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NARAYAN CHANGDER
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 PRACTICE BOOK» NOT FOR SALE
Contents

1 INVESTMENT BANKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 INVESTMENT BANKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
 1. INVESTMENT BANKING

NARAYAN CHANGDER
1.1 INVESTMENT BANKING
1. Real estate investment means A. Secondary Market
A. Investment in houses B. Primary Market
B. Investment in flats C. money market
C. Investment in bungalows D. Securities market
D. all of these 5. Hedging means:
2. Why might there be a rise in investment A. reducing risks
bankers in the future? What causes this B. increasing risks
trend?
C. being ready to take risks
A. The high income despite the pandemic
D. avoiding risks
B. It is very easy to get into school for it
C. The increase in technology that sparks 6. is regarded as the fourth element of
interest for lots of this generation the financial system.

D. none of above A. Financial services

B. Financial markets
3. Techniques Financial Statement Analysis
besides ratio analysis and trend analysis C. Financial institutions
is D. Financial instruments
A. Horizontal analysis 7. Preferred stock allows you to vote but
B. Common size analysis does not guarantee a set dividend.
C. Analysis Ratio A. True
D. Trend analysis B. False

4. Merchant banks deal with funds raised 8. How many hours average does an invest-
through and capital market. ment banker work per week?

1. D 2. C 3. B 4. C 5. A 6. A 7. B 8. C
1.1 INVESTMENT BANKING 3

A. 45 hours B. Evaluation of performance

B. 70 hours C. Inability to achieve synergy.

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C. 105 hours D. Managers overly focused on acquisi-
tions.
D. 120 hours
14. What is Initial public offering (IPO)?
9. What is FPO
A. The process of transferring private
A. Final private offer companies to public companies
B. First public order B. The process of issuing short-term debt
C. Final public offer securities
D. None of the above C. The process of issuing long-term debt
securities
10. What do investment banks do in securi-
D. The process of issuing equity securi-
ties market operations?(Please chose 2
ties to the public
options)
A. Intermediary of public issue of securi- 15. Who spreads awareness about mutual
ties funds in india?
B. broker, dealers, underwriter in sec- A. SBI
ondary market B. ICICI
C. risk managers and observers C. AMFI
D. portfolio managers D. Bank of Baroda

11. Which of the following is NOT relevant to 16. International investment banking opera-
the use of the NPV method of investment tional system
appraisal? A. Front Office
A. It relies on discounted cash flows B. Middle Office
B. It’s expressed as a percentage for eas- C. Back Office
ier comparison D. All answer
C. Its value will fall if interest rates rise
17. A merchant banking is a financial institu-
D. A financially viable investment has a tions conducting money market activities
positive value and a lending
12. The Dealing Room in the Treasury organi- A. underwriting and financial advice
zation is in the following section: B. Investment service
A. Front Office C. All of above
B. Middle Office D. none of above
C. Back Office 18. Investment bank functions:
D. Branches A. working capital financing
13. These are the problems in achieving acqui- B. Trade Finance
sition success except: C. Credit card
A. Integration difficulties. D. Project Financing

9. D 10. A 10. B 11. B 12. A 13. B 14. D 15. C 16. D 17. C 18. D 19. A
1.1 INVESTMENT BANKING 4

19. Real estate and collecting items such as 25. Functions of Middle Office
coins and stamps are also examples of in- A. Risk management
vesting.
B. financial control
A. True
C. corporate treasury
B. False D. all answer
20. The Payback Period (PBP) will always se- 26. Banks are not allowed to be involved with
lect the investment that hedge funds or private equity firms after

NARAYAN CHANGDER
A. Gives the highest rate of return Dodd-Frank Act 2010.
A. True
B. Returns the cost of investment first
B. False
C. Has the highest total net cash flow
27. RBI may collect from the merchant bankers
D. none of above
an initial authorisation fee, an annual fee
21. The following are all methods of invest- and renewal fee.
ment appraisal, EXCEPT: A. True
A. Payback period B. False

B. Balance sheet return 28. Is the money in a Roth IRA taxed when it
is withdrawn?
C. Net present value
A. True
D. Discounted Payback period
B. False
22. Which type of prospectus is Red Herring? 29. A bond, generally considered to be a risk-
A. Preliminary prospectus free investment, issued by the U.S. Trea-
sury, with a maturity of more than 10
B. Final prospectus
years.
23. In terms of business accounts and finance, A. T-Note
an investment is B. Mutual Fund
A. Having retained earnings receiving in- C. Emergency Fund
terest in the bank D. CD
B. Purchasing new capital equipment
30. Saving is for
C. Returning dividends to shareholders A. for emergency
D. Financing a long-term bank loan pay- B. materializing the dream
ing interest
C. Funding happy retirement
24. Selling your stock for more than you paid D. for all
for it is known as
31. What does the M in M-banking stands for?
A. stock
A. money
B. dividends B. message
C. return C. mobile
D. capital gains D. mutual fund

20. B 21. B 22. A 23. B 24. D 25. D 26. A 27. B 28. B 29. A 30. D 31. C 32. C
1.1 INVESTMENT BANKING 5

32. Which investment makes one a lender? D. Sales and trading and corporate fi-
A. Investment in Equity share nance

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B. investment in preference share 39. Which type of investment typically carries
C. investment in debenture the highest risk?

D. investment in land A. Bonds

B. Real Estate
33. Investing is usually done to meet long-
C. Stocks
term goals and earns a significant amount
of interest. D. Savings Account
A. True 40. NPV will be positive if
B. False A. Companies work hard
34. The goal of investing is to earn more in re- B. Discounted cash flows justify initial in-
turns than the yearly inflation rate vestment
A. True C. Money is given back
B. False D. They won’t be

35. Investment banking is much riskier than 41. Variance calculation and measuring the
traditional banking Standard deviation is one way of measur-
ing the
A. True
A. Return
B. False
B. Speculation
36. What is the primary purpose of corporate C. Gambling
finance?
D. Risk
A. Creating and managing retirement ac-
counts 42. Which of the following is not a character-
istic of an investment bank?
B. Leveraging debt financing for different
projects A. The customer base of the bank will
only be a few hundred
C. Providing investment advisory ser-
vices B. It is an institution for select individ-
uals, governments and corporations and
D. Monitoring and managing foreign in-
not all citizens
vestments
C. Income is from fees and interest
37. Role of merchant banking is Innovation.
D. It is associated with the performance
A. False of the financial markets
B. True
43. A sudden and extreme downturn in stock
38. Which activities fall under the front office performance/value
of investment banking? A. Index
A. Technology and research B. Crash
B. Risk management and back office C. Penalty
C. Investment banking and markets D. Risk

33. B 34. A 35. A 36. B 37. B 38. C 39. C 40. B 41. D 42. C 43. B 44. B
1.1 INVESTMENT BANKING 6

44. Which type of prospectus has the informa- B. A fund created by financial advisors for
tion of share price and number of shares? retirement accounts
A. Preliminary prospectus C. A fund to provide loans to businesses
B. Final prospectus D. A pool of capital, managed by a team
of investors, to purchase and manage in-
45. Merchant banks shall not associate with vestments
any business other than that of the securi-
ties market. 50. a network of savers, investors, finan-

NARAYAN CHANGDER
A. True cial assets, and financial institutions that
work together to transfer savings to in-
B. False vestment uses
46. Performance financial statement usually
use to calcuate valuation of corporation
which is used as basis valuation
A. Cash Flow
B. Income Statement
C. Notes to Financial Statement Analysis
D. Financial Position Statement
A. secondary market
47. The Average (or Accounting) Rate of Re- B. primary market
turn Method of Investment Appraisal will
always select C. financial system
A. The project with the lowest cost D. capital market
B. The project with the highest total net 51. Lead of merchant banker should advice the
return issuer to enter into intermediary for
C. The project with the highest average the purpose of issue management.
rate of return A. Agreement
D. none of above B. Arrangement
48. You invest $675 in a computer repair com- C. Memorandam of association
pany. At the end of the year, you receive D. none of above
$300 as your share of the profit. What is
your Rate of Return (ROR)? 52. What is the main role of an investment
A. 44% banker?

