Premium Essay

Private Equity Fund Final Take Home Exam

In: Business and Management

Submitted By donghuni99
Words 2191
Pages 9
Private Equity Investments - Final Exam

(July/ 4/ 2011)

Question 1-a
a. What are financial theory and concepts that support and rationalize activities of parties involved in the events leading to the financial crisis? Why and how did the meltdown happen? Is the model used in the process wrong?
Answer 1-a
Moral hazard nurtured by Real estate and MBS bubble;
House prices of the United States had risen steadily since 1975. This trend accelerated in 1996, and reached about 12 percent per annum in late 2005 and early 2006. One reason for the rise in house prices is the Federal Reserve’s policy of maintaining low interest rates after the 2001 recession.

Under these market situation, mortgage loan and mortgage backed securities market became more popular and bigger. The financial markets’ appetite for mortgage product also resulted in more creative and complex financial products and strategies such as MBS (Mortgage-backed securities), CDO (Collateralized debt obligation), ABCP (Asset-backed commercial paper), Conduits, SIV (Structured investment vehicles). For example, according to the case, the S&L crisis also boosted the securitization of mortgages by two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Starting with bundles of mortgages purchased from mortgage originators, the GSEs created and sold mortgage-backed securities (MBSs), which delivered to holders the payments made on these mortgages. In exchange for a fee, the GSEs guaranteed the interest and principal on these loans. This meant that, assuming the GSEs remained solvent (or that the government came to their rescue if they found themselves in financial trouble), the only payment risk faced by the holders of these MBSs was the risk that the underlying mortgages would be repaid before they were due (known as prepayment risk). At that time, Popularity of “Subprime

Similar Documents

Free Essay

Assignment Sheet

...ASSIGNMENT SHEET TUESDAY, JANUARY 17, 2012 CLASS 1– INTRODUCTION AND GOALS FOR THE SEMESTER A. CLASS LECTURE Review of Topics, Assignment Sheets, and Course Outline The Case Method - Rules for Classroom Discussion Instruction for the Formation of Study & Project Groups B. Professor/Student Introductions C. Readings from Course Packet: 1. Fin 394.4 Syllabus - Course Outline and Grading Policy 2. “Course Introduction” 3. Note to the Student: How to Study and Discuss Cases 4. “The Case Method” - Jeff Sandefer 5. “Classroom Discussion” - Jeff Sandefer 6. “Note on Study Groups” - Jeff Sandefer ASSIGNMENT: 1. PURCHASE THE COURSE PACKET 2. BRING YOUR RESUME TO THE NEXT CLASS 3. BROWSE THE CLASS BLACKBOARD SITE: (HTTP://COURSES.UTEXAS.EDU/) AND LOOK AT THE EXTERNAL LINKS AND COURSE DOCUMENTS POSTED. a. Case Exhibits b. Case Solutions c. Valuation Templates d. Valuation External Links e. Project Information ASSIGNMENT SHEET THURSDAY, JANUARY 19, 2012 CLASS 2 – WORK FOR MONEY OR MONEY WORK FOR YOU? A. Turn in Resume B. Form study groups (self-select 4-6 people with different education, concentration, work experience and cultural background). Send e-mail to the professor with...

Words: 4007 - Pages: 17

Premium Essay

Fia Fa1

...transactions 24 6. Purchases and credit transactions 29 7. Payroll 32 8. Page | 2 3 Control accounts and initial trial balance 34 © 2011 The ExP Group. Individuals may reproduce this material if it is for their own private study use only. Reproduction by any means for any other purpose is prohibited. These course materials are for educational purposes only and so are necessarily simplified and summarised. Always obtain expert advice on any specific issue. Refer to our full terms and conditions of use. No liability for damage arising from use of these notes will be accepted by the ExP Group. ExPress Notes FIA FA1 Recording Financial Transactions START About ExPress Notes We are very pleased that you have downloaded a copy of our ExPress notes for this paper. We expect that you are keen to get on with the job in hand, so we will keep the introduction brief. First, we would like to draw your attention to the terms and conditions of usage. It’s a condition of printing these notes that you agree to the terms and conditions of usage. These are available to view at www.theexpgroup.com. Essentially, we want to help people get through their exams. If you are a student for the ACCA exams and you are using these notes for yourself only, you will have no problems complying with our fair use policy. You will however need to get our written permission in advance if you want to use these notes as part of a training programme that you...

Words: 9725 - Pages: 39

Premium Essay

Company Law

...how mergers and acquisitions are structured and why particular deals create value for firms. The course will examine the various techniques and deal terms that have profound effects on both parties and the outcome of the transaction. The course will include actual transactions as well as drafting exercises. We will focus on the barriers to optimal structuring and techniques for eliminating drafting problems. Emphasis will be given to understanding the legal responsibilities of the buyer and seller, as well as the financial, tax and regulatory treatment of the deal, the techniques for putting the deal together, corporate acquisition agreements and the securities and governance issues that arise in deals involving publicly listed and private companies. The course will encourage students to become familiar with the techniques used in corporate acquisitions and related transactions. Materials The readings will be posted on Blackboard. Case studies can be purchased directly from the publisher. Course Book Sherman, Andrew and Hart, Milledge A. Mergers and Acquisitions: From A to Z (Second/Third Edition) AMACOM (available in University Library and Business Law Department) Recommended Sudarsanam, Sudi, Creating Value From Mergers and Acquisitions, (Second Edition) Prentice Hall (available in University Library and Business Law Department) Written Assignments and Grades Cases You must...

