Evolution of Underwriting Practices in the Financial Sector
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Questions and Answers

Why did Goldman Sachs stop trading Gold?

  • It was too risky to trade Gold
  • Competitors were not interested in Gold trading
  • Regulations prohibited trading Gold
  • Gold was not manageable for them (correct)
  • What change in the industry drove most of the changes in Investment Banking?

  • Competition from other banks
  • Changes in regulations (correct)
  • Market trends
  • Technological advancements
  • What characteristic differentiated private equity firms before 2007?

  • They were part of the banks
  • They were not considered by investors
  • They were heavily regulated
  • They were valued differently (correct)
  • Which Investment Bank had restrictions on acting as advisors?

    <p>JP Morgan</p> Signup and view all the answers

    What drove the evolution of Investment Banking according to the text?

    <p>Changes in regulations</p> Signup and view all the answers

    What type of banks are JP Morgan and Citigroup described as in the text?

    <p>Commercial banks</p> Signup and view all the answers

    What is the historical definition of Investment Banking?

    <p>Providing support to customers in raising funds in capital markets</p> Signup and view all the answers

    In the world of Capital Markets, the relationship in Investment Banking is typically described as:

    <p>One-to-many</p> Signup and view all the answers

    Which of the following services is NOT typically offered by Investment Banks?

    <p>Insurance policy sales</p> Signup and view all the answers

    What are some characteristics important for an investment banker?

    <p>Valuation skills, Access to clients, and Technology knowledge</p> Signup and view all the answers

    How did the text describe the origin of Investment Banking?

    <p>Tied to primary markets</p> Signup and view all the answers

    Which term is NOT correctly paired with its corresponding type of financial instrument in the text?

    <p>Derivatives - DCM</p> Signup and view all the answers

    What was the main reason behind some companies in the 1960s transitioning to become advisors in the field of Investment Banking?

    <p>They lacked the required financial strength for underwriting activities</p> Signup and view all the answers

    Which segment is NOT typically included in the modern definition of Investment Banking?

    <p>Retail Banking Services</p> Signup and view all the answers

    What was a key factor that facilitated the transition of Investment Banking from a strict definition to a broader one?

    <p>Approval from regulators favoring financial conglomerates</p> Signup and view all the answers

    Which service offered by Investment Banks involves providing guidance at every stage of a company's life?

    <p>Mergers and Acquisitions (M&amp;A) Advisory</p> Signup and view all the answers

    During which period did the focus of Investment Banking shift towards Risk Management activities?

    <p>1980s - 1990s</p> Signup and view all the answers

    What aspect differentiated companies that transitioned to advisory roles in Investment Banking during the 1960s from others?

    <p>Skill set without financial strength requirement</p> Signup and view all the answers

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