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Questions & Answers: Chapter 1 – Overview of Investment Banking Q1. What were the two main arguments for rejoining investment banks and retail deposit-taking banks that led to the passing of the Gramm-Leach-Bliley Act? A. The !rst argument is that […]

Chapter 10 – Investment Banking Careers, Opportunities, and Issues Q1. What are core differences between Investment Banking and Sales & Trading career paths? A. IB typically involves longer working hours than Sales & Trading, but o en slightly Q2. Describe […]

Chapter 11 – Overview of Hedge Funds Q1. Unlike most mutual funds, why are hedge funds able to charge performance fees on top of management fees? Q2. Describe side pockets. A. Side pockets are where hedge funds house illiquid investments […]

Chapter 12 – Hedge Fund Investment Strategies Q1. During a financial crisis, the yield curve flattens and the yield on the 30-year Treasury bond reached a new low. As a hedge fund manager, suppose you think the market has overreacted […]

Chapter 13 – Shareholder Activism and Impact on Corporations Q1. Which type of company makes an easier target for an activist investor and why: a company that has adopted a majority voting standard, or a company with a plurality voting […]

Chapter 14 – Risk, Regulation and Organizational Structure Q1. Which two core hedge fund activities can either create incremental risk or act as a risk mitigator? A. Short selling and derivatives: both can be used for either speculating or hedging. […]

Chapter 15 – Hedge Fund Issues and Performance Q1. Describe the key characteristics and benefits of hedge funds A. Key characteristics: lower registration/reporting requirements compared to mutual funds; act as an investment manager Q2. How has the perception of hedge […]

Chapter 16 – Overview of Private Equity Q1. Are private equity firms financial buyers or strategic buyers and why? Which type of buyer should generally be able to pay more in an M&A auction and why? Why might that not […]

Chapter 17 – LBO Financial Model Please also refer to questions in the accompanying case study, “Toys R Us” Q1. What does an LBO analysis include, what does it solve for and what question is answered by the analysis? A. […]

Chapter 18 – Private Equity Impact on Corporations Q1. What are some measurable benefits from private equity ownership of corporations? A. Better management practices; higher productivity and correspondingly higher Q2. What were the World Economic Forum’s principal conclusions regarding private […]

Chapter 19 – Organization, Compensation, Regulation and Limited Partners Q1. What is a difference between the organizational structure of private equity funds and hedge funds? A. Private equity funds are organized as closed-end funds whereas hedge funds are Q2. What […]

Chapter 2 – Regulation of the Securities Industry Q1. Following the 1929 Stock market crash, Congress passed a series of Acts to regulate the securities industries. Name four of these Acts and brie!y describe their purpose. A. The four Acts […]

Chapter 20 – Private Equity Issues and Opportunities Q1. Describe the benefits and risks of an equity buyout compared to a leveraged buyout. A. If companies can be acquired at a low enough cost, private equity funds may be able […]

Chapter 3 – Financings Q1. What type of securities offerings do not need to be registered with the SEC? A. 144A private placements to QIBs Q2. List the three types of bank participants in an underwriting syndicate and their core […]

Chapter 4 – M&A Q1. Provide definitions for strategic buyers and financial buyers in a prospective M&A transaction. A. Strategic buyers are companies in the same industry as the target companies that they aempt to acquire. The acquirer has a […]

Chapter 5 – Trading Q1. When might an investment bank decline participation in an underwriting and why? A. When the perceived risks of participation outweigh the expected underwriting fees. One possible risk is if the trader believes demand for new […]

Chapter 6 – Asset Management, Wealth Management, and Research Q1. What is the difference between asset management and wealth management? A. AM provides fund investment services to individuals, families and institutional investors. Assets are managed on a fund level. WM […]

Chapter 7 – Credit Rating Agencies, Exchanges and Clearing and Selement Q1. Compare the different roles provided to the investor community by credit rating analysts and sell-side research analysts. A. Credit rating analysts help investors assess the credit risk of […]

Chapter 8 – International Banking Q1. What are the benefits of issuing Eurobonds? Investing in Eurobonds? A. An issuer can minimize the regulatory impact of issuance and minimize Q2. Why are most corporate Eurobond issuers large, multinational corporations? A. Eurobond […]

Chapter 9 – Convertible Securities and Wall Street Innovation Q1. Aer an initial hedge is in place, what do hedge fund investors in convertible bonds do with shares of the underlying stock when the stock price increases or decreases? A. […]

Questions & Answers: Chapter 1 – Overview of Investment Banking Q1. What were the two main arguments for rejoining investment banks and retail deposit-taking banks that led to the passing of the Gramm-Leach-Bliley Act? Q2. Describe the three principal businesses […]