Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Financial Economics > Investment Banks > Flashcards

Investment Banks Flashcards

1
Q

What do investment banks do

A

They underwrite stocks bonds and commercial papers as well as acting as deal makers in mergers and acquisitions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What differentiates investment banks from stock brokers

A

They earn their money from fees rater than commissions on stock trades

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What was the glass steagall act

A

It separated commercial banking from investment banking by prohibiting banks from trading securities on behalf of customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does it mean to underwrite a stock

A

To purchase the entire batch for a predetermined price to sell on the secondary market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What services do investment banks provide during underwriting

A

Advice filing documents and doing the actual underwriting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a seasoned equity offering

A

Offering nee stock of a company already publicly listed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What documents need to be filed when issuing stocks

A

The registration statement must be filed with the sec securities and exchange commission aka finansinspektionen

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the registration statement that must be filed with the sec

A

Like an initial report about the condition of the company and what the money will be used for

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does sec approval mean

A

Only that the document is correct not that it is accurate nor än endorsement of the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the prospectus of the registration statement

A

The part of the statement that all investors can see

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

When is a stock issue fully subscribed

A

When enough customers are convinced to buy each share on the issuing date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Why might it be bad for an investment bank if the stock is oversubscribed

A

Because then it seams like the price is too low and that the IV screwed the issuing firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Why is it bad for an investment bank if a share is under subscribed

A

Because they may loose a lot of money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a best effort agreement

A

An alternative to underwriting where shares are sold on a commissions basis aka at the price that the issuing firm asks for

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are private placements in investment banking

A

When securities are sold to a limited number of investors. Here IBs are mostly matchmakers and advisors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Does a firm need to register with sec in a private placement

A

No because it is not going public.

17
Q

What are equity sales in investment banking

A

When part if or the whole business is sold, here IBs are matchmakers

18
Q

How aee equity sales comducted

A

IB prepares confidential memorandum with financial info to prospecting buyer that responds with a letter of intent that contains the terms if acquisition. IB then helps negotiators and when seller accepts the due diligence period begins where the buyer verifies the accuracy. When all is done a legally binding contract is signed called the definite agreement

19
Q

What happens in a hostile takeover of a company

A

When an outside firm forces a merger by acquiring 50% of voting shares without the approval of top managers

20
Q

How can IBs assist in hostile takovers

A

They can help raising capital or help relaying a tender offer to willing shareholders. They can also assist in protecting the shares

21
Q

What is the difference between brokers and dealers

A

Brokers matchmake in exchange for a comission. Dealers stand ready to buy for cheap and sell for slightly more and make a living on the spread aka the diference

22
Q

What can you do at a brokerage house

A

Place an order to buy stocks at the market price or some other rate

23
Q

What is the risk with a market order of a stock

A

It might take time to fulfill meanwhile the price may change

24
Q

What is a limited order in the stock market

A

Where a buy order has a macimum price and a sell order has a minimum price

25
Q

What is a stop loss order in the stock market

A

To automatically sell when a stock reaches a certain price

26
Q

What is margin credit

A

Loans issued by brokerage houses

27
Q

What functions do dealers work in the market

A

They provide liquidity as they stand ready to buy and sell at any time

28
Q

What is private equity investing

A

When stocks are bought non publicly such as venture capital

29
Q

How does venture capitalism work in practice

A

They are structured as limited partnerships where the greater partner is liable for the debt while the lesser partner aka the vc has limited liability but provide the funding.

30
Q

Why does vc help with information assymetry

A

No freeriders as the stock is illiquid and membership on board where they have oversight and can give advice

Financial Economics (14 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions