FIA Investment Banking & Capital Markets Flashcards
6 cards from real FIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 FIA Investment Banking & Capital Markets flashcards as text
What is a 'leveraged buyout' (LBO)?
Answer: The purchase of a company financed primarily with borrowed funds, using the acquired company's assets as collateral
An LBO is an acquisition in which the buyer uses significant borrowed funds, often secured against the target company's own assets and cash flows, to finance the purchase.
In mergers and acquisitions (M&A), what does 'due diligence' refer to?
Answer: A comprehensive investigation of a target company's financials, legal status, and operations before a deal closes
Due diligence is the thorough examination of a target company's financial records, contracts, liabilities, and operations that a buyer conducts before completing an acquisition.
What is the purpose of a 'fairness opinion' in an M&A transaction?
Answer: To provide an independent financial assessment that the deal price is fair to shareholders
A fairness opinion is an independent assessment by a financial advisor confirming that the transaction price is fair from a financial point of view to the target company's shareholders.
What is a 'green shoe option' (overallotment option) in an IPO?
Answer: A provision allowing underwriters to sell additional shares beyond the original offering size to stabilize the price
The greenshoe option allows underwriters to issue up to 15% more shares than originally planned, giving them a tool to stabilize the stock price after the IPO.
Which document must a company file with the SEC before conducting a public securities offering in the US?
Answer: Form S-1 (Registration Statement)
A Form S-1 is the registration statement that companies must file with the SEC before conducting an initial public offering, containing detailed financial and business information.
What distinguishes a 'bulge bracket' investment bank from a boutique investment bank?
Answer: Bulge bracket banks are large full-service global firms; boutiques are smaller firms specializing in specific services or sectors
Bulge bracket banks (e.g., Goldman Sachs, JPMorgan) are large global full-service investment banks, while boutique banks are smaller firms that specialize in specific advisory services or industry sectors.
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