Words: 1459 - Pages: 6

Premium Essay

Metal Joining Processes

...Ashwin M. Patel company secretary & Compliance Officer * Resigned w.e.f. 17 June, 2013 BaNkers Citi Bank NA Axis Bank Limited The Shamrao Vitthal Co-operative Bank Limited Chartered Accountants 1/74, Krishna Kunj, R. A. Kidwai Road, King’s Circle, Matunga (C. Rly.), Mumbai - 400 019 statUtorY aUditors shaparia & Mehta iNterNaL aUditors Mukund N. chitale & co. Chartered Accountants 204-205 - A Agrawal Shyamkamal, Vile Parle (East), Mumbai - 400 057 reGistered office 220, 2nd Floor, ‘‘FLYING COLORS’’, Pandit Din Dayal Upadhyay Marg, L.B.S Cross Road, Mulund (West), Mumbai - 400 080 Tel No. (022) 2593 7700 / 800 / 900 Fax No.(022) 2593 7799 Email : info@mteducare.com reGistrar & traNsfer aGeNts Link Intime India Private Limited C-13, Pannalal Silk Mill Compound L.B.S. Marg, Bhandup (West) Mumbai - 400 078 Tel: (91 22) 2596 0320 Fax: (91 22) 2596 0329 Investor Grievance Email: mtel.ipo@linkintime.co.in 1 We Are Focused • Futuristic • Innovative • Inquisitive • Collaborative Committed • Supportive • Technology driven We are mt eduCare… 2 We...

Words: 40793 - Pages: 164

Free Essay

Acc 497 Final Exam Question and Answers

...Section 351 is an example of a negative aspect of the corporate form of business organization. 3. Which of the following statements is true? A. Formation of a partnership requires legal documentation. B. An individual engaged in the active conduct of a business must elect not to be taxed as a partnership. C. If two people (or business entities) work together to carry on any business or financial operation with the intention of making a profit and sharing that profit as co-owners, a partnership exists for federal income tax purposes. D. The partnership form of business creates double-taxation because individual partners are taxed, and the partnership is also taxed as a separate legal entity. Want to download the Final Exam answers..?? Click ACC 497 Final Exam BUSINESS ENVIRONMENT AND CONCEPTS Section 2: Economic Concepts Essential to Obtaining an Understanding of an Entity's Business and Industry 4. What effect would a decrease in interest rates by the Federal Reserve most likely have in the nation’s manufacturing sector, all other factors remaining constant? A. An increase in both production and employment B. A decrease in both production...

Words: 6211 - Pages: 25

Premium Essay

Mba Outline

...COURSE AND SUBJECT GUIDE POSTGRADUATE MANAGEMENT PROGRAMS 2010 The information contained in this Course and Subject Guide: • • is current only at the date it is published and Melbourne Business School is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date; and is not intended to provide or make recommendation on which you should rely. Melbourne Business School reserves the right to change course content, lecturers, course time, examination procedures and other course details. To the extent permitted by law, Melbourne Business School specifically excludes any liability for any error or inaccuracy in, or omissions from, the information in this Guide and any loss or damage which you or any person may suffer. Last updated: 12 March 2010 1 2 MELBOURNE BUSINESS SCHOOL 2010 ACADEMIC CALENDAR ___________________________________________________________________ TERM 1 Thursday Monday Tuesday 14 January 18 January 26 January Orientation Evening – Weekend Mode and Standard Part Time World of Management Weekend Mode and Part Time (until Friday 22 January) Australia Day Academic School Holiday Carlton Campus on Sunday operations Monday Thursday Friday Monday Thursday Friday Friday Thursday Friday Sunday 9 February 18 February 26 February 8 March 18 March 19 March 2 April 15 April 16 April 25 April Commencement Term 1 Teaching (standard 12-week format subjects) Weekend Mode – Module 1a (until...

Words: 31716 - Pages: 127

Premium Essay

Fin380 Final Exam Study Guide

...FGB 380 Common Final Exam The final exam consists of 60 multiple choice and/or true false questions worth 2.5 points each. The 60 assessment items may include, but are not limited to the following: 1. The goal of the financial manager Chapter 1 Maximize stockholder’s wealth 2. Legal forms of business organization, with specific emphasis on the advantages/disadvantages of corporations Sole Proprietorship: a business owned by one individual (greatest in number of the forms) Advantages: Easiest to start, least regulated, single owner gets all profits, taxed as personal income Disadvantages: Limited to life of owner, equity capital limited to owner’s personal wealth, unlimited liability, difficult to sell ownership interest Partnership: Similar to sole proprietorship, except the business has more than one owner. Advantages: more capital available and relatively easy to start, taxation is simple (each owner reports their percentage of income Disadvantages: unlimited liability extends to both partners (joint and severally liable), difficult to raise capital, difficult to transfer ownership NOTE: A limited partnership limits the partners to their investment, but one partner has to be unlimitedly liable Corporation: a separate legal entity that exists apart from its owners (shareholders or stockholders). Most important in total sales, assets, profits, and contributions to national income. Advantages: limited...

Words: 7152 - Pages: 29

Premium Essay

Caia

............................................................................... 2 Sample Exam Questions ............................................................................................................................. 2 Exercises ...................................................................................................................................................... 2 Errata Sheet................................................................................................................................................. 2 The Level II Examination and Completion of the Program ................................................................... 3 Topic 1: Professional Standards and Ethics ......................................................................................... 4 Topic 2: Introduction to Alternative Investments................................................................................ 6 Topic 3: Real Assets .............................................................................................................................. 20 Topic 4: Hedge Funds ........................................................................................................................... 29 Topic 5: Commodities ........................................................................................................................... 48 Topic 6: Private Equity .........................................................................................

Words: 31020 - Pages: 125

Premium Essay

Comparison Between Pnb & Sbi

...COMPARATIVE STUDY OF HOME LOANS OF PNB AND SBI BANK. A dissertation submitted to Department of Management in partial fulfillment of the requirