FIN 461 CORE MAIN ALL QUESTIONS AND ANSWERS
SURE A+
✔✔What did the Gramm-Leach-Bliley Act of 1999 overturn? - ✔✔Glass-Steagall Act
✔✔What type of business model did the Gramm-Leach-Bliley Act of 1999 aim to
provide for banks? - ✔✔More stable and countercyclical business model
✔✔How did the Gramm-Leach-Bliley Act of 1999 affect US banks' competitiveness? -
✔✔Allowed US banks to better compete with international counterparts
✔✔What financial institutions were formed as a result of the Gramm-Leach-Bliley Act of
1999? - ✔✔US-based universal investment banks
✔✔Sarbanes-Oxley Act of 2002 - ✔✔corporate governance, disclosure, and conflicts of
interest, executives must "certify" company financial statements, criminal penalties for
fraud, separated stock analysis from underwriting activities
✔✔Dodd-Frank Act of 2010 - ✔✔Federal regulation to regain control of financial
institutions by the federal government after the 2008 meltdown.
✔✔Volcker Rule - ✔✔prohibition on most proprietary trading by US banks and their
affiliates, restricts institutions from owning, sponsoring, or investing in hedge and PE
funds
✔✔Committee on Foreign Investment in the United States (CFIUS) - ✔✔interagency
committee authorized to review certain transactions involving foreign investment in the
US, in order to determine the effect of such transactions on the national security of the
US
✔✔Antitrust Law - ✔✔legislation to prevent new monopolies from forming and police
those that already exist, enforced by DOJ and FTC
, ✔✔Sherman Act (1890) - ✔✔Makes monopolizing a market, cartels, and other collusive
arrangements illegal
✔✔Clayton Act (1914) - ✔✔Strengthened Sherman Act, outlawed certain
anticompetitive practices not prohibited by the Sherman Act, including price
discrimination, tying contracts, exclusive dealing, interlocking directorates, and buying
the corporate stock of a competitor
✔✔Hart-Scott-Rodino Act (1976) - ✔✔This Act requires companies to notify the DOJ
and the FTC before completing mergers and acquisitions and establishes a 30-day
post-notification waiting period which gives the government time to evaluate the likely
competitive effects of a proposed transaction
✔✔control share statute - ✔✔effectively forces a shareholder vote to proceed with a
hostile bid
✔✔fair price statute - ✔✔requires bidders to pay all shareholders the same price for
their shares, regardless of when they are tendered
✔✔business combination statute - ✔✔imposes a waiting period for combining the
assets of the bidder and target after shareholder reaches certain threshold
✔✔poison pill statute - ✔✔dilutes the bidder's ownership stake by allowing target firm
shareholders to purchase more shares at a discount (when triggered)
✔✔constituencies statute - ✔✔allows management to take into consideration
constituencies other than shareholders when evaluating a takeover proposal
✔✔friendly takeover tactic - ✔✔most takeovers classified as friendly, negotiations
precede public disclosure and tensions are often worked out in private
✔✔hostile takeover - ✔✔expensive and often unsuccessful
✔✔hostile takeover tactic: bear hug - ✔✔seemingly friendly approach, aimed at putting
pressure on target management
✔✔hostile takeover tactic: proxy contest - ✔✔outsiders compete with management for
shareholder votes, often in an attempt to replace the board of directors
✔✔hostile takeover tactic: hostile tender offer - ✔✔prospective buyer makes an offer
directly to the shareholders (goes around management)
SURE A+
✔✔What did the Gramm-Leach-Bliley Act of 1999 overturn? - ✔✔Glass-Steagall Act
✔✔What type of business model did the Gramm-Leach-Bliley Act of 1999 aim to
provide for banks? - ✔✔More stable and countercyclical business model
✔✔How did the Gramm-Leach-Bliley Act of 1999 affect US banks' competitiveness? -
✔✔Allowed US banks to better compete with international counterparts
✔✔What financial institutions were formed as a result of the Gramm-Leach-Bliley Act of
1999? - ✔✔US-based universal investment banks
✔✔Sarbanes-Oxley Act of 2002 - ✔✔corporate governance, disclosure, and conflicts of
interest, executives must "certify" company financial statements, criminal penalties for
fraud, separated stock analysis from underwriting activities
✔✔Dodd-Frank Act of 2010 - ✔✔Federal regulation to regain control of financial
institutions by the federal government after the 2008 meltdown.
✔✔Volcker Rule - ✔✔prohibition on most proprietary trading by US banks and their
affiliates, restricts institutions from owning, sponsoring, or investing in hedge and PE
funds
✔✔Committee on Foreign Investment in the United States (CFIUS) - ✔✔interagency
committee authorized to review certain transactions involving foreign investment in the
US, in order to determine the effect of such transactions on the national security of the
US
✔✔Antitrust Law - ✔✔legislation to prevent new monopolies from forming and police
those that already exist, enforced by DOJ and FTC
, ✔✔Sherman Act (1890) - ✔✔Makes monopolizing a market, cartels, and other collusive
arrangements illegal
✔✔Clayton Act (1914) - ✔✔Strengthened Sherman Act, outlawed certain
anticompetitive practices not prohibited by the Sherman Act, including price
discrimination, tying contracts, exclusive dealing, interlocking directorates, and buying
the corporate stock of a competitor
✔✔Hart-Scott-Rodino Act (1976) - ✔✔This Act requires companies to notify the DOJ
and the FTC before completing mergers and acquisitions and establishes a 30-day
post-notification waiting period which gives the government time to evaluate the likely
competitive effects of a proposed transaction
✔✔control share statute - ✔✔effectively forces a shareholder vote to proceed with a
hostile bid
✔✔fair price statute - ✔✔requires bidders to pay all shareholders the same price for
their shares, regardless of when they are tendered
✔✔business combination statute - ✔✔imposes a waiting period for combining the
assets of the bidder and target after shareholder reaches certain threshold
✔✔poison pill statute - ✔✔dilutes the bidder's ownership stake by allowing target firm
shareholders to purchase more shares at a discount (when triggered)
✔✔constituencies statute - ✔✔allows management to take into consideration
constituencies other than shareholders when evaluating a takeover proposal
✔✔friendly takeover tactic - ✔✔most takeovers classified as friendly, negotiations
precede public disclosure and tensions are often worked out in private
✔✔hostile takeover - ✔✔expensive and often unsuccessful
✔✔hostile takeover tactic: bear hug - ✔✔seemingly friendly approach, aimed at putting
pressure on target management
✔✔hostile takeover tactic: proxy contest - ✔✔outsiders compete with management for
shareholder votes, often in an attempt to replace the board of directors
✔✔hostile takeover tactic: hostile tender offer - ✔✔prospective buyer makes an offer
directly to the shareholders (goes around management)
