Bloomberg Assessment Test

Here is everything you’d want to know.

https://www.bloomberginstitute.com/

BAT is well-intentioned as it does give a chance to set a level playing field for students from different universities. At least at the companies that are going to put some weight on these test scores. But that depends on if/when the BAT goes live, if/when it gets some acceptance and if/when students nailing the test also do well at the job..

BAT flyer claims that no preparation is required!! Oh well, I think they meant no prep required for this beta field test, as the scores don’t matter..maybe.. but yeah they do have a body of knowledge they cover, so there is a lot to prepare.

….and I am sure there will be 100s of test prep books flooding the market once BAT goes live.

BTW based on kind of questions that appeared in the test, I wonder how the science and other undergrads are going to do well without prep.

Unless the test is different for students with different backgrounds, but then…. whats the point?

So assuming its all standard ( well they have not claimed it to be a standardized test btw), here is what you need to know.

Most concepts are covered in our finance and related courses and the question are centered around those concepts. There are many trick questions to test your grasp of concepts. There are many confusing choices. As with any standardize test, need to be careful reading the question.

The test is divided into following sections, I attempt to highlight the concepts covered in the tests as far a I remember.

Economics :
Supply function, demand function, equilibrium, price function, relations, curves, marginal costs, opportunity costs, externalization, internalization, global trade, GDP, GNP, balance of trade, trade deficit, monetary policy, fiscal policy, economic value, monetary value, real values and nominal values, inflation and its effects and prevention, deflation and its effects and prevention. Role of governments, role of federal banks, sovereign debt, national debt, exports, imports and currency valuation.

Know leading economic indicators.

There are few questions that need calculations. You can only use calculator in your computer, hope they allow a regular calculator in real tests.

Financial Statement Reporting and Analysis:
Know your accounting. Balance sheets, Income statements and cash flow statements.
Know your ratios. What items on BS and IS affect those ratios and how ( up/down/no change)
Know What item goes where ( which statement) and how it affects other items on same or other statements.
Net working capital and what affects it.
Retained earnings and what affects it.

Don’t think there were any calculations in this section.

Valuation:
This seemed like the biggest topic of the exam. May be because valuation questions were also covered in other sections of IB.
Know different valuation methods, DCF, comparable, LBO etc. Which is preferred when. What information would you need for each of those valuation methods.
Know DCF concepts in detail, FCF analysis, discount rate, WACC, cost of debt, cost of equity.
Understand clear differences between EBIT/EBITDA/Operating cash flow/free cash flow and operating income/ gross income/ net income

Total Enterprise value. ( V=E+D-C)
Standard ratios used in comparable methods, which is best in any given situation.
Start up valuation, valuation of firm with no growth but good cash flow etc etc.


Investment Banking – Corporate Finance and Financial Advisory , Investment Banking – Capital Markets Issuance / Syndication, Investment management

Bond markets, equity markets. If you are investor or advisor to your clients.
What affects bond markets. What affects equity markets.
What is LIBOR, Fed fund rate, prime rate e.t.c
Money markets, commercial papers, treasury bills.
Chapter 2 of Investments is a good read.
Capital market questions. debt and equity

CAPM,alpha, beta and gamma.

Risk & returns, how to diversify risk, unavoidable risk, risk that cannot be diversified etc.
Note: Systematic risk cannot be divesified; Idiosynchratic risk can be diversified away.
Idiosynchratic risk that canont be diversified away is a diversification measure of a portfolio.
( CAPM, FAMA FRENCH model)
Mutual funds, hedge funds, index funds.

Portfolio theory, and IB concepts, Role of IB,

IPOs. What is some IPO buzz works, pitching etc etc
Understand whole process in detail and then more. There are many questions related to IPO.

Global Markets
Questions mostly around currency exchange rates, fluctuations.
Know global indices names

Verbal Skills : Read very small essays or news excerpts: Analyze what kind of writing it is.. Arguments, facts and examples, chronological event description etc etc

Math Skills : Use calculator you should be fine. Nothing surprising here.

Situational Judgment : Mostly you are worked up what would you do kind of question. Office situate with boss/ co-workers/new employees, c levels etc

Ethical Reasoning: just 1 question. you will have to be from another planet to screw this.
Tasks : Some event or news is given . You are a trader trading in money market/ bond market/equity market/ option market, what your reaction will be to those events, news etc.

UPDATE: If you have access to Bloomberg terminal, make yourself familiar with it, as most of the questions would show you the snapshot from the terminal and for the first timer the information on the screen could be overwhelming.

52 Responses to Bloomberg Assessment Test

  1. linda says:

    Thanks for the info. I’m taking the test tomorrow…

  2. Clark says:

    Are you penalized if you answer incorrectly rather than leaving it blank, if there is such a case? Also, when you say that we should be familiar with leading economic indicators, does that mean we should know where they are currently at or we should know what they represent and how they’re derived?

    Thanks.

    • sacbag says:

      Hi Clark. The test is not adaptive like GRE or GMAT, you could jump to any question within a section. So I would guess blanks and incorrect answers are treated the same, but its just a guess. Regarding the economic indicators, you just need to know what they are and what they imply.

