FIN 461 Exam 1 QUESTIONS WITH ANSWERS

FIN 461 Exam 1 QUESTIONS WITH
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ANSWERS

Inorganic Growth - CORRECT ANSWERS ✔✔Quicker, immediate
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impact, can increase debt capacity
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Expensive, risky, cultural challenges |\ |\ |\




M&A Motives - CORRECT ANSWERS ✔✔Synergies
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Operational Synergies |\




Financial Synergies |\




Diversification
Achieve organization |\




M&A Strategies - CORRECT ANSWERS ✔✔Horizontal integration
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|\ Driven by economies of scale and scope
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Vertical integration|\




|\ Backward integration |\




|\ Forward integration |\




Conglomeration
|\ Driven by the desire to diversify
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When do companies use equity for buyouts? - CORRECT
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ANSWERS ✔✔When they think their stock is overvalued
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, Is it good to see cash for a buyout? - CORRECT ANSWERS ✔✔Yes,
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they have money and think their stock is over / fairly valued
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IB Functions - CORRECT ANSWERS ✔✔Corporate Finance - M&A,
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structuring, underwriting (assisting with companies raising |\ |\ |\ |\ |\ |\


capital)
Sales - Retail brokers, institutional sales people, private clients
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services reps |\




Trading - security trading |\ |\ |\




Research - Stocks, Bonds, industry analysis, fixed income
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Syndicate - link between corporate finance and salespeople,
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facilitate securities in a public offering |\ |\ |\ |\ |\




IB role in M&A - CORRECT ANSWERS ✔✔Identify strategic
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alternatives
Value maximization |\




Speed of execution |\ |\




Certainty of completion |\ |\




Due Diligence & Valuation - CORRECT ANSWERS ✔✔Comps
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Precedent Transactions |\




DCF
LBO
Stapled Finance (could be offered) |\ |\ |\ |\