K234-ind-au - Investment Banking Applications
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
- 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 projectionsExplanation
A teaser is a document that provides an overview of a business opportunity to potential investors, giving them a brief introduction to the opportunity without disclosing sensitive financial information or projections. On the other hand, a Confidential Information Memorandum (CIM) is a more detailed document that includes comprehensive financial information and projections about the opportunity. Therefore, the main difference between a teaser and a CIM is that a teaser is less detailed and does not contain financial information and projections, while a CIM provides more comprehensive information, including financial details.Rate this question:
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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. FalseExplanation
False. 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 capital markets.Rate this question:
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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 capitalExplanation
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 in Mergers & Acquisitions, providing guidance and support during the process. Investment banks are also involved in trading derivatives and equity securities, which involves buying and selling these financial instruments on behalf of clients. Lastly, they assist individuals, corporations, or governments in raising capital, which includes helping them secure funding through various means such as issuing bonds or stocks.Rate this question:
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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 dealExplanation
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 investment bank is assisting the client in selling their business or assets. The Teaser is a brief document that provides an overview of the opportunity to potential buyers, while the Confidential Information Memorandum contains detailed information about the business, financials, and other relevant details. These documents are prepared to attract potential buyers and provide them with the necessary information to evaluate the opportunity.Rate this question:
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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 teaserExplanation
IBISWorld generally has the greatest impact on the steps of the M&A process that involve gathering and analyzing information. This includes preparing the Confidential Information Memorandum, conducting due diligence, submitting an indication of interest, and preparing, sending, and receiving teasers. These steps require a deep understanding of the industry and market data, which is a key expertise of IBISWorld.Rate this question:
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- 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. TrueExplanation
Sell-side Merger & Acquisition tends to be more "generalist" than buy-side, as it involves providing advisory services to clients who are looking to sell their businesses or assets. In sell-side M&A, the focus is on understanding the overall market and finding potential buyers from various industries. On the other hand, buy-side M&A involves acquiring businesses or assets on behalf of clients, and it often requires industry-specific knowledge to identify suitable targets. Therefore, the statement that sell-side M&A is more "generalist" than buy-side M&A is true.Rate this question:
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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 AssociationExplanation
IBISWorld has been a platinum sponsor of the Association for Corporate Growth, the Alliance of Merger & Acquisition Advisors, and the Risk Management Association. However, the Commercial Finance Association is not one of the organizations that IBISWorld has been a platinum sponsor of.Rate this question:
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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
problemsExplanation
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 in-depth analysis and insights into various industries, including their financial performance, trends, and challenges. By identifying industries facing short-term problems, Investment Banks can make informed decisions about potential investment opportunities or risks. This information allows them to target industries that may offer short-term opportunities for profit or industries that may require assistance in overcoming their problems.Rate this question:
- 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 ValuationsExplanation
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 using IBISWorld Industry Reports, Investment Banks can gather valuable information about the industry in which a business operates, including market trends, competition, and growth potential. This information is crucial in determining the value of a business and making informed investment decisions.Rate this question:
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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 important because they provide insights into the sources and methods used by investment banks to gather information and prepare for client interactions. By understanding these aspects, we can better understand the needs and priorities of investment banks in terms of information and preparation.Rate this question:
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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 PlayersExplanation
Investment banks would likely use the "Major Players" section of the IBISWorld Industry Report in buy-side and sell-side transactions to ensure they are familiar with each key player in the industry. This information is important for competitive bids mandated by financial sponsors, as it helps investment banks understand the competitive landscape and make informed decisions during the transaction process.Rate this question:
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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 answer suggests that while it may not be necessary to read all 700 reports, having a thorough understanding of supply chains and industry interaction is crucial in order to properly analyze and contextualize an industry. This response acknowledges the importance of having a comprehensive understanding of the industry, while also recognizing that it may not be feasible to read every single report.Rate this question:
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Current Version
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Mar 15, 2023Quiz Edited by
ProProfs Editorial Team -
Jul 14, 2016Quiz Created by
Damian Mills
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