Investment Banking - Intro Flashcards Preview

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Flashcards in Investment Banking - Intro Deck (44):
1

4 main areas of investment banking

a) Capital Market b) Advisory c) Trading & Brokerage d) Asset Management

2

What are the Critical Factors in investment banking

a) Government Regulations & Market Dynamics

3

Name the largest investment banks in the world

Barclays, Morgan Stanley, Goldman Sachs, Merrill Lynch, JP Morgan, Credit Suisse, CITI, Deutsche Bank

4

What's the main activity of investment bank

Security Underwriting. Investment banks bought bonds and stocks from the issuers and resold these securities to a group of investors

5

How investment banks have emerged in America?

American economy was growing too fast, commercial banks couldn't cope with the pace to expand railroads, mining & other heavy industries

6

What are the main activities of a commercial bank

Deposit taking & Credit giving activities

7

What's a spread

the difference between the interest that the bank pays to a depositor and the interest that it pays to the borrower. Spread = Interest Income - Interest Expense

8

What's commerical banks main source of revenue

Interest income

9

What's a universal bank

banks that perform commercial and investment banking services

10

What's Glass-Steagall act and which year it was enacted

Glass-Steagall act prohibited commercial banks involvement in investment banking activities and it was enacted in 1933.

11

Three main business units of Morgan Stanley

institutional securities, wealth management and investment management.

12

What the investment banking products encompass of?

a) Trading b) Asset Management c) Underwriting Debt & Equity d) Advisory

13

Two traditional activities that stand at the core of investment banking?

Underwriting Debt & Equity And Advisory

14

What's the role of a Chinese wall?

The role of a Chinese wall is to create a barrier between different divisions (for example between Research and Underwriting) whose interactions will create a conflict of interest.

15

What is Capital Markets service also called?

Underwriting Services

16

What is Advisory service also called?

M&A and Restructuring

17

What's ECM

Equity Capital Markets

18

What's DCM

Debt Capital Markets

19

What's founder's interest?

The founders of a company want to sell at the right time and monetize their hard work.

20

What are investors looking for?

Investors are looking to invest in a company that has great management and great potential.

21

What's investment bankers role in the IPO process

a) Provide Guidance b) IPO preparations c) Deal with investors d) Arrange meeting with Company's management and Investors e) Stabilize the stock price

22

Selling additional equity share is called?

SEO - Seasoned Equity Offerings

23

What's an acquisition?

When a company buys another company's shares or assets.

24

Bidders and Sellers

Buyers and Sellers

25

M&A logic

the amount of money that the bidder wants to pay and the amount of money that the seller is asking

26

When is restructuring necessary?

Restructuring is necessary when the firm cannot service its debts and in danger of going bankrupt.

27

When the company is in need of restructuring, what are its alternatives?

A private workout or a bankruptcy procedure in the court

28

What's the golden goose of investment banking?

Trading & Brokerage

29

What is trading & brokerage consists of?

Trading & Brokerage consists of buying and selling securities by using investment bank's own money (proprietary trading) or buying securities on behalf of its clients (brokerage)

30

How much revenue does the trading & brokerage activity contribute in an investment bank?

It contributes about 30-50% of revenue

31

What's market making?

Investment banks play a very important role in the liquidity of financial markets. Market making consists of buying of securities and being ready to sell these securities when the customer place an order

32

What are the financial instruments do the investment banks trade?

Equity and fixed income instruments and derivative financial instruments (speculative reasons)

33

Examples of derivative instruments?

Forwards, Futures, Options & Swaps

34

What's is an Asset Manager's business?

Asset Managers are in the business of using money to make more money.

35

What's an Asset Management?

Asset Management is about managing clients' investment and providing them with strategies and expertise that will help them achieve their financial goals.

36

What is the spectrum of asset classes?

Stocks, Bonds, Commodities, Real Estate, Private Equity,

37

What does an asset manager do?

high quality advice and superior risk return investments

38

Different categories of stock?

Small Cap, Mid Cap, Large Cap, Blue Chip, Dividend Stocks, Stocks from growth region like BRIC countries

39

Different categories of bond?

Short maturity, long maturity, Government, Corporate

40

What are the other asset management categories

Commodities and Real Estate

41

What are alternative investments for asset management?

Private equity or hedge funds

42

What are the roles in asset management?

Sales force, Portfolio Manager and Research Department

43

Who makes the investment decision and portfolio allocation?

Portfolio manager who takes the help of Research department to make investment decisions.

44

What are the 5 largest funds in terms of AUM - assets under management?

Blackrock, Vanguard group, UBS, State Street and Fidelity