  3. james says:

    The ‘
Ethical Reasoning’, I hope you chose the “do nothing” answer 🙂
    OR did you select “approach your manager about the illegal activity?”

    My philosophy is – keep silent and don’t interfere with the business. IF they are doing stuff illegal let the law sort them out.
    Not necessarily an answer “from another planet”

  4. Ashish says:

    Hi,

    Thanks for the post. That is great insight.
    What is KPM book ??
    Can you please mail me soft copy if you have on munuchwa01@gmail.com.

    Thanks.

  5. VIshnu says:

    u mention KPM, what book are u referencing?

  6. Chanda says:

    I am planning to take the test next week. Can you tell me if there are any realted sites or videos where I can find some sample proplems?

    Thanks

  7. sacbag says:

    Investments [Hardcover]
    Zvi Bodie
    Alex Kane
    Alan Marcus
    This is a good book.

  8. Visit testspot.net, here you can take tests anc competitions also you can create your own groups, where you can manage your tests and competitions this site has so many tests

  9. john says:

    just a question, are calculators allowed? if not, what kind of computing devices are we allowed to use?

  10. Akaash says:

    hey ..
    its well written
    I am going for the test in next three hours

  11. swat says:

    Were their numericals in the exam or theoretical questions on EBITDA, WACC, etc, other valuation topics?

  12. What is this KPM Book mentioned? Are you referring to Kane Bodie and Marcus?

  13. Joe says:

    This is a fantastic collection of info on the BAT! Thank you so much, sacbag!

  14. Neha says:

    hi Sachin..
    had few questions about BAT..
    can you please mail me ur e mail id..
    Thanks in advance

  15. Morpheus says:

    Hi!

    Do you know if you can take the exam more than once? I did it last week and i want to do it again. I have heard that you have to wait for an entire year to take it again.

    Thanks!

  16. Mark Chan says:

    Can someone explain how to derive the answer (Euro179) for the BAT sample question?

    III. Corporate Valuation
    As an investment banking analyst at Deutsche Bank, you are asked to perform a discounted cash flow analysis. Your associate provides you with the following information from the company’s operating model and asks you to calculate the present value of the company’s first five years of unlevered free cash flows assuming a 10% discount rate and a 40% tax rate.

    • sacbag says:

      Use below formulas:

      (1) EBIT= EBITDA – ( Depreciation & Amortization)

      (2) Unlevered FCF = EBIT(1-Tax) + Depreciation -CapEx – ΔNWC

      (3) NPV (FCF) should give you the answer.

      • Mark Chan says:

        Thank you very much for the help. I can’t seem to get the right answer (Euro179). I come up with the following unlevered FCF:
        FY+1=36.10
        FY+2=44.92
        FY+3=48.90
        FY+4=53.40
        FY+5=58.38
        Total unlevered FCF for five years = 241.70
        N = period, or 5 years
        I = interest rate, or 10% discount rate
        I get a present value of Euro 150.08
        The answer given is Euro 179.
        What am I doing wrong?

      • sacbag says:

        You need to add the NPV of each year’s FCF to get total NPV. You are adding all FCFs and then taking NPV of that.

  17. Mark Chan says:

    Thank you. I was able to get the answer.

  18. Chinedu says:

    Sorry guys, just a quick one, how did you sort out the amortization from (D&A)? (2) Unlevered FCF = EBIT(1-Tax) + Depreciation -CapEx – ΔNWC, how did apply this?

    • sacbag says:

      For free cash flow purposes, Depreciation and Amortization are considered together and hence terms “Depreciation” or “Depreciation & Amortization” are used interchangeably.

  19. mohit gupta says:

    can neone tell me what considered to be a good score..I got 51.13 and global average is 51.1

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  21. djvandebrake says:

    Hey, an someone help me with the practice questions? There are a few I think are wrong. The one about the government downgrade – shouldn’t the yield go up in this case, to reflect the higher risk (or, depending on how you look at it, lower price of bonds)? Risk aversion shouldn’t make the treasury yields fall! Also, the one about the percent of a company owned by new shareholders – if you are raising the same amount of money, then the number of new shares will depend on the price of the share… so why would the new shareholders own 25% of the company regardless of the number of shares sold in the IPO? Finally, the question about Catepillar buying Bucyrus… how do I even begin to do that one?

  22. sacbag says:

    US Treasury: This is slightly tricky. Remember the question is asking to select the MOST LIKELY answer. First its given in the question that the US treasury yield fell across the curve. This immediately implies higher demand. We need to figure why there might be a higher demand for the treasuries. Though it may seem counter-intuitive, the only likely answer is ” risk aversion and flight to quality”. Nothing else apply correctly.

    Why treasuries fell ? After the downgrade, there was a panic in the market, and panic translates into risk aversion. Investors started selling their holdings and started buying the so called risk free/low risk bonds, that is again the US treasuries . In other ways the downgrade did opposite to the theoretically expected impact on the treasury yields. ( But that is “given” in the question and not asked )

    For the next question: the ownership is determined by the value transferred to the new owner. If 25% of the value is $75m, then the value of the company is $300m. So regardless of the no.of shares and price per share, the new owners are buying a part of the company for $75m and that is 25% of the company. [Changing the share price will only change the no. of shares.]

