#1
What is the primary role of investment banks?
Facilitating capital raising and corporate transactions
ExplanationFacilitating financial transactions and capital raising for corporations.
#2
Which of the following is NOT a typical service provided by investment banks?
Retail banking services
ExplanationRetail banking services are not typically provided by investment banks.
#3
What is the process of raising capital by selling shares of a company to institutional investors and the general public for the first time?
Initial Public Offering (IPO)
ExplanationAn IPO is the initial sale of company shares to the public to raise capital.
#4
Which of the following is a key characteristic of investment banks?
Engaging in trading and securities activities
ExplanationInvestment banks are involved in trading securities and engaging in related activities.
#5
Which of the following is NOT a typical department within an investment bank?
Human resources
ExplanationHuman resources departments are not typically found within investment banks.
#6
Which of the following is NOT a type of financial market?
Supply market
ExplanationSupply market is not a recognized type of financial market.
#7
What does the term 'IPO' stand for in investment banking?
Initial Public Offering
ExplanationInitial Public Offering refers to the first sale of stock by a company to the public.
#8
Which of the following is a primary function of the trading desk in an investment bank?
Facilitating buying and selling of financial instruments
ExplanationTrading desks facilitate the buying and selling of various financial instruments.
#9
What is the term used to describe the process of combining two companies to form a single entity?
Mergers and acquisitions
ExplanationMergers and acquisitions involve combining companies to create a unified entity.
#10
What is the primary function of an investment banker in an initial public offering (IPO)?
Underwriting securities
ExplanationInvestment bankers underwrite securities to facilitate the IPO process.
#11
Which regulatory body oversees investment banks in the United States?
Securities and Exchange Commission (SEC)
ExplanationThe SEC regulates investment banks and securities markets in the United States.
#12
What is the term used to describe the process of dividing a company into separate business units and selling them off independently?
Divestiture
ExplanationDivestiture involves selling off parts of a company to streamline operations.
#13
What is the purpose of due diligence in investment banking?
To assess the risk associated with an investment
ExplanationDue diligence helps evaluate the risks associated with an investment opportunity.
#14
Which department within an investment bank is responsible for advising clients on strategic decisions and managing corporate relationships?
Investment banking division
ExplanationThe investment banking division advises clients on strategic decisions and manages relationships.
#15
What is the primary goal of restructuring in investment banking?
Maximizing shareholder value
ExplanationRestructuring aims to enhance shareholder value through organizational changes.
#16
Which of the following is a characteristic of high-yield bonds?
They have a low credit rating
ExplanationHigh-yield bonds typically have low credit ratings, indicating higher risk but potentially higher returns.
#17
Which of the following is a characteristic of mezzanine financing?
It combines debt and equity features
ExplanationMezzanine financing combines elements of debt and equity financing.