K234-ind-ny - Investment Banking Applications

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| By Damian Mills
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K234-ind-ny - Investment Banking Applications - Quiz

Please complete the following self-assessment quiz - Test your own knowledge but if necessary please refer back to the training materials, manuals and/or other relevant resources to complete the questions


Questions and Answers
  • 1. 

    What is the main difference between a teaser and a Confidential Information Memorandum (CIM)?

    • A.

      They are the same thing

    • B.

      A teaser is not as detailed as a CIM, which contains financial information and projections

    • C.

      A CIM is not as detailed as a teaser, which contains financial information and projections

    • D.

      A CIM provides information, while a teaser is a legally binding contract

    Correct Answer
    B. A teaser is not as detailed as a CIM, which contains financial information and projections
    Explanation
    A teaser is a document that provides a brief overview of a business opportunity to potential investors. It is meant to generate interest and attract potential buyers or investors. On the other hand, a Confidential Information Memorandum (CIM) is a more detailed document that provides comprehensive information about the business, including financial information and projections. It is typically shared with interested parties who have signed a non-disclosure agreement and have expressed serious interest in pursuing the opportunity further. Therefore, the main difference between a teaser and a CIM is the level of detail and information provided in each document.

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  • 2. 

    An Investment Bank is generally divided into industry coverage and product coverage groups. Product coverage groups focus on specific sectors, such as healthcare, industrials or technology. True or False?

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    An Investment Bank is generally divided into industry coverage and product coverage groups. Industry coverage groups focus on specific sectors, such as healthcare, industrials or technology, while product coverage groups focus on specific financial products, such as mergers and acquisitions, debt financing, or equity financing. Therefore, the correct answer is False.

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  • 3. 

    Which of the following are among the main services offered by Investment Banks? Mark the four options that apply.

    • A.

      FICC services (fixed income instruments, currencies and commodities)

    • B.

      Low-value savings accounts

    • C.

      Assist/advise Mergers & Acquisitions

    • D.

      Residential home loans

    • E.

      Trading derivatives and equity securities

    • F.

      Assist individuals, corporations or governments in raising capital

    Correct Answer(s)
    A. FICC services (fixed income instruments, currencies and commodities)
    C. Assist/advise Mergers & Acquisitions
    E. Trading derivatives and equity securities
    F. Assist individuals, corporations or governments in raising capital
    Explanation
    Investment banks offer a range of services including FICC services (fixed income instruments, currencies and commodities), which involve trading and managing these financial instruments. They also assist and advise on Mergers & Acquisitions, helping companies navigate the complex process of merging or acquiring other businesses. Investment banks are also involved in trading derivatives and equity securities, which involves buying and selling these financial instruments on behalf of clients. Lastly, investment banks assist individuals, corporations, or governments in raising capital, helping them secure funds for various purposes such as expanding their business or funding infrastructure projects.

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  • 4. 

    When will an Investment Bank prepare a Teaser and Confidential Information Memorandum for a client?

    • A.

      For a sell-side deal

    • B.

      For a buy-side deal

    Correct Answer
    A. For a sell-side deal
    Explanation
    An Investment Bank will prepare a Teaser and Confidential Information Memorandum for a client in a sell-side deal. In a sell-side deal, the client is looking to sell their business or assets, and the Investment Bank assists them in finding potential buyers. The Teaser is a brief document that provides an overview of the business or assets being sold, while the Confidential Information Memorandum is a more detailed document that provides comprehensive information about the business or assets. These documents are prepared to attract potential buyers and provide them with the necessary information to make informed decisions about the deal.

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  • 5. 

    Mergers & Acquisitions (M&A) are a service offered by Investment Banks, and a key area that IBISWorld can help with. Which of the following steps in the M&A process does IBISWorld generally have the greatest impact on? Mark all four that apply.

    • A.

      Sign confidentiality agreement

    • B.

      Prepare Confidential Information Memorandum

    • C.

      Conduct due diligence

    • D.

      Submit indication of interest

    • E.

      Prepare, send/receive teaser

    Correct Answer(s)
    B. Prepare Confidential Information Memorandum
    C. Conduct due diligence
    D. Submit indication of interest
    E. Prepare, send/receive teaser
  • 6. 

    Which of the following position types do we target when prospecting an Investment Bank? Mark all five that apply.

    • A.

      Research Analysts

    • B.

      Associates

    • C.

      Head of Research

    • D.

      Home Loan Specialists

    • E.

      Partners/Managers

    • F.

      Library/Knowledge Managers

    Correct Answer(s)
    A. Research Analysts
    B. Associates
    C. Head of Research
    E. Partners/Managers
    F. Library/Knowledge Managers
  • 7. 

    Sell-side Merger & Acquisition tends to be more "generalist" than buy-side, in which an industry specialist is often used. True or False?

