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Quizzes > Business & Finance

Investment Banking Quiz: 15 Questions on Valuation and Deals

Quick, free investment banker test-15 questions with instant results.

Editorial: Review CompletedCreated By: Stefano ContiUpdated Aug 23, 2025
Difficulty: Moderate
Questions: 15
Study OutcomesAdditional Reading
3D voxel art illustrating the concept of Investment Banking course

This investment banking quiz helps you check your grasp of valuation, M&A, and capital markets basics. If you want more practice with numbers and statements, try our financial accounting quiz and a quick debit and credit quiz. For sharper math speed, the quantitative aptitude test can help. Finish in minutes and see which topics to review before interviews.

The primary revenue streams for investment banks typically include which combination?
Subscription fees, advertising revenue, and in-app purchases
Advisory fees, underwriting fees, trading and sales, and asset management fees
Insurance premiums, reinsurance float, and policy surrender fees
Deposit interest, mortgage origination fees, and ATM surcharges
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In an IPO, which document serves as the primary marketing material to potential investors?
Term sheet
NDA
Engagement letter
Preliminary prospectus (red herring)
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During bookbuilding, what is the bookrunner's key objective?
Determine the investing public's tax liabilities
Draft the company's audited financial statements
Gauge investor demand to set an optimal price and allocation
Approve the issuer's board compensation
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A fairness opinion in M&A primarily addresses which question?
Whether the buyer can finance the deal
Whether the merger will create synergies
Whether the deal complies with antitrust laws
Whether the consideration offered is fair, from a financial point of view, to the client's shareholders
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Which multiple is most appropriate for valuing a capital-intensive, loss-making company with positive EBITDA?
Price/Earnings
Price/Book only
Dividend Yield
EV/EBITDA
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Which valuation method is best for capturing control premiums paid in takeovers?
Trading comparables
Dividend discount model only
Precedent transactions analysis
Replacement cost method
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In calculating WACC, which tax effect is commonly included?
Tax shield on interest, reducing the after-tax cost of debt
Tax shield on stock-based compensation
Tax on depreciation, increasing cost of capital
Tax shield on dividends, reducing cost of equity
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Which is the best description of the role of a lead-left bookrunner?
Custodian for investor funds
Auditor of the issuer
Primary coordinator for marketing, pricing, and allocation in a securities offering
Only responsible for legal documentation
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What does unlevered beta represent in valuation?
Company's total risk including unsystematic risk
Company's business risk without the effect of capital structure
Interest rate sensitivity only
Market risk premium
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Which item is added in calculating enterprise value from equity value?
Deferred tax assets
Treasury stock
Minority interest (non-controlling interest)
Accumulated other comprehensive income
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In an LBO, which lever primarily increases equity returns when exit multiples are unchanged?
Increasing capex above maintenance levels
Reducing working capital turns
Issuing new equity annually
Debt paydown through cash flow
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What is the primary purpose of a MAC (Material Adverse Change) clause in an acquisition agreement?
Allow buyer to terminate or renegotiate if a significant adverse event occurs
Guarantee regulatory approval
Mandate a fixed purchase price regardless of conditions
Provide seller with additional earnout payments
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Which is typically excluded from free cash flow to the firm (FCFF)?
Capital expenditures
Taxes on operating income
Changes in net working capital
Dividends paid to common shareholders
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In EV bridge calculations, which item is subtracted from enterprise value if held on the balance sheet?
Accounts payable
Excess cash and cash equivalents
Operating leases (post-IFRS 16)
Goodwill
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Which is a typical feature of mezzanine financing in PE deals?
First-lien security with revolver availability
Zero-coupon senior notes only
Subordinated debt with PIK interest and warrants
Government guarantee
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Which best describes a dividend recapitalization in PE?
Using cash to repurchase vendor notes
Issuing equity to retire debt
Raising new debt to pay a dividend to shareholders
Selling a minority stake to a strategic buyer
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In an M&A auction, the primary purpose of an indication of interest (IOI) is to:
Provide non-binding valuation range and key terms to progress to the next round
Fulfill regulatory notification requirements
Replace the NDA
Serve as a binding offer requiring board approval
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Which statement about PPA (purchase price allocation) post-acquisition is accurate?
Goodwill must be amortized over 40 years under U.S. GAAP
Identifiable intangible assets are recognized and amortized if finite-lived; goodwill is not amortized under U.S. GAAP
No fair value remeasurement is required
All intangibles are expensed immediately
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When valuing banks, which metric is most commonly used as a primary trading comparable?
Price to tangible book value (P/TBV) or P/BV
EV/EBITDA
Dividend payout ratio
EV/Revenue
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Which is the best description of a stapled financing package in an auction?
Public bond issued before signing
Bridge loan guaranteed by regulators
Mandatory financing provided by the target
Financing term sheet pre-arranged by the sell-side advisor for potential buyers
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Study Outcomes

  1. Understand and interpret financial statement analysis and ratio analysis techniques.
  2. Analyze and build financial models using practical data inputs.
  3. Apply valuation methodologies to assess company value effectively.
  4. Evaluate investment-banking deliverables such as pitch books and fairness opinions.

Investment Banking Additional Reading

Here are some top-notch resources to supercharge your investment banking knowledge:

  1. This Coursera course from the University of Illinois delves into financial statement analysis, valuation techniques, and modeling, aligning perfectly with your course objectives.
  2. This comprehensive guide from Mergers & Inquisitions explores the intricacies of fairness opinions, including their purpose, process, and real-world examples.
  3. Investopedia provides a clear and concise overview of fairness opinions, detailing their definition, importance, and an illustrative example.
  4. The Corporate Finance Institute offers an in-depth look at fairness opinions, discussing their significance, key considerations, and notable examples.
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