B. 2.25% A. To process financial records using

manual and computerized systems
C. 0.44%
B. To act as financial advisors to corpora-
D. 22.5% tions, to help raise capital
49. What is a private fund? C. To help clients by assisting with ser-
vices (Ex:setting up checking account)
A. A fund to facilitate trading of stocks
and bonds D. none of above

45. A 46. A 47. C 48. A 49. D 50. C 51. C 52. B 53. C

1.1 INVESTMENT BANKING 7

53. A security in which the investor loans 58. a network of savers, investors, finan-
money to a company or government, then cial assets, and financial institutions that
pays regular interest to the bondholder work together to transfer savings to in-

PRACTICE BOOK» NOT FOR SALE

and returns the principal on the bond’s ma- vestment uses
turity date
A. Index Fund
B. Dividend
C. Bond
D. T-Note

54. What is IPO

A. Initial Public offering A. secondary market
B. Independent public offering B. primary market
C. Introductory public offering C. financial system
D. Initial private order D. capital market

55. What is the role of a licensed broker- 59. Downsizing has a more positive effect on
dealer in providing investment banking firm performance than does downscoping.
services? A. True
A. Coordinating with bidders in mergers B. False
and acquisitions
60. Working capital management consist of
B. Generating pitch books of financial in-
cash management, receivable manage-
formation
ment, short term financing decision and
C. All of the above
A. Fixed asset management
D. Subscribing investors to security is-
B. Total asset management
suances
C. Inventory management
56. refers to an intangible investment.
D. Equity management
A. Return
61. The amount you earn as profit from
B. Security
your investment based on your deposited
C. Risk amount, usually expressed as a percent-
D. Diversification age
A. Penalty
57. Which one of the following is shown first
when the assets are arranged in the order B. Interest Rate
of their liquidity? C. Emergency Fund
A. Cash in hand D. Index
B. investment in gold 62. Which of the following indicates the
C. investment in Land wealth of a person
D. investment in stock market A. Asset

54. A 55. C 56. B 57. A 58. C 59. B 60. C 61. B 62. D

1.1 INVESTMENT BANKING 8

B. Bank balance 68. What are the main areas within the mar-
C. capital kets division of investment banking?
A. Investment banking, risk manage-
D. Net worth
ment, and research
63. Market Ratio shows the company’s value B. Corporate finance, technology, and
and represent market value expectation to back office
company, below is market ratio C. Sales and trading, research, and risk
A. Price to Book Value Ratio, ROA, ROE management

NARAYAN CHANGDER
B. EPS, ROA, ROE D. Sales and trading, structuring, and re-
search
C. EPS, Market to Book Value, P/E Ratio
D. Net Profit Margin, ROA, ROE 69. Banker’s acceptance is generally a money
market instrument issued by a bank to:
64. What is stress testing? A. Payment of export proceeds
A. The process of analyzing the impact of B. Insurance claim payment
various market conditions on a company
C. Payment of outstanding credit
B. Performing an audit to assess the fi- D. Auction guarantee
nancial health of a company
70. is a market for lending & borrowing of
C. Identifying opportunities for invest-
short term funds.
ment
A. Money Market
D. Providing long-term financial advice
B. capital Market
65. Dividends are earned when you sell your C. Forex Market
stock for more than what you paid for it.
D. Secondary Market
A. True
71. Which of the following is not a typical job
B. False
title for an Islamic Investment Bank?
66. Which Act was enacted after the Global Fi- A. Analyst
nancial Crisis (2007-2009)? B. Associate
A. Dodd-Frank Act C. Shari’ah Auditor
B. Gramm-Leach-Bliley Act D. Mechanic
C. Glass-Steagall Act 72. Firm buys a controlling or 100% interest
D. none of above in another firm called
A. Merger
67. Andy earned $300 on a $1000 invest-
ment. What is his current ROI (Return on B. Acquisition
Investment)? 73. world investment report is published by
A. 2% A. UNDP
B. 3% B. World Bank
C. 30% C. IMF
D. 70% D. UNCTAD

63. C 64. A 65. B 66. A 67. C 68. D 69. A 70. A 71. D 72. B 73. D 74. B
1.1 INVESTMENT BANKING 9

74. Spreading your investments around to in- 79. How do we call the basic document neces-
crease financial security sary for conducting an issue on the primary
market?

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A. Risk assessment
B. Diversification A. prospectus
C. Stocks, bonds & cash B. brochure
D. Liquidity trap C. offering book
75. When overseeing the activities required D. none of above
for making acquisitions can divert manage-
rial attention from other matters that are 80. The function of brokers in financial mar-
necessary for long-term competitive suc- kets is very important for other market
cess. players because:
A. Large or extraordinary debt. A. Speed up transactions
B. Inadequate evaluation of target B. Deliver the best price
C. Too large. C. Trusted source of information
D. Managers overly focused on acquisi-
D. Guarantee the legality of transactions
tions.

76. It is aligned most closely with establish- 81. It is a process through which a potential
ing and using strategic controls and usually acquirer evaluates a target firm for acqui-
improves performance more on a compar- sition
ative basis? A. Synergy
A. Downsizing
B. Junk bonds
B. Downscoping
C. Due diligence
C. Leveraged Buyouts
D. Bureaucratic controls
D. Restructuring

77. Diversifying your investments means 82. Recurring deposit is also a pyramid scheme
varying your investments with different A. True
levels of risk.
B. False
A. True
B. False 83. In a bear market, investment prices rise,
so it is important to buy as soon as possi-
78. What is the principal function of invest- ble.
ment banks in the Financial Services indus-
try? A. True
A. Providing loan services B. False
B. Creating and managing retirement ac-
counts 84. A major drawback of cryptocurrency is
that it is not insured by the government
C. Underwriting, issuing, and trading
stocks and bonds A. True
D. Managing employees’ salaries B. False

75. D 76. B 77. A 78. C 79. A 80. B 81. C 82. B 83. B 84. A 85. C
1.1 INVESTMENT BANKING 10

85. A market where shares in corporations are 91. For shareholders, generates gains in
bought and sold through an organized sys- their wealth that they could not duplicate
tem. or exceed through their own portfolio di-
A. Portfolio versification decisions.

