Primary markets

Question 1

Who is the primary markets regulator in the UK?

Answer 1

Financial conduct authority

Question 2

Who is the primary markets regulator in the US?

Answer 2

Securities and exchange commission (SEC)

Question 3

How are government bonds in major countries issued?

Answer 3

By auction

Question 4

What is a conventional gilt?

Answer 4

Long term UK government bond, offering fixed payments of “coupon” every six months and repayment of original principle at the maturity date

Question 5

What is classed as a short maturity bond?

Answer 5

<10 years

Question 6

What is classed as a medium maturity bond?

Answer 6

10-15 yrs

Question 7

What is classed as a long maturity bond?

Answer 7

> 15 yrs

Question 8

What is an IPO done through?

Answer 8

An underwriting

Question 9

What is a merger?

Answer 9

Two companies joining together

Question 10

What happens to shares in a merger?

Answer 10

A new share replaces both existing shares

Question 11

What is a friendly vs hostile takeover?

Answer 11

Friendly - Recommended by management or target firm

Hostile - Not recommended by target firm

Question 12

For a merger, shareholders in both companies must:

Answer 12

Agree

Question 13

What are the five stages of a merger?

Answer 13

• Preliminary examination
• Announcement
• Outline agreement
• Due diligence
• Completion

Question 14

What are the five stages of an acquisition?

Answer 14

• Preliminary examination
• Announcement
• Due diligence
• Offer
• Completion

Question 15

What must a potential acquirer do when they’ve reached the 30% ownership threshold?

Answer 15

Announce their intentions

Question 16

What are stages in which investment banks earn fees?

Answer 16

• Advisory role (before and after announcement)
• Supporting a bond issue
• Conducting a “roadshow” to persuade shareholders to agree to the transaction
• Due diligence