    For the caterpillar question: Its a simple math. The EBITDA for Bucyrus was 537.5 million. Total paid by caterpliiar was $ 8.6 B. Divide $8.6billion by 537.5 million and you get 16.

    The final offer made by the acquirer should be the net value of the target company i.e. including the net debt. (cash on the balance sheet – outstanding debt).

  23. Hey guys I am taking BAT on saturday I am studying by solving exercises for CFA level 1 on investopedia tab professionals. Sachbag I agree with your answers, you work in financial industry??? I heared juniors have to work like 12-16 hours a day, like hell on earth in big banks:S Otherwise I am undegraduate and our dean even don’t let us to go, as exam is kind of too dificult and postgraduate students go, but I am taking it anyway, foreign exchange trading is my hobby and I am into it for like since I was 17. Questions are not that hard only problem is I am not that into stocks and bonds, but I covered everything in school so I just have to go trough again :S

    • sacbag says:

      If you are handling CFA L1 questions fine, you should do great on the BAT. Yes there is lot of long hours in early finance career, which most people say is worth it. Good luck!

  24. I don’t know myself I am 21 yrs old, now only 2 exams left to finish undergraduate, and I should seek for some job or go for post-graduate what I am most likely to do. If I get in big firms, higher salary and also longer hours to work, more pressure because of strong competition for your job position and you can be easily removed. On the other hand here in my country I can get some low income easy job with lots of free time. Now while I am young I just want get a job where I can travel a lot worldwide with my firm on meetings stuff like that as I want see world, moneys really not that motivation for me, as I am broke since I started university. I lost my scholarship for talented students and parents give me almost nothing:S 😦 Otherwise I am also doing sports 3-4 hours a day and I am also learning to mix music 🙂 Good luck guys on exam

  25. Finance Knowledge and Aptitude
    Corporate Valuation 100.0 46.17
    Financial Markets 80.0 42.48
    Investment Management 53.33 38.31
    Financial Statements Analysis 46.67 48.42
    Investment Banking 40.0 40.81
    Economics 40.0 49.84

    Career Skills

    Modeling Skills 80.0 56.01
    Situational and Ethical Judgment 70.0 62.62
    Analytical Reasoning 66.67 50.89
    Math Skills 60.0 56.66
    Verbal Skills 40.0 54.47

    Overall 61.29 49.7

    These are my results from BAT. Was very difficult mentaly for me, as I was running out of time in last hour, thts why I couldnt read texts on verbal but was flying trough them. I don’t know how I got 100% in corporate valuation, I am not expert in it at all :S Result is ok, but competition at top is so high I think 5500 ppl or more got better results than me out of 25000 so maybe I am in top 25%, but which means for job position nothing special. Got no connections or feedback, most likely will go to graduate degree in my country in October, even though I find school little boring 😀 Making big money is not that easy 😀

  26. rachit says:

    i am doing biotechnology engineering but am interested in a career in finance. i have been reading up on the subjects. Is BAT test open to all engineering branches and can i write the test .

    • sacbag says:

      please check with the entity offering the test. BAT is not suppose to be the key to an entry into a finance career.

  27. la says:

    guys, do you know how to get 10000 yen in math skills question.
    Thanks in advance

  28. sunny says:

    do someone have information about Bloomberg terminal? how to get prepare for this particular part of exam… and how to prepare for the graphs ??? plz help

  29. Gud job guyz, really found this blog helpful.

  30. Eddie says:

    Took this back in February and got a 49.4/100. Really difficult questions overall, in my opinion. I’m a straight economics major so I’d had no exposure to finance or accounting, and only a semester of intro macroeconomics. Math section is overall easy, got an 80 on that. Investment banking you have to know, I only got ~13 on that. Ethics, no idea how that’s graded, did average (~50).

  31. pup says:

    Is there a website we can compare our score to? And kinda see where we are on the board? as in strong in economy or finance or accounting?

    • sacbag says:

      you official score report should provide you that detail.

    • JR says:

      You can also use the Bloomberg Institute website under the employers section there is a search feature. You can do your own analysis of your results in any combination of categories, by your school, graduation year, continent, country, major of study, or the specific test sections. All you need to do is do a search by your using just your school and determine who you are in the list based on your total overall score and one category score. Then write down the B# on the top right of that section. Then each time you search just go down the pages until you reach your individual test score for that section. Then you’ll find youself in the listings. It allows you to do all sorts of numerical analysis of your performance in various situations.

  32. emma says:

    Hey, an someone help me with the practice questions? There are a few I think are wrong. The one about the government downgrade – shouldn’t the yield go up in this case,
    sat test preparation topic

    • Bryan Baruch College says:

      I looked at that question as well. Under normal circumstances a downgrade implies more risk which should lower prices and increase the yield.

  33. ranjan says:

    i have forgot to hit save answer in one section and directly hit the finish section . will the answers will be saved

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