What is cheaper, preferred or common stock?
Banking Operations Interview Questions
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Why do you want to work for HSBC?
If there is a 500 dollars of capital expenditure in the income statement wiping out all the last year's cash flow, how do you do it.
Pre-deal situation BuyCo plans to acquire 100% shares of SellCo in a stock-for-stock transaction. BuyCo has a net income of $300,000 and 100,000 shares outstanding Market shareprice of BuyCo is $50.0 Pre-deal EPS = $3.0 Pre-deal P/E = 16.7x SellCo has a net income of $100,000 and 50,000 shares outstanding Market shareprice of SellCo is $60.0 Pre-deal EPS = $2.0 Pre-deal P/E = 30.0x The deal BuyCo agrees to pay a premium for control of 30%, so the offer price for one SellCo share is 1.3*$60.0 = $78.0 Stock-for-stock exchange ratio is $78/$50 = 1.56 of BuyCo shares for one SellCo share BuyCo issues 1.56*50,000 = 78,000 new shares to exchange them for all the SellCo shares outstanding Total shares of NewCo = 100,000 (pre-deal shares of BuyCo) + 78,000 (new shares) = 178,000 shares NewCo expected EPS = Total net income/Total shares outstanding = ($300,000+$100,000)/178,000 = $2.25 NewCo expected shareprice = (P/E of BuyCo)*(expected EPS) = 16.7x*$2.25 = $37.45 Post-deal situation EPS of NewCo fall from $3.0 to $2.25, so the deal is 25% dilutive for BuyCo shareholders BuyCo shareholders own 100,000/178,000 = 56.18% of NewCo SellCo shareholders own 78,000/178,000 = 43.82% of NewCo http://en.wikipedia.org/wiki/Accretion/dilution_analysis
How strong you are in investment banking?
Tell me about yourself? Why SC?
Types of shares in detail
What firm evaluation methods do you know.
Suppose you have two buckets, one containing 50 white balls and one 50 black balls, how can you rearrange the balls allowing you the highest probability of selecting a black ball?
What happens to a company's enterprise value when it issues new shares and pays out those proceeds as dividends?
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