INVESTMENT BANKING EXAMINATION QUESTIONS AND
CORRECT ANSWER WITH EXPLANATION GRADED A+
STUDY GUIDE SOUTHERN NEW HAMPSHIRE UNIVERSITY
1. Investment banking primarily deals with:
A. Raising capital and advisory services
B. Retail banking only
C. Insurance underwriting only
D. Tax collection
Answer: A
Rationale: Investment banks help firms raise funds and provide financial advice.
2. Investment banks mainly serve:
A. Corporations and governments
B. Individual savings accounts only
C. Farmers only
D. NGOs only
Answer: A
Rationale: They focus on institutional clients.
3. Underwriting means:
A. Guaranteeing a securities issue
B. Saving money
C. Paying taxes
D. Buying groceries
Answer: A
Rationale: Investment banks support issuance of securities.
4. IPO stands for:
A. Initial Public Offering
B. Internal Private Operation
C. Investment Profit Order
D. Indexed Price Option
Answer: A
Rationale: First sale of shares to the public.
5. Equity underwriting involves:
A. Issuing shares
, B. Issuing loans only
C. Insurance contracts
D. Tax services
Answer: A
Rationale: Raising equity capital.
6. Debt underwriting involves:
A. Issuing bonds
B. Issuing shares
C. Paying dividends
D. Currency exchange
Answer: A
Rationale: Raising borrowed funds.
7. Mergers and acquisitions (M&A) refers to:
A. Combining or buying companies
B. Banking deposits
C. Insurance claims
D. Tax filing
Answer: A
Rationale: Corporate restructuring activity.
8. Advisory services include:
A. Financial and strategic guidance
B. Only accounting
C. Only loans
D. Only trading stocks
Answer: A
Rationale: Investment banks guide corporate decisions.
9. Capital raising is:
A. Obtaining funds for business expansion
B. Spending money
C. Paying salaries
D. Buying insurance
Answer: A
Rationale: Funding operations and growth.
10. Primary market activity involves:
A. Issuing new securities
, B. Trading old securities
C. Currency exchange
D. Tax collection
Answer: A
Rationale: First-time issuance.
11. Secondary market activity involves:
A. Trading existing securities
B. Issuing new shares
C. Loan creation
D. Insurance underwriting
Answer: A
Rationale: Resale of securities.
12. Book building is:
A. Price discovery process in IPOs
B. Loan approval system
C. Tax calculation method
D. Accounting process
Answer: A
Rationale: Demand-based pricing.
13. Merchant banking refers to:
A. Investment banking services
B. Retail banking
C. Insurance banking
D. Microfinance only
Answer: A
Rationale: Corporate financial services.
14. Syndicated loan is:
A. Loan provided by multiple lenders
B. Single bank loan
C. Government grant
D. Insurance payout
Answer: A
Rationale: Risk sharing among banks.
15. Leveraged buyout (LBO) is:
A. Buying a company using borrowed funds
CORRECT ANSWER WITH EXPLANATION GRADED A+
STUDY GUIDE SOUTHERN NEW HAMPSHIRE UNIVERSITY
1. Investment banking primarily deals with:
A. Raising capital and advisory services
B. Retail banking only
C. Insurance underwriting only
D. Tax collection
Answer: A
Rationale: Investment banks help firms raise funds and provide financial advice.
2. Investment banks mainly serve:
A. Corporations and governments
B. Individual savings accounts only
C. Farmers only
D. NGOs only
Answer: A
Rationale: They focus on institutional clients.
3. Underwriting means:
A. Guaranteeing a securities issue
B. Saving money
C. Paying taxes
D. Buying groceries
Answer: A
Rationale: Investment banks support issuance of securities.
4. IPO stands for:
A. Initial Public Offering
B. Internal Private Operation
C. Investment Profit Order
D. Indexed Price Option
Answer: A
Rationale: First sale of shares to the public.
5. Equity underwriting involves:
A. Issuing shares
, B. Issuing loans only
C. Insurance contracts
D. Tax services
Answer: A
Rationale: Raising equity capital.
6. Debt underwriting involves:
A. Issuing bonds
B. Issuing shares
C. Paying dividends
D. Currency exchange
Answer: A
Rationale: Raising borrowed funds.
7. Mergers and acquisitions (M&A) refers to:
A. Combining or buying companies
B. Banking deposits
C. Insurance claims
D. Tax filing
Answer: A
Rationale: Corporate restructuring activity.
8. Advisory services include:
A. Financial and strategic guidance
B. Only accounting
C. Only loans
D. Only trading stocks
Answer: A
Rationale: Investment banks guide corporate decisions.
9. Capital raising is:
A. Obtaining funds for business expansion
B. Spending money
C. Paying salaries
D. Buying insurance
Answer: A
Rationale: Funding operations and growth.
10. Primary market activity involves:
A. Issuing new securities
, B. Trading old securities
C. Currency exchange
D. Tax collection
Answer: A
Rationale: First-time issuance.
11. Secondary market activity involves:
A. Trading existing securities
B. Issuing new shares
C. Loan creation
D. Insurance underwriting
Answer: A
Rationale: Resale of securities.
12. Book building is:
A. Price discovery process in IPOs
B. Loan approval system
C. Tax calculation method
D. Accounting process
Answer: A
Rationale: Demand-based pricing.
13. Merchant banking refers to:
A. Investment banking services
B. Retail banking
C. Insurance banking
D. Microfinance only
Answer: A
Rationale: Corporate financial services.
14. Syndicated loan is:
A. Loan provided by multiple lenders
B. Single bank loan
C. Government grant
D. Insurance payout
Answer: A
Rationale: Risk sharing among banks.
15. Leveraged buyout (LBO) is:
A. Buying a company using borrowed funds
