Investment Banking Practice Exam

About Investment Banking
Investment banks underwrite new debt and equity securities for all types of corporations, aid in the sale of securities, and help to facilitate mergers and acquisitions, reorganizations, and broker trades for both institutions and private investors. Investment banks also provide guidance to issuers regarding the issue and placement of stock.

Many large investment banking systems are affiliated with or subsidiaries of larger banking institutions, and many have become household names, the largest being Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America Merrill Lynch, and Deutsche Bank.

Investment banks employ investment bankers who help corporations, governments, and other groups plan and manage large projects, saving their client time and money by identifying risks associated with the project before the client moves forward.

Essentially, investment banks serve as middlemen between a company and investors when the company wants to issue stock or bonds. The investment bank assists with pricing financial instruments to maximize revenue and with navigating regulatory requirements.

Why is Investment Banking important?
The significance of investment banking companies is
•    Role as an Advisor: Raising capital funds is a tedious task for any organization, where the service of an investment bank comes into play. An investment firm can help sell the company’s shares by determining a good price using sophisticated financial models. Financial analysts look after factors such as earning potential, the strength of the management team while selling shares. Investment banks offer advice at the time of merger and acquisition by advising the management on how worth the company is and helping in the restructuring of the company.
•    Underwriting Stocks and Bonds: Underwriting is the process wherein the investment banks take financial risk in exchange for a fee. It involves conducting research and assessing the degree of risk involved in insurers’ business. An investment bank buys a certain number of bonds/stocks at a previously discussed price and resells them through an exchange. It is the job of the investment bank to prepare the documentation which must go to the Securities and Exchange Commission before the company can sell any share. Documentation will comprise of details such as financial statements, management information, current ownership, and future plans.
•    Other activities: Apart from advising and helping raise money for the companies, investment banks perform other functions as well such as research, trading and sales, asset management, wealth management, and securitized products.

Who should take the Investment Banking Exam?
•    Banking or Finance professionals
•    Banking or Finance managers and senior executives
•    Investment or Banking consultants
•    Any professional with skills and knowledge on investment banking
•    Anyone interested in investment banking

Knowledge and Skills required for the Investment Banking Practice Exam

Investment Bankers should have specific skills of persuasion, leadership and analytical bent of mind to excel.

Investment Banking Practice Exam Objectives

Investment Banking exam focuses on assessing your skills and knowledge in various aspects of investment banking covering financial analysis, valuation, M&A.

Investment Banking Practice Exam Pre-requisite

Knowledge of financial analysis and banking is essential and prerequisites for the Investment Banking exam.

Investment Banking Certification Course Outline
1. Accounting Essentials
1.1 Financial Terminologies
1.2 Accounting Concepts
1.3 Financial Statements
1.4 Reporting Mechanics

2. Financial Markets
2.1 Primary and secondary Market
2.2 Markets & Intermediaries
2.3 Securities, currencies. Contracts, commodities
2.4 Positions and Leverage
2.5 Order execution & validity

3. Financial Analysis
3.1 What is Financial Analysis
3.2 Components of Financial Analysis
3.3 Types of Ratios
3.4 Ratios Analysis
3.5 DuPont Analysis
3.6 Financial Analysis Applications

4. Capital Budgeting
4.1 NPV, IRR
4.2 Categories and principles of Capital budgeting
4.3 Payback periods and project ranking
4.4 Profitability index
4.5 Evaluation and selection of capital projects
4.6 WACC

5. Valuation
5.1 Valuation Basics
5.2 DCF Valuation
5.3 Gordon Growth Model
5.4 Relative Valuation
5.5 Asset Based Valuation
5.6 Evaluation of securities

6. Start Up Modeling
6.1 Initial Funding
6.2 Estimating Revenues-Expenses
6.3 Opportunity cost
6.4 Decision making

7. Mergers & Acquisition:
7.1 Types of M&A: Merger, Acquisition, Consolidation, Spin-off, Drivers for M&A,
7.2 Accounting for Mergers,
7.3 Differentiate between financing and operating synergies,
7.4 M&A Regulatory Environment, Developing M&A Models,
7.5 Integration of Financial Statements


Exam Format and Information
Certification name – Investment Banking Certification
Exam duration – 60 minutes
Exam type - Multiple Choice Questions
Eligibility / pre-requisite - None
Exam language - English
Exam format - Online
Passing score - 25
Exam Fees  - INR 1199