businesses may not ever be able to recover and will close their doors. After the devastation of Hurricane Harvey in 2017, many restaurants never reopened because they couldn't afford the cost to renovate or lost so much business from being closed that they couldn't make themselves profitable again.When large companies and industries are impacted by natural disasters, there is often a negative ripple effect felt by consumers and investors. (OIL Refinery example, Mexico, reduction in available oil) . Commodity Price increases. These kinds of price increases aren't just limited to market-traded commodities. When natural disaster strikes, scarcity rules, and regular staples like food, merchandise and even housing can become commoditized as a result

What are assets on the balance sheet of a financial institution?

Property Trading assets Loans to customers Deposits to the central bank Cash/Reserves Bonds

What will your income statement look like for a coffee shop?

Sales from coffee/products, COGS would be the ingredients, milks, coffee beans, syrups, etc., expenses of wages, utilities, rent, maybe advertising, potential depreciation of coffee machines/refrigerators

Have you ever had a project not go according to plan? What happened? What did you do to get it back on track?

Stock pitch valuation - I did a valuation for VMware through comparable companies and I was struggling because our pitch was a buy and based on my valuation, the stock was actually being overvalued. I had to decide whether to choose a whole other set of companies or find a way to defend our investment thesis against the valuation.

How many people set foot in the Roman Colosseum on an average day in August?

Summer months will probably be the busiest & since it is one of Rome's greatest tourist attractions, I would estimate about at least 20,000 people a day (600,000 monthly visitors in aug... /30 - 20,000)

How many people set foot in the Vatican during an average day in July?

Summer months will probably be the busiest & since it is one of Rome's greatest tourist attractions, I would estimate about at least 20,000 people a day (700,000 monthly visitors in aug... /30 ~ 25,000)

What's the terminal growth rate? How do you calculate it?

Terminal growth rate is an estimate of a company's growth in expected future cash flows beyond a projection period and represents an assumption that the company will continue to grow (or decline) at a steady, constant rate into perpetuity. Terminal Value = (FCF X [1 + g]) / (WACC - g) Whereas, FCF (free cash flow) = Forecasted cash flow of a company g = Expected terminal growth rate of the company (measured as a percentage) WACC = Weighted average cost of capital

What happens to enterprise value when you issue or repurchase shares?

Theoretically nothing should happen to the EV

What is a treasury bond?

Treasury bonds are U.S. government debt securities with a maturity range between 10 and 30 years and which are marketable and set at a fixed interest rate. T-bonds pay semiannual interest payments until maturity, at which point the face value of the bond is paid to the owner

Describe a task that really tested your analytical abilities.

VALUATION - I did a valuation for VMware through comparable companies and I was struggling because our pitch was a buy and based on my valuation, the stock was actually being overvalued. I had to decide whether to choose a whole other set of companies or find a way to defend our investment thesis against the valuation.

What's more expensive - debt, or equity?

When financing a company, "cost" is the measurable cost of obtaining capital. With debt, this is the interest expense a company pays on its debt. With equity, the cost of capital refers to the claim on earnings provided to shareholders for their ownership stake in the business. The Cost of Equity is generally higher than the Cost of Debt since equity investors take on more risk when purchasing a company's stock as opposed to a company's bond. Therefore, an equity investor will demand higher returns (an Equity Risk Premium) than the equivalent bond investor to compensate him/her for the additional risk that he/she is taking on when purchasing stock. -The stock market has a higher volatility of returns than the bond market -Capital gains are not a guarantee

What's the connection between interest rates and equity prices?

When interest rates are rising, both businesses and consumers will cut back on spending. This will cause earnings to fall and stock prices to drop

Name the difference between JPMC's consumer and wholesale departments.

Wholesale banking refers to that banking which targets corporate or big custom. The U.S. consumer and commercial banking businesses serve customers under the Chase brand.

Tell me about a time when you were confused about details of a request. What steps did you take to clarify things?

Writ 150 - I did not understand the scope of one of our prompts and being the detail-oriented person I am, I often have to clarify on exactly what (in this case) my professor wanted. I made a list of questions I wanted to ask surrounding the broad topic and I scheduled a conference with my teacher so that I could fully understand what she was looking for.

What's J.P. Morgan's share price today?

check

What's the square root of 0.1?

~ 0.32

What's the square root of two?

~1.4