B. Index A. Synergy
C. Stock Market B. Junk bonds
D. CD C. Due diligence

NARAYAN CHANGDER
86. An example of a blue-chip stock is Best D. Bureaucratic controls
Buy.
92. Management of the acquired firm
A. True
A. takeover the firm
B. False
B. acquire power
87. Big US investment banks charge lower fee
C. reports to management of acquiring
than major European banks.
firm
A. True
D. none of above
B. False
93. What is the main role of an investment
88. If you invest $20, 000 in a friend’s com-
bank?
pany and after one year you receive $250
as your share of the profit, what is your A. Acting as a broker for pension funds
ROR? B. Providing loans to consumers and busi-
A. 0.0125% nesses
B. 80% C. Managing complex financial transac-
C. 8% tions
D. 1.25% D. Offering financial advice to high-net-
worth individuals
89. Financial assets include
A. Bank deposits 94. Current policy rate/ discount of SBP is:

B. Investment in debentures/bonds A. 10.25

C. Investment in equity shares B. 12
D. all of these C. 9

90. Financial Investment is the D. 6

A. persons commitment to buy a flat or 95. This states that money is legal tender but
house has no tangible value
B. employment of funds in securities to A. target date fund
earn returns
B. exchange fund transfer
C. employment of funds on assets to earn
returns C. cryptocurrency
D. keeping money in locker D. fiat system

86. A 87. B 88. D 89. D 90. B 91. A 92. C 93. C 94. C 95. D 96. A
1.1 INVESTMENT BANKING 11

96. The relationship between risk and return 102. Restructuring refers to a strategy
can be stated as: through which a firm changes its set of
businesses or its financial structure.

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A. Higher risk indicates higher return.
A. True
B. Higher risk indicates lower return.
B. False
C. Lower risk indicates higher return.
D. No relationship exists between risk 103. What are the core investment banking ac-
and return. tivities?
A. Front office, middle office, and back of-
97. The finance manager is accountable for. fice
A. Proper utilization of funds B. Organizational structure, industry pro-
B. Effective management of a fund file, and criticisms
C. Corporate finance, sales and trading,
C. Arrangement of financial resources
and research
D. Earning capital assets of the company
D. Risk management, technology, and re-
98. What is Investment banking search

A. It is a bank 104. is the organisations, institutions that

provide long term funds.
B. It is a type of banking
A. Applies market
C. NFT
B. Forex Market
D. None of these
C. Money Market
99. The Economic Growth, Regulatory Relief, D. Capital Market
and Consumer Protection Act gives exemp-
tion of Small Banks from the Volcker Rule. 105. It is a financing option whereby risky ac-
quisitions are financed with money (debt)
A. True that provides a large potential return to
B. False lenders (bondholders)
A. Synergy
100. Stock exchange is a
B. Junk bonds
A. Primary market
C. Due diligence
B. secondary market
D. Bureaucratic controls
C. Money market
106. Return refers to the money you can earn
D. none of these
from an investment.
101. Issue management is an important func- A. True
tion of and B. False
A. Public manager and merchant banker
107. Category 1 of merchant banker can act
B. Bank manager and lead manager as:
C. Merchant banker and lead manager A. All issue management functions
D. none of the above B. Underwriter

97. C 98. B 99. A 100. B 101. C 102. A 103. C 104. D 105. B 106. A 107. A
108. B
1.1 INVESTMENT BANKING 12

C. Consultant 113. Financial services companies exclude:

D. none of above A. Sole proprietor
B. Insurance companies
108. risks cover the risk of market, inter-
est rate risk and purchasing power risk. C. Co-operative Banks
A. Unsystematic risk D. commercial banks

B. Systematic 114. The rate at which the average price of a

product or service increases over some pe-

NARAYAN CHANGDER
C. Financial
riod of time is known as
D. Business
A. inflation
109. What division of an investment bank re- B. rate of return
views companies and writes reports about C. interest
their prospects?
D. investing
A. Research
115. PSX use for:
B. Trading
A. loan grants
C. Mergers and Acquisitions
B. trading of shares
D. Financial Advisors
C. registration of company
110. This type of investing is a great start as D. retirement benefits of employees
you can invest with a small balance.
116. Semiannually means
A. robo-advisors
A. Once a year
B. cryptocurrency
B. Every other year
C. micro-investing
C. Twice a year
D. fiat system
D. Four times a year
111. The market value of a share is responsi-
117. Investment can be defined.
ble for.
A. Use of capital on assets to receive re-
A. The respective companies turns
B. Shareholders B. Person’s dedication to purchasing a
C. The government house or flat
D. The investment market C. Usage of money on a production pro-
cess of products and services
112. What distinguish direct listing from D. Net additions made to the nation’s cap-
IPO?(Please chose 3 options) ital stocks
A. The absence of underwriter.
118. What are Asset Based Lending (ABL) ser-
B. No new shares issued. vices?
C. No listing costs A. Providing investments to small busi-
D. No lock off or waiting period (of selling nesses
or buying shares) B. Creating and managing mutual funds

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1.1 INVESTMENT BANKING 13

C. Providing short-term finance secured 124. Name the micro finance company that be-
on a company’s assets comes the first to start operation as a com-
mercial bank

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D. Buying and selling stocks and bonds
A. Paytm Bank
119. State bank of india started merchant
B. Vodafone M Pisa Bank
banking in followed by icici in
C. Bandhan Bank
A. 1980, 1981
D. Yes Bank
B. 1978, 1980
C. 1973, 1974 125. Responsibilities of merchant bankers.
D. none of above A. Legal aspect
B. Banking policies
120. Which TERM refers to the numerical value
needed to calculate the NPV of an invest- C. To the investors
ment? D. Corporate dynamics
A. Ratio 126. Ownership in a publicly traded corpora-
B. Net cash flow tion is represented by?
C. Discounted cash flows A. CD-Certificate of Deposit
D. Discount factor B. Money Market
C. Treasury Bill
121. Which of the following is considered as
risk free investment? D. Stock

A. gold 127. A strategy which 1 firm buys a control-

B. equity ling interest in another firm with the intent
of making the acquired firm a subsidiary.
C. bonds
A. Merger
D. treasury bills
B. Merger
122. Which of the following is NOT a global C. Hostile Takeover
investment bank?
D. Acquisition
A. Wells Fargo
128. What are the main activities of the back
B. Bank of America office in investment banking?
C. Goldman Sachs A. Sales and trading and research
D. JPMorgan Chase B. Risk management and technology
123. If you receive a 5% return on an invest- C. Investment banking and markets
ment you made of $4, 000, what is the D. Settlement, clearance, and record-
amount you received? keeping
A. $800
129. Earnings of a company shared with its
B. $200 stockholders are known as
C. $8, 000 A. Capital gains
D. $20, 000 B. Dividends

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1.1 INVESTMENT BANKING 14

C. Stock 136. Free Cash Flow to Firm is always greater

D. Return than Free Cash Flow to Equity.
A. True
130. The following would appear in which sec-
tion of the cash flow statement? Cash re- B. False
ceived from the sale of property Explanation:If the firm has an abundance
of cash and a small amount of debt, Free
A. Operating
Cash Flow to Equity will be bigger than
B. Investing Free Cash Flow to Firm.

