Finance Industry

Question 0

Describe what corporate inversion is and the McDermitt deals

Answer 0

• Corporate inversion happens when a company change their headquarters from U.S to abroad to allow company in the U.S to touch profit made abroad without paying high taxes in the U.S
• The guy who invented it was John Carroll when working with oil company McDermitt having large amount of profit stored abroad and want to take that back to U.S without paying high taxes.
• Recent tax code aim to prevent these inversions but have not been very effective.

Question 1

Describe how companies are transferring pension plans to insurers.

Answer 1

• Many companies protect themselves against stock market swings and such by having insurance companies take over these pension plan obligations.
• Prudentials is the biggest of them all
• It’s unclear at this point whether these transfers will be profitable for the insurers.

Question 2

Describe hedge funds current position in the market.

Answer 2

• Hedge funds underformed markets since 2009, charge exorbitant fees, and fine prints allow hedge funds to freeze assets and do a lot of things without asking people who put money in it.
• Despite these problems, hedge funds continue to grow since 2009 and people who manage it are being better compensated.

Question 3

Describe Citigroup under Michael Corbat

Answer 3

• Michael corbat initially promised to make citigroup banking boring - take less risks
• However, over the years, commodities and treasury trading increase while consumer finances decrease, leading to higher risks rather than lower
• In addition, Citigroup is mired in large numbers of litigations about its practices, calling into question Michael Corbat’s promise.