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CQIB - Chapter 1 - BUSINESS OF BANKING (80 QUESTIONS WITH COMPLETE SOLUTIONS).
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CQIB - Chapter 1 - BUSINESS OF BANKING (80 QUESTIONS WITH COMPLETE SOLUTIONS).
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CQIB - Chapter 1- BUSINESS OF
BANKING (80
QUESTIONS
WITH COMPLETE
SOLUTIONS)
financial intermediation - answer The process of
pooling funds from savers and using these to
provide loans to borrowers. The bank acts as a go
between or intermediary for those who have extra
money and those who want to borrow.
Role of Banks - answer Acts as a financial
intermediary between savers and borrowers, which
results in efficient use of pooled resources.
,Facilitates the creation of money by expanding the
supply of money through deposit and loan
transactions.
Creates financial products and services that
benefits its customers.
Develops mechanisms for transferring money and
making payments.
Contributes to the development of the economy
Investment Banking: what are Debt Capital
Markets? - answer Large Company or Government
wants to raise capital by issuing bonds
An investment bank would be involved in planning
the bond issuance, working with the issuer to
manage the documentation required to issue the
bonds, and help sell the bonds.
The investment bank would buy the securities at
one price and then add on a markup in the sale
,price and thereby generate a profit that
compensates for the risk they take on. This
difference is the underwriting spread. A lead bank
will normally work with a group of investment
banks, called a syndicate, to underwrite an issue so
that the risk is spread among others.
Investment Banking: A group of investment banks
is called? - answer Syndicate - A lead bank will
normally work with a group of investment banks,
called a syndicate, to underwrite an issue so that
the risk is spread among others.
Investment Banking: What is underwritten spread?
- answer The investment bank would buy the
securities at one price and then add on a mark-up
in the sale price and thereby generate a profit that
compensates for the risk they take on. This
difference is the underwriting spread.
Investment Banking: What is Equity capital
markets? - answer Where a company needs more
money to grow and decides to raise the funds by
undertaking an initial public offering (IPO).
Whereby it sells its shares to the public and a wider
pool of
, investors for the first time. The investment bank
will put together a prospectus explaining the terms
of the offering and the risks it carries, managing
the issuance process and helping the price of the
offering.
Investment Banking: Private placements - answer
Where customers plan an offering of bonds with an
institutional investor such as an insurance
company or a retirement fund. Often this can be a
fast track option due to lower regulatory
requirements.
Investment Banking: Mergers and acquisitions -
answer Where a company is looking to buy
another company, investment banks offer advice
on how the company should proceed with the
acquisition, including the pricing of the offer.
Investment banks need to establish information
barriers within the organizations to prevent
exchanges or communication that could lead to
conflict of interest.
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