NARAYAN CHANGDER
C. Financing
137. What is the traditional service of invest-
D. none of above ment banks that has declined in revenue?
131. This company-sponsored retirement plan A. Proprietary trading
requires specific job qualifications to be el-
B. Securities underwriting
gible.
A. 401k C. Brokerage trading

B. roth IRA D. Asset management

C. traditional IRA 138. The act of investing in a large variety of
D. pension stocks, bonds and/or alternative invest-
ments, like gold or real estate, as a way
132. Degree of uncertainty on how likely the to reduce your overall risk.
investor is to make money on an invest-
ment A. Dividends

A. Index B. Mutual Fund Investing

B. Risk C. Portfolio
C. Maturity D. Diversification
D. Penalty
139. The time period an investment is intended
133. How can you earn money from stocks? to last
(Hint:Choose 2 correct answers) A. Maturity Date
A. Capital gain B. Term
B. Interest C. Interest
C. Dividends
D. Diversification
D. Holding the stock for at least 3 years
140. IRDA stands for
134. FD is called a Term deposit
A. Indian Regulatory Development Au-
A. True thority
B. False
B. Insurance Regulatory Development
135. Robo-advisors are algorithm driven fi- Authority
nancial planning services C. Investment in Insurance Regulatory
A. True Development Authority
B. False D. none of the above

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1.1 INVESTMENT BANKING 15

141. If you wish to purchase US dollars to C. Examining a company’s financial state-

travel abroad, you will approach:- ments for accuracy

PRACTICE BOOK» NOT FOR SALE

A. Ministry of finance D. Finding large-scale investors for cor-
B. US Embassy porate bonds

C. Any bank branch authorized for such 147. lets make money simple
activity A. Kotak Mahindra
D. External Affairs ministry B. yes bank
142. Which of the following is not a financial C. Citi bank
investment? D. bank of baroda
A. Purchase of debenture 148. Which company is an example of direct
B. Purchase of car listing?
C. Purchase of machine A. Spotify
D. Purchase of bond B. Facebook

143. Internal development of new product of- 149. Which President signed the Economic
ten considered high risk and become the Growth, Regulatory Relief, and Consumer
solid reason for mergers and acquisition. Protection Act?

A. True A. Obama
B. Trump
B. False
C. Clinton
144. The more money you invest, the higher
D. none of above
the interest rate you earn, and the sooner
you invest, the more money you will earn. 150. What is not included in money market in-
A. True struments is:
B. False A. Call money
B. World currency
145. A bond, often having tax advantages for
C. Bankers Acceptance
individual investors, issued by a state or
local government, typically uses the loan D. Shares
to pay for public works to benefit its citi-
151. To calculate the rate of return, divide
zens.
your share of the profit by the amount you
A. Index Fund invested.
B. Commodity A. True
C. Municipal Bond B. False
D. Emergency Fund 152. Increase firm’s power by exploiting cost-
based and revenue-based synergies.
146. What is the primary responsibility of an
investment bank in an IPO? A. Vertical Acquisition
A. Arranging debt financing for corpora- B. Related Acquisition
tions C. Horizontal Acquisition
B. Publishing a prospectus for investors D. none of above

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1.1 INVESTMENT BANKING 16

153. The amount the stock initially sells for is D. Young companies planning to go public
known as its
A. IPO 159. The following are capital market
instruments
B. dividends
A. Shares, Debt Securities, Mutual Funds,
C. capital gains
Sukuk, SUN
D. exchange
B. Currency, Bankers Acceptance, T. Bill,
154. Merchant bankers are:

NARAYAN CHANGDER
A. Merchant C. Tabunngan, Tour, Deposit
B. Banks D. SBI, SKBDN, L/C
C. Neither merchants nor banks
D. none of above 160. How should we understand the state-
ment “The investment bank is bound to
155. Which of the following is a problem to the issuer by a best offer agreement”?
achieve successful acquisition?
A. The investment bank is to actively sell
A. Small organization the securities in all possible ways.
B. Very little diversification B. The investment bank will purchase the
C. Acceptable debts securities that can not be sold anywhere.
D. Lack of due diligence
161. When the company makes a profit it
156. What are the division of Back Office gives the shareholders a
A. operations department A. Tax
B. information benefits B. Dividend
C. all answer
D. banking departments 162. The bank’s ability to fulfill its debt obli-
gations, be able to pay back all its depos-
157. Stocks of a company fall if performance itors, and be able to fulfill credit requests
is good submitted by debtors without delays
A. True A. Solvabilitas
B. False B. Profitability
C. May or may not
C. Liquidity
D. none of above
D. In the profit table
158. Choose multiple answers:What types of
companies are most likely to hire an invest- 163. Select multiple:Which degrees are the
ment banker? most common for an investment banker?
A. Big companies planning mergers and A. Data analytics
acquisitions
B. Finance
B. Companies looking to expand
C. Accounting
C. Public and financially stable compa-
nies D. Economics

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1.1 INVESTMENT BANKING 17

164. Why do companies issue stocks? 170. What types of transactions are involved
A. To create and investment opportunity in corporate finance?

PRACTICE BOOK» NOT FOR SALE

into other businesses. A. All of the above
B. To increase employee cooperation and B. Raising infrastructure finance, seed
an operating level. capital, and restructuring debt
C. To be traded individually C. Equity issuance, financing joint ven-
tures, and raising capital
D. To raise money for economic invest-
ment and to fund operating costs. D. Mergers and acquisitions, demergers,
and takeovers
165. Which of the following regulates Credit
Rating agencies in India? 171. Selling your stock when it reaches a cer-
tain price is known as a limit order.
A. RBI
A. True
B. NSE
B. False
C. SEBI
172. What is capital structuring?
D. ICAI
A. Managing a company’s debts and eq-
166. The early growth of merchant banking in uity
the country is assigned to the B. Issuing debt securities to investors
A. Foreign exchange regulations act 1973 C. Undertaking foreign investments
B. fema D. Providing loan services to businesses
C. Income tax act
173. NBFC is a company registered under
D. none of above
A. The RBI Act
167. An acquiring firm can gain capabilities B. The Indian Contract Act
that the firm does not currently possess C. The Companies Act, 1956
such as in term of technology capabilities,
expertise and reduced inertia. D. Co-operative society Act

A. True 174. A non-voting share that pays a fixed div-

idend is a
B. False
A. growth
168. Money set aside for unanticipated ex-
B. blue chip stock
penses or loss of income
C. preferred stock
A. Mutual Fund
D. common stock
B. T-Note
175. Reason why firms uses acquisition strat-
C. Index Fund
egy.
D. Emergency Fund
A. Decreased speed to market
169. Diversifying increases the overall risk of B. Decreased diversification
loss. C. Managers overly focused on acquisi-
A. True tion
B. False D. Reshaping competitive scope

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1.1 INVESTMENT BANKING 18

176. This individual retirement plan is not tax- 182. One of the restructuring process after
defferred mergers and acquisition is called down-
A. 401k scoping. What is downscoping

B. roth IRA A. Reduction of employees

C. traditional IRA B. Sell firms’ assets to others
D. pension C. Eliminating unrelated businesses
D. Adding more new products

NARAYAN CHANGDER
177. Current ratio is good if:
A. 1.5:1 183. Which of the following is the function of
B. 0.9:1 financial market?
C. 1:1 A. Mobilization of savings
D. 0.75:1 B. Price fixation
178. Economic well being of a person depends C. Provide liquidity to financial assets
on D. All of the above
A. how much you save
184. Investment Bank is a
B. how much you invest
C. how wisely you invest A. loan provider

D. none of these B. not loan provider

C. deposits taking
179. What division of an investment bank
earns commissions based on market per- D. all answer
formance?
185. Dow Jones and S&P 500 are examples of
A. Retail banking division
stock indexes.
B. Advisory division
A. True
C. Sales division
B. False
D. Trading division

180. In portfolio management which aspect 186. What might be the causes of the Global
should be maximized? Financial Crisis?

