Investment Banking
What is the main role of an investment bank?
Help companies raise money and advise on mergers and acquisitions?
What type of companies do VCs invest in?
Startups or early stage companies
What do private equity firms do?
Buy, improve, and sell companies for profit
What does it mean when a stock "goes public"?
It starts trading on the stock exchange
What is an IPO?
Initial Public Offering, when a private company sells shares to the public.
What is equity?
Ownership in a company
What does LBO stand for?
Leveraged Buyout.
An index of 500 major US companies
What do investment bankers do in a merger?
Help companies combine by negotiating deals and valuing businesses
What is a term sheet?
A document outlining the key terms of a VC investment
How is PE different from VC?
PE buys established companies; VC invests in startups.
What is a dividend?
A payment to shareholders from company profits
Name two major investment banks.
Goldman Sachs, J.P. Morgan, Morgan Stanley, etc.
What does “Series A funding” mean?
The first round of VC investment after seed funding.
Name one big private equity firm.
Blackstone, KKR, Carlyle Group, etc.
What does the term "buy low, sell high" mean?
Buying stocks when they are cheap and selling when they are expensive
What is a financial model used for in investment banking?
To analyze a company’s performance and predict future earnings.
What is a cap table?
A table showing ownership percentages and investment history in a startup
What is an exit strategy in private equity?
A plan to sell an investment for a profit, such as through an IPO or acquisition
What is short selling?
Betting that a stocks price will go down