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Club Deals in Investment Banking

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Questions and Answers

What is a distinctive characteristic of Club Deals?

A smaller loan that is pre-marked to a select group of lenders (correct)

A large loan that is offered to all lenders in the market

A loan that is only available to MNCs

A loan that is exclusively offered to a single lender

Why might a Club Deal be suitable?

During periods of low uncertainty

When the deal is perceived as conservative

During periods of higher uncertainty or when the deal is perceived as aggressive (correct)

When there are many lenders available

What happens before a Club Deal is competitively bid?

The borrower selects a single lender for the deal

The borrower negotiates with multiple lenders

The borrower signs all contracts and sets all conditions with multiple lenders (correct)

The borrower publishes the deal publicly for all lenders to see

How many lenders are typically involved in a Club Deal?

Around 3-5 lenders Signup and view all the answers

What is the role of the co-leads in a Club Deal?

To allocate the loan to other lenders in the club deal Signup and view all the answers

What type of transaction involves an investment bank willing to buy shares from the issuer and then sell the shares as quickly as possible to institutional investors?

Bought deals Signup and view all the answers

Which type of transaction is commonly used in the US?

Accelerated book building Signup and view all the answers

What type of transaction is typically used for large issuers?

Accelerated book building Signup and view all the answers

What is the main characteristic of a private placement transaction?

It is a private sale of securities to a small number of investors Signup and view all the answers

Which of the following is NOT a type of transaction?

Club Deals Signup and view all the answers

What is the primary purpose of issuing bonus shares?

To prevent investors from selling their shares for a certain period of time Signup and view all the answers

What is a unique feature of the green-shoe option?

It permits the advisor to artificially influence the market price Signup and view all the answers

What is the relationship between Nestle and Alcon?

Nestle and Alcon are companies in different sectors Signup and view all the answers

What is the purpose of the additional fees paid to the advisor in the green-shoe option?

To compensate the advisor for influencing the market price Signup and view all the answers

What can be inferred about the relationship between Nestle and Alcon?

Nestle and Alcon are unrelated companies Signup and view all the answers