A. Return A. Decrease in the federal funds rate

leading to subprime lending.
B. Risk
B. The widespread practice of securitiza-
C. Return and Risk
tion
D. None of the above
C. In 2004 the Securities and Exchange
181. The return of a share holder is Commission (SEC) trengthened the net-
capital requirement
A. Rate of interest
B. Dividend D. The partially repeal of Glass-Steagall
Act (1933) allowed banks, securities firms,
C. Discount rate and insurance companies to merge »>
D. Discount value too big to fail entity.

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1.1 INVESTMENT BANKING 19

187. Merchant banking activities was origi- B. Allows owners to focus on developing
nated with the merchant banking division innovations and bring them to market.
set by

PRACTICE BOOK» NOT FOR SALE

C. Stimulate effective growth
A. yes bank D. All of the Above
B. Grinds bays bank
193. There are no consequences for withdraw-
C. none of the above ing money from a CD before the maturity
D. none of above date
A. True
188. The main difference between a tradi-
tional IRA and a Roth IRA is when the B. False
money is taxed.
194. What is the primary function of an invest-
A. True ment bank’s research division?
B. False A. To assist traders and sales depart-
ment
189. Volcker Rule One is one of the key com-
ponents of Dodd-Frank Act. What is it B. To maintain institutional knowledge on
about? various research areas
A. restricting the ways banks can invest C. To generate revenue for the bank
B. limiting speculative trading D. To provide investment advice to out-
side clients
C. eliminating proprietary trading
D. annual stress test applied with banks 195. A mutual fund that invests in the stocks
having more than $50 billion of assets that are the basis of a well-known stock
or bond index
190. An acquisition can reduce the negative ef-
A. T-Note
fect of an intense rivalry on a firm’s finan-
cial performance B. CD
A. True C. Index Fund
B. False D. Commodity

191. Investors agree to invest in high-risk in- 196. True or False:Investment banking is a
vestments if only competitive field that requires a solid edu-
cation background and long hours
A. There are any true speculations
A. True
B. The predicted return is satisfactory for
taking a risk B. False
C. There are no safe options except for 197. You are serving as a lender to either
holding cash the government or a corporation with this
D. The return is short type of investment.
A. Bond
192. Which of the following is/are the rea-
son(s) for a buyout? B. Mutual fund

A. Protection against a capricious finan- C. Roth IRA

cial market. D. Traditional IRA

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1.1 INVESTMENT BANKING 20

198. What was the Norbourg scandal about? 203. IPO means:
A. The CEO kept billions of dollars of debt A. Initial Prospectus obtain
off the company’s balance sheet B. Interesting publc operation
B. The company had had inflated its rev-
C. Initial Public offering
enues by making false entries
D. Inter Private Open
C. The company had intentionally over-
stated earnings in the company’s books 204. refers to the strategy of investing in

NARAYAN CHANGDER
D. The company owner diverted the com- a variety of businesses with different lev-
pany funds into funds for personal use els of risk.

199. As per which act, holidays are provided A. diversification

in the banks? B. security
A. RBI Act C. risk
B. Banking Regulation Act D. return
C. as per orders of Govt.
205. Which bank was closed by the New York
D. Banking Nationalisation Act State commissioner of bank during the
Great Depression (in 1930)?
200. What is the primary role of a financial an-
alyst? A. The Bank of United States
A. Assisting companies in issuing debt se- B. The Bank of America.
curities
206. What is the main difference between ven-
B. Providing loan services to businesses ture capital and private equity?
C. Researching and analyzing financial A. Venture capital is focused on develop-
markets ing new projects whereas private equity
D. Advising companies on investment op- focuses on mature businesses
portunities B. Venture capital is provided by govern-
201. The Economic Growth, Regulatory Relief, mental bodies whereas private equity is
and Consumer Protection Act increases unsecured and obtained from financial in-
Regulatory Burdens bank holding compa- stitutions
nies having from $200 to $250 billion in C. Venture capital is focused on existing
assets. businesses whereas private equity is fo-
A. True cused on new projects
B. False D. Venture capital is unsecured whereas
private equity is secured
202. Stocks in a corporation that are expected
to experience rapid growth are known as 207. Which would be considered the highest
risk investment type?
A. Blue chip stocks A. Stock
B. Preferred stock B. Mutual Fund
C. Growth stock C. Bond
D. Common stock D. Money Market Account

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1.1 INVESTMENT BANKING 21

208. Which of the following is not necessarily 214. Value of a mutual fund increases with fall
involved in an IPO process in market

PRACTICE BOOK» NOT FOR SALE

A. underwriter A. Yes
B. registrar of companies B. No
C. registrar of issue
215. This is a professionally managed, diverse
D. investment bank portfolio of investments.
209. The following are examples of global in- A. Roth IRA
vestment banks, except: B. Bond
A. Goldman Sachs
C. Traditional IRA
B. JP Morgan and Co
D. Mutual fund
C. HSBC
D. Citi Bank 216. Cash Conversion Cycle formula:
A. AR + Inventory-AP
210. operates in inter bank call money
market. B. AP + Inventory + AR
A. Commercial Banks C. Inventory-AP-AR
B. Central Bank (RBI) D. you-ar
C. Co-operative Banks
217. This type of modern day investment is a
D. Financer house of India mutual fund designed to grow investments
for a specific time frame.
211. True or False:A professional accounting
designation required to be an investment A. target date fund
banker B. exchange fund transfer
A. True C. cryptocurrency
B. False D. fiat system
212. After the Global Financial Crisis Finan-
218. The Volcker Rule, restricts the ways
cial, institutions are required to lower the
banks can invest, limiting speculative trad-
amount of money they hold in reserve to
ing, and eliminating proprietary trading.
facilitate the economy.
Where can we find Volcker Rule?
A. True
A. Dodd-Frank Act 2010
B. False
B. Glass-Steagall Act 1933
213. The liberalization of Indian Banking and C. Gramm-Leach-Bliley Act
Regulation was done based on recommen-
dation of ? D. none of above
A. R Gandhi Committee 219. Putting money away for retirement is an
B. Narasimham Committee example of saving.
C. Basel committee A. True
D. Khusro Committee B. False

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1.1 INVESTMENT BANKING 22

220. In treasury products, where the sale 226. Merchant banking in India is governed by
(bank) and purchase (customer) transac- A. SEBI
tions are in the form of the right to buy
or the right to sell with a period according B. IRDA
to the agreement, namely: C. RBI
A. SWAP transactions D. Ministry of Finance
B. Option Transactions
227. knowledge is Power