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    The explanation for the given correct answer is that in sell-side M&A, the focus is on providing advisory services to clients who are looking to sell their businesses. As a result, sell-side M&A professionals need to have a broad understanding of various industries and be able to work with clients from different sectors. On the other hand, in buy-side M&A, the focus is on acquiring businesses, which often requires a more specialized industry knowledge to identify and evaluate potential targets. Therefore, buy-side M&A professionals often rely on industry specialists to assist in the acquisition process.

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  • 8. 

    IBISWorld has been a platinum sponsor of several organizations related to Merger & Acquisition activity. Which of the following is not one of them?

    • A.

      Association for Corporate Growth

    • B.

      Commercial Finance Association

    • C.

      Alliance of Merger & Acquisition Advisors

    • D.

      Risk Management Association

    Correct Answer
    B. Commercial Finance Association
    Explanation
    The correct answer is Commercial Finance Association. This means that IBISWorld has not been a platinum sponsor of the Commercial Finance Association.

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  • 9. 

    Complete this sentence: IBISWorld Industry Reports can help Investment Banks with Target Short Listing, particularly by identifying profitable industries or those with short-term _ _ _ _ _ _ _ _.

    Correct Answer
    problems
    Explanation
    IBISWorld Industry Reports can help Investment Banks with Target Short Listing, particularly by identifying profitable industries or those with short-term problems. These reports provide comprehensive and detailed analysis of various industries, including their financial performance, market trends, and potential risks. By identifying industries with short-term problems, Investment Banks can make informed decisions about which industries to target for investment or advisory services. This information allows them to assess the potential risks and opportunities associated with each industry, ultimately helping them in their shortlisting process.

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  • 10. 

    IBISWorld Industry Reports can help Investment Banks by providing unbiased research to benchmark against for valuation. Where is this most useful?

    • A.

      Target Short Listing

    • B.

      Pitch Book and CIM

    • C.

      Due Diligence and Deal Closure

    • D.

      Business Valuations

    Correct Answer
    D. Business Valuations
    Explanation
    IBISWorld Industry Reports are most useful for Investment Banks in the process of Business Valuations. These reports provide unbiased research that can be used as a benchmark for valuation purposes. By utilizing IBISWorld reports, Investment Banks can gain valuable insights into various industries, market trends, and key factors affecting business performance. This information helps them accurately assess the value of a business and make informed investment decisions.

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  • 11. 

    Which of the following are key questions that help us understand the needs of investment banks? Mark all three that apply.

    • A.

      Where do you get the industry piece for your pitch books?

    • B.

      What sources do you use for first-stage research?

    • C.

      Are you interested in pursuing consulting assignments outside your key market sectors?

    • D.

      How do you prepare for face-to-face meetings?

    Correct Answer(s)
    A. Where do you get the industry piece for your pitch books?
    B. What sources do you use for first-stage research?
    D. How do you prepare for face-to-face meetings?
    Explanation
    The three key questions that help us understand the needs of investment banks are: Where do you get the industry piece for your pitch books?, What sources do you use for first-stage research?, and How do you prepare for face-to-face meetings? These questions are relevant as they focus on gathering information about the sources and methods used by investment banks in their work, which can provide insights into their needs and strategies.

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  • 12. 

    Which IBISWorld Industry Report sections is likely to be used by Investment Banks in the following application:"Used in buy-side and sell-side transactions - e.g. to ensure they are across each key player in the industry for the purposes of competitive bids mandated by ‘financial sponsors.’"

    • A.

      Industry at a Glance

    • B.

      Operating Conditions

    • C.

      Industry Outlook

    • D.

      Major Players

    Correct Answer
    D. Major Players
    Explanation
    Investment banks would likely use the "Major Players" section of the IBISWorld Industry Report in buy-side and sell-side transactions to ensure they have knowledge of each key player in the industry. This information is important for competitive bids mandated by financial sponsors as it allows investment banks to understand the competitive landscape and make informed decisions.

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  • 13. 

    What is generally the best way to respond to a prospective Investment Bank client when they say that they only look at a few industries per year?

    • A.

      "We don't expect you to read 700 reports, but the ability to understand supply chains and industry interaction is vital to putting an industry in context."

    • B.

      "We add value with our revenue and profit forecasts, allowing an independent estimate of future value."

    • C.

      "First Research meets certain needs, but is designed for sales teams. IBISWorld is more tailored to investment banks."

    • D.

      "We cannot tell you if a specific company will be successful, but we can tell you what is takes to make a successful company in a given industry."

    Correct Answer
    A. "We don't expect you to read 700 reports, but the ability to understand supply chains and industry interaction is vital to putting an industry in context."
    Explanation
    The correct answer emphasizes the importance of understanding supply chains and industry interaction when analyzing an industry. It acknowledges that reading all the reports may not be feasible, but highlights the need to grasp the broader context of the industry. This response suggests that having a comprehensive understanding of how different factors within an industry interact with each other is crucial for making informed investment decisions.

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Nov 30, 2015
    Quiz Created by
    Damian Mills
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