Private Equity Application Quiz!

13 Questions | Total Attempts: 38

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Private Equity Application Quiz!

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Questions and Answers
  • 1. 
    Investment banking is typically an advisory/capital raising service, while private equity is an investment business.
    • A. 

      True

    • B. 

      False

  • 2. 
    Which of the following is among the most common investment strategies in private equity? 
    • A. 

      Leveraged buyouts

    • B. 

      Audit & assurance

    • C. 

      Venture capital

    • D. 

      Distressed investmets

    • E. 

      Corporate banking

  • 3. 
    Select the most appropriate description of the strategy described below: A company acquires a controlling interest in another company using mostly debt to finance the purchase. The acquiring company (or companies) normally put up a very small amount of equity to close the deal, as well as a very large amount of debt. The assets of the company that is being acquired are used as collateral for the debt being used to finance the transaction. If the deal goes through, then a large amount of debt that was used to complete the transaction will be paid off using the cash flow or assets of the acquired company.
    • A. 

      Growth capital

    • B. 

      Venture capital

    • C. 

      Investment banking

    • D. 

      Leveraged buyout

  • 4. 
    The breadth of IBISWorld's Industry report collection helps private equity clients by giving them access to a large collection of supply chain information. How is this most useful to private equity clients?
    • A. 

      Helps them make well-informed procurement decisions.

    • B. 

      Introduces them to industry jargon.

    • C. 

      Helps them to "stress-test" their portfolio.

    • D. 

      Allows them to get the complete picture of a firm’s business environment.

  • 5. 
    Which of the following are questions that help BDMs understand the needs of private equity prospects? 
    • A. 

      Do you have any uncommitted funds at the moment?

    • B. 

      How do your Credit Analysts assess whether the loan applicant’s evidence is credible?

    • C. 

      What marketing tools are you currently using?

    • D. 

      How do you monitor your portfolio of investments?

    • E. 

      How many prospects do you research to identify attractive business opportunities?

  • 6. 
    Which of the following is the least likely objection to be raised by a private equity prospect?
    • A. 

      We do all our industry research in-house

    • B. 

      Your reports are not niche enough for the industries we target

    • C. 

      The industry reports do not have the level of detail that we require

    • D. 

      We never have any use for industry information

  • 7. 
    Which of the following best describes mezzanine investment?
    • A. 

      Refers to debt capital that gives the lender the right to convert to an ownership interest in a firm if the loan is not paid back on time and in full.

    • B. 

      Refers to investments in the equity or debt of temporarily financially stressed firms (that are sound over the medium-term).

    • C. 

      Refers to raising acquisition debt against the future cashflow of the company, which is then used to make interest and principal payments.

    • D. 

      Refers to funding a company prior to its start up, or during its early life cycle.

  • 8. 
    On average, a private equity group looks at around 100 opportunities to make one deal. 
    • A. 

      True

    • B. 

      False

  • 9. 
    When economic conditions are good, private equity groups are more likely to venture outside their niche – providing us an opportunity to sell. 
    • A. 

      True

    • B. 

      False

  • 10. 
    How do private equity firms generally receive a return on their investment?
    • A. 

      An IPO, when the firm is offered for sale to the public

    • B. 

      Merger or acquisition, when a company is sold for cash or shares in another company

    • C. 

      Transfer pricing, the setting of the price for goods and services sold between controlled legal entities within an enterprise

    • D. 

      Recapitalization, when cash or debt is raised against future cash flow

  • 11. 
    If a private equity prospect asks who IBISWorld's main competitors are, which of the following could you include in your response? 
    • A. 

      IBISWorld doesn't have a direct competitor - there are similar companies but none with the breadth and range of Industry research we produce.

    • B. 

      There are no other companies producing Industry research.

    • C. 

      Clients say First Research meets certain needs, but is designed for sales teams. IBISWorld is more tailored to PEG needs.

    • D. 

      All of the analysis that we produce can be found on the Internet for free, but it would take you a few hours to put it together.

  • 12. 
    Read the following information about how we help Harvest Capital Credit, one of our private equity clients: Key reports and sections: iExpert, Key External Drivers, Key Success Factors, and Key Statistics. Unbiased information: Uncover industry threats and opportunities, and expected future performance from a credible and unbiased source, that a company may not be forthcoming about. Crosscheck applicant’s books: Applications can be biased as trying to make the company look the best it can, our reports help to paint the whole picture for industry performance to make a more informed decision. Which of the following is not a key way that IBISWorld helps Harvest Capital Credit?
    • A. 

      Applicants will try to portray themselves in the best light possible, and IBISWorld reports help HCC make a more informed decision

    • B. 

      IBISWorld Industry data, in conjunction with client metrics, helps HCC to price loans

    • C. 

      IBISWorld provides a credible and unbiased source to help uncover threats and opportunities

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