NARAYAN CHANGDER
C. Spot Transactions
A. Financial Express
D. Forward Transactions
B. The Economic Times
221. Why is FD better than RD? C. Hindustan Times
A. You end up bankrupt D. none of above
B. You get higher returns
228. This type of retirement account is not tax-
C. Bank pays you
deferred.
D. You get NFTs
A. 403(b)
222. A certificate issued by a bank to a person B. Roth IRA
depositing money for a specified length of
time. C. Traditional IRA

A. Mutual Fund D. None of the above

B. Index 229. Risk refers to the chance that an invest-

C. Bond ment will decrease in value.
D. Certificate of Deposit (CD) A. True
B. False
223. Is NASDAQ located in New York?
A. True 230. Which services are offered by a full
service investment bank but not offered
B. False
by the investment banking division of a
224. The two American stock exchanges are bank?
the NYSE and NASDAQ. A. Underwriting
A. True B. M & A Advisory
B. False C. Equity research
225. Alco (Asset Liabilities Committee) mem- D. All of the above are offered by the divi-
bers in the bank are: sion
A. Treasury, Credit, Accounting and Com-
231. Which is more common, mergers, acquisi-
pliance Division
tions, or takeovers?
B. Treasury, Credit, Accounting, Compli-
A. Takeovers
ance and Audit Division
C. Treasury, Credit, Accounting, Compli- B. Mergers
ance and Legal Divisions C. Acquisition
D. All Divisions D. none of above

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1.1 INVESTMENT BANKING 23

232. What is the term for the spread of invest- 237. Which of the following is not a fee-based
ments to reduce risk? financial service?

PRACTICE BOOK» NOT FOR SALE

A. Allocation A. Corporate counseling
B. Diversification B. Lease financing
C. Segmentation C. Issue management
D. Integration
D. Profit management
233. What was the main reason for Gramm-
Leach-Bliley Act 1999 to be enacted? 238. If a bank has to borrow funds from RBI
for a long term, which among the follow-
A. To prevent Commercial banking, in- ing will be applicable?
vestment banking, and insurance o be
more integrated A. Repo Rate
B. Because Glass-Steagall Act 1933 had B. Reverse Repo
existed for too long. C. Bank Rate
C. To repair the issues occured during
D. liquidity Adjustment Facility
Global Financial Crisis.
D. none of above 239. Purchasing power risk is also known as

234. What does the time value of money

mean? A. Inflation risk
A. The idea that a £today is worth more B. Business risk
than a £in the future C. Financial risk
B. The idea that a £today is worth less D. Market risk
than a £in the future
C. The value of time in monetary terms 240. If the price of a share at the beginning of
D. How much time is takes to earn an in- the year was Rs.70/-, dividend received
vestment back during the year was Rs.5/-per share and
the price at the end is Rs.79/-. What is
235. refers to the potential of not earning the rate of return?
or even losing money. A. 23%
A. Return
B. 15%
B. Security
C. 20%
C. Risk
D. 25%
D. Diversification
241. is the chance of loss or the variability
236. covers the entire range of services
of returns associated with a given asset.
provided by a merchant banker.
A. Cooperate counselling A. Return

B. Project counselling B. Value

C. Credit syndication C. Risk
D. none of above D. Probability

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1.1 INVESTMENT BANKING 24

242. Some examples of collectibles are coins, A. Underwriting and issuing stocks and
stamps, and jewelry. bonds
A. Collectibles B. Establishing private funds
B. Returns C. Creating and managing retirement ac-
C. Bonds counts

D. Limit orders D. Providing loan services

NARAYAN CHANGDER
243. Stocks in a large, well-established busi- 248. Which types of banks are involved in in-
ness, like Microsoft, are known as vestment banking?
A. common stock A. Credit unions, insurance companies,
and investment funds
B. preferred stock
B. Prime brokers, investment funds, and
C. growth stock
trusts
D. blue chip stock
C. Investment banks, commercial banks,
244. This modern day investment is a digital and retail banks
alternative to traditional currency. D. Investment banks, pension funds, and
A. target date fund trusts
B. exchange fund transfer 249. tick any three qualitative variables taken
C. cryptocurrency into consider while doing a fundamental
analysis
D. fiat system
A. competitive edge
245. What is mergers and acquisitions
(M&A)? B. profitability

A. Combining of two or more companies C. management

into a single entity D. Corporate culture
B. Trading of assets and liabilities be-
250. The SENSEX has
tween two companies
C. Providing financial advice on capital in- A. 50 stocks
vestments B. 25 stocks
D. Creating and managing mutual funds C. 30 stocks

246. This is a small payout to shareholders D. 100 stocks

each fiscal period.
251. By what organization do you need ap-
A. IPO proval by before you start working as an
B. dividends investment banker?
C. capital gains A. PRA
D. exchange B. CRA
C. IRS
247. What type of financial services are pro-
vided by commercial banks? D. IIROC

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1.1 INVESTMENT BANKING 25

252. Day trading is an example of A. Investment

A. saving B. Speculation

PRACTICE BOOK» NOT FOR SALE

B. investing C. Gambling
C. speculating D. Arbitrage
D. none of above 258. Which of the following is not the reason
for acquisition?
253. What is an investment bank?
A. Increase market power
A. A bank that is solely focused only on
investing people’s or institution’s money B. Overcoming entry barriers
B. A department within an universal bank C. Increase diversification
that is responsible for investment of liq- D. Building up brand image
uidity of the bank
259. service is offered by the merchant
C. A financial services company or cor- banker to get term loan for project, help
porate division that engages in advisory- client make appraisal, designing capital
based financial transactions on behalf of structure etc
others
A. Underwriting
D. All of the above are correct
B. Loan Syndication
254. What is an acquisition? C. Issue Management
A. When a company purchases another D. none of above
company’s shares
260. Find odd one:Authorization criteria of
B. When a company is accused of a crime
merchant bankers
C. When a company merges with another
A. Professional competence
company to form a larger firm
B. All business performed
D. When gas prices are raised
C. Capital adequacy
255. Which investment makes one an owner D. none of above
A. investment in NSC
261. A payment made by a publicly traded cor-
B. investment in bond poration to its shareholders
C. investment in debenture A. Dividend
D. investment in equity B. Index
256. SECP Functions include: C. Commodity
A. trading of share D. T-Note
B. financing 262. Putting your money into an MMA is an
C. regulator for companies example of
D. none of above A. saving
B. investing
257. is based on tips, rumours and
hunches, unplanned and without knowl- C. speculating
edge of the exact nature of risk. D. none of above

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1.1 INVESTMENT BANKING 26

263. What is securitization? 267. What is underwriting in investment bank-

ing?
A. The process of transferring financial
assets into cash A. It is the evaluation of risk and expo-
sures of potential clients to decide how
B. The process of issuing different types
much coverage the client should receive
of securities to investors
B. It is the exchange of a fee for the ac-
C. The process of aggregating multiple
ceptance of risk
assets into a tradable security

NARAYAN CHANGDER
C. It is the process of helping corpora-
D. The process of restructuring a com- tions and institutions find, evaluate, and
pany’s debts complete acquisitions of businesses
264. The following would appear in which sec- D. It is the process of raising capital
tion of the cash flow statement? cash pay- through selling stocks or bonds to in-
ments for equipment vestors on behalf of corporations
A. Operating 268. It is important to to reduce your over-
B. Investing all risk of loss.

C. Financing A. diversify
B. invest
D. none of above
C. save
265. Employment of funds with the aim of
D. spend
achieving additional income is known as
269. A fixed-income security is defined as:
A. Speculation A. a debt obligation that pays a fixed rate
B. Gambling of return for a one-year period.

C. Biting B. common or preferred stock that pays

a fixed annual dividend.
D. Investment
C. a long-term debt obligation that pays
266. What is the main difference between in- scheduled fixed payments.
vestment banks and commercial banks? D. long-term debt issued solely by a fed-
A. Investment banks are regulated by the eral or state government.
SEC and FINRA, while commercial banks 270. The oldest stock exchange in India is
are regulated by the Glass-Steagall Act
A. Delhi Stock Exchange
B. Investment banks offer a wide range
of services, while commercial banks are B. National Stock Exchange
limited to underwriting securities C. Bombay Stock Exchange
C. Investment banks take deposits, while D. Madras Stock Exchange
commercial banks provide advisory-based
financial transactions 271. The regulatory body for the securities
market in India is
D. Investment banks focus on underwrit-
ing security issuance, while commercial A. RBI
banks focus on retail banking B. SEBI

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1.1 INVESTMENT BANKING 27

C. IRDA 277. The person responsible for managing a

firm’s cash flow, credits and capital expen-
D. NABARD
ditures is called a

PRACTICE BOOK» NOT FOR SALE

272. Tax defferred means that taxes are taken A. broker.
out upon deposit, not withdrawal. B. stakeholder.
A. True C. chief accountant.
B. False D. treasurer.
278. The main purpose of acquisition is to cre-
273. Factors associated with a market or with
ate synergy.
the firms currently operating in it that
increase the expense and difficulty new A. True
firms encounter when trying to enter that B. False
particular market.
279. If you invest $500 in a business and at
A. Cross-Border Acquisition the end of the year your ROR was 2%,
B. Diversification how much did you receive?

C. Barriers to Entry A. $1, 000

B. $25, 000
D. none of above
C. $510
274. FATCA Stands for D. $10
A. Foreign Account Tax Compliance Act 280. The lead merchant bankers under cate-
B. Foreign Account Trade Company Act gory shall accept a minimum underwriting
of
C. Financial Account Tax Compliance Act
A. 20%
D. Fiscal Account Tax Compliance Act
B. 0.25%
275. Investors with risk-loving characteristics C. 100%
will purchase securities with higher ex- D. 5%
pected returns, lesser risks, and more liq-
uidity. Do you agree with this statement? 281. A merchant bank can help an organization
specifically in promotion functions
A. True
A. Sponsoring the issue
B. False B. Marketing
276. Financialintermediaries can substantially C. All of the above
reduce transaction costs per dollar oftrans- D. none of above
actions because their large size allows
them to take advantage of 282. This individual retirement plan is tax-
defferred
A. Poorly informed consumers
A. 401k
B. Standardization B. roth IRA
C. Economies of scale. C. traditional IRA
D. Their market power. D. pension

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1.1 INVESTMENT BANKING 28

283. Stock exchange is B. Cash Flow Forecast

A. Primary market C. Profit
B. forex market D. Investment
C. spot market 289. What differs merchant (investment) bank
D. Secondary market from commercial one?

284. Leverage Buyout results in higher perfor-

NARAYAN CHANGDER
mance but in higher risk on long-term out-
comes.
A. True
B. False

285. which company is the sole public sector

life insurance company A. Merchant banks work mainly with the
A. Standard life insurance government
B. Bharti Axa life insurance B. Merchant banks work mainly with indi-
viduals
C. Life Insurance Corporation of India
C. Merchant banks deal mainly with busi-
D. none of above nesses
286. This type of modern day investment oper- D. Merchant banks deal mainly with com-
ates much like a mutual fund except prices mercial banks
rise and fall all day
290. A collection of stocks and/or bonds com-
A. target date fund bined into one fund, which will be traded
B. exchange fund transfer as a unit, typically chosen and actively
managed by an expert in exchange for a
C. cryptocurrency
fee from each investor.
D. fiat system
A. Stock
287. What is the primary reason for a com- B. Bond
pany to issue stock?
C. T-Note
A. The stocks help investors earn a
D. Mutual Fund
higher rate of return
B. To raise money to grow the company 291. Mutual funds are a great option for peo-
ple who need diversification and don’t
C. To distribute the risk of bankruptcy know much about investing.
across more investors
A. True
D. To increase greater awareness of the
company B. False

288. The quantitative techniques used to cal- 292. b) plans are offered to public employees
culate the financial costs and benefits in and are tax-deferred.
investments? A. True
A. Investment Appraisal B. False

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1.1 INVESTMENT BANKING 29

293. A share of the value of a company, which 299. Formal merchant banking activity in india
can be bought, sold or traded as an invest- was orginated in
ment and which gives the investor partial

PRACTICE BOOK» NOT FOR SALE

A. 1969
ownership of the company
A. CD B. 1963

B. Mutual Fund C. 1974

C. T-Note D. none of above
D. Stock
300. It is formalized supervisory and behav-
294. What is stock market? ioral rules and policies designed to ensure
consistency of decisions and actions across
A. Non-Fungible token
a firm’s units.
B. Trading of shares of privately listed
A. Synergy
companies
C. Trading of shares of public listed com- B. Junk bonds
panies C. Due diligence
D. none of these D. Bureaucratic controls
295. An English language teacher and an in-
vestment banker both: 301. A fee you’ll be charged for withdrawing
money before a CD’s maturity date
A. assign homework
A. Index
B. love English grammar
B. Interest
C. help people
D. earn a lot of money C. Risk
D. Penalty
296. A raw material or primary agricultural
product that can be bought and sold, such 302. Stock exchange is known as market
as copper or coffee for securities.
A. CD
A. Primary market
B. Dividend
B. Secondary market
C. Commodity
C. money market
D. Bond
D. Forex market
297. It is possible to lose all of your invested
money. 303. In which Act it was required commercial
A. True banking to be separated from investment
banking?
B. False
A. Glass-Steagall Act
298. Mutual funds are independent on the mar-
ket B. Gramm-Leach-Bliley Act
A. True C. Dodd-Frank Act
B. False D. none of above

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1.1 INVESTMENT BANKING 30

304. Which of the following are the three B. commercial bank

types of leverage buyouts, except? C. islamic bank
A. Employee Buyouts D. all answer
B. Management Buyouts
310. inflation risk arises due to:
C. Whole-firm buyouts
A. bank deposit
D. All of the Above
B. share trading
E. None of the Above

NARAYAN CHANGDER
C. inflation due to supply and demand
305. Bhadti’s name is life
D. stock exchange
A. axis bank
311. What is a potential conflict of interest in
B. bank of baroda
investment banking?
C. Bandhan Bank
A. Estimating the value of potential acqui-
D. bank of baroda sitions
306. When mergers and acquisition occurred, B. Sharing information between divisions
restructuring process will also take place. C. Providing strategic advice to clients
A. True D. Facilitating mergers and acquisitions
B. False
312. What is not a true statement about the
307. Most investors are risk averse which Capital Market is:
means: A. Long term transaction period, more
A. they will assume more risk only if they than 1 year
are compensated by higher expected re- B. Relatively low interest rates when
turn compared to the Money Market
B. they will always invest in the invest- C. Compared to the Money Market, Capi-
ment with the lowest possible risk tal Market risk is relatively low
C. they actively seek to maximize their re- D. The capital market is supervised by
turn BAPEPAM
D. they avoid the stock market due to the
313. Which is better
high degree of risk
A. RD
308. The overall collection of investments held
B. FD
by a person.
C. NFT
A. Fund
B. Portfolio D. none of above

C. Savings Account 314. What are the full forms of RD and FD

D. Certificate of Deposit A. Recurring deposit, fixed deposit

309. provider of a very standardized service. B. Ruler deposit, funding deposit

This refer to? C. recurring deposit, fraction deposits
A. investment bank D. none of these

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1.1 INVESTMENT BANKING 31

315. Which of the following is the activity 320. What is the purpose of a Chinese wall in
which finance people are involved? investment banking?

PRACTICE BOOK» NOT FOR SALE

A. marketing decision A. To prevent conflicts of interest
B. promotional decision B. To negotiate fair prices for acquisi-
tions
C. Investing decision
C. To facilitate information sharing
D. None of these
D. To generate revenue for the bank
316. What’s NOT a correct collocation?
321. It involve the deliberate and careful se-
A. diversify funds lection of target firms and an evaluation
B. allocate funds of the relative health of those firms con-
tribute to successful acquisitions.
C. follow funds
A. Financial slack
D. hedge funds
B. Complementary assets or resources
317. Process valuing money today to future C. Effective due-diligence process
A. Discounting D. Friendly acquisitions facilitate integra-
B. Compounding tion of firms
C. Annuity valuing 322. If you buy part of a company this is called
D. Installment a
A. Share
318. A special type of acquisition strategy
B. Dividend
wherein the target firm does not solicit the
acquiring firm’s bid. C. Patent
A. Hostile Takeover D. none of above

B. Acquisition 323. The most important function of a financial

market is:
C. Merger
A. to facilitate the flow of funds between
D. Takeover
lenders and borrowers
319. company analysis try to answer the ques- B. to provide a market for shares.
tions; (choose any two) C. to provide information about an issu-
A. Has the company performed better in ing company’s financial situation.
comparison with its performance in the D. to secure profits for brokers and
previous years? agents.
B. Has the company performed better in
324. Which investment bank had the biggest
managing the creditors?
global market share of revenue as of De-
C. Has the company performed better in cember 2021?
comparison with its susidiaries in foreign
A. JP Morgan
market
B. Goldman Sachs
D. Has the company performed better in
comparison with its peer companies in the C. Morgan Stanley
same industry? D. none of above

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1.1 INVESTMENT BANKING 32

325. For what kind of transactions are demat 331. What is the term for the profit made from
accounts necessary selling an investment for more than its pur-
A. For having mobile banking facilities chase price?
B. For taking retail loans from banks A. Dividend
C. For trading in shares of companies B. Capital gain
D. For non resident account C. Interest
326. It is best to start investing as soon as D. Return on Investment

NARAYAN CHANGDER
possible.
A. True 332. What is the purpose of a stress test?
B. False A. To determine if the institution could
survive a financial crisis
327. The purpose of financial markets is to?
B. To identify potential weaknesses in an
A. Lower the yield on bonds
institution’s financial position.
B. Allocate savings efficiently
C. To find the relation of assets and liabil-
C. Control inflation
ities and how well the institution manage
D. Increase the price of common stocks risks.
328. A mutual fund is a pool of money man- D. none of above
aged by a professional
A. Banker 333. Horse racing, game of cards, lottery are
the typical examples of
B. Bench plate
C. Accountant A. Investment

D. Fund manager B. Gambling

329. What is the role of investment bankers C. Speculation

in issuing new security offerings? D. Arbitrage
A. Assisting in raising financial capital
334. Investing in multiple blue chip, growth,
B. Offering ancillary services such as re-
and penny stocks are examples of
search and trading
C. Facilitating transactions and market- A. saving
making B. investing
D. Providing advice on mergers and ac- C. speculating
quisitions
D. none of above
330. This is the best way to earn money in the
stock market as it has a much larger re- 335. Discounting formula
turn.
A. FV = PV (1+i)n
A. IPO
B. dividends B. PV = FV / (1+i)n

C. capital gains C. EAR = (i/m.n)-1

D. exchange D. FVa={1-(1/(1+i)n)}/i

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1.1 INVESTMENT BANKING 33

336. Who controls money market? 341. When two firms agree to integrate their
operations called
A. RBI

PRACTICE BOOK» NOT FOR SALE

A. Merger
B. SBI
B. Acquisition
C. SEBI
D. IRDA 342. As a stockholder, you own a part of a
company.
337. Find odd one:challenges faced by the mer- A. True
chant bankers in India.
B. False
A. Entry restrictions
343. Banks are required to maintain adequate
B. Legal aspect
liquidity. Fulfillment of sufficient liquidity
C. Poor new issue market is calculated using:
D. Banking policies A. LCR.(Liquidity Coverage Ratio)
E. SEBI guidelines B. LDR (Loan Deposit Ratio)
C. Jum (change it and I will answer
338. Voting shares that are not paid a fixed minmm)
dividend are known as
D. NSFR (Net Stable Funding Ratio)
A. growth stock
344. What is it called when a lender and bor-
B. blue chip stock
rower deal directly with each other, with-
C. common stock out the help of a financial institution?
D. preferred stock A. Private room
B. Privacy Act of 2012
339. Functional of financial services exclude:
C. Private Placement
A. Mobilisation of savings D. Stocks and Bonds
B. Collection Tax 345. What is the difference between an In-
C. Allocation of funds vestment Bank and an Islamic Investment
Bank?
D. none of above
A. The products and services offered in
340. What is risk management? an Islamic Investment Bank is Shari’ah
compliant as per its Shari’ah Board
A. Monitoring and managing foreign in-
vestments B. Islamic Investment Banks only deal
with Islamic projects and transactions, in-
B. Seeking investment advice from a fi- cluding customers that are Islamic
nancial analyst
C. Investment Banks does not have any-
C. Evaluating and monitoring the risks in- thing to do with any Shari’ah compliant
volved in a particular investment services and transactions
D. Creating and managing retirement ac- D. All of the above are correct differences
counts between the two

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1.1 INVESTMENT BANKING 34

346. Which of the following is not an invest- 349. Which of these phrases is used for strong
ment? disagreement?
A. Wage A. Not necessarily.
B. Property B. I don’t see it this way.

C. Stocks C. True enough, but

D. I have to side with John on this one.
D. Shares

NARAYAN CHANGDER
350. What are the two primary issuance ob-
347. Which of the following is outside the jective that issuers set for investment
purview of investment class banks?
A. Purchase of debenture A. maximizing the value of the proceeds.
B. Savings bank deposits B. ensuring a rising trend in secondary
market share prices.
C. Current account deposits
C. selling all the share in a predeter-
D. Fixed deposits mined time frame.
348. Which division of an investment bank pro- D. minimizing fees and commissions
vides strategic advice to institutional in-
351. This type of retirement account is only of-
vestors?
fered to public employees.
A. Financial Advisors A. Traditional IRA
B. Mergers and Acquisitions B. Roth IRA
C. Research C. 403(b)
D. Trading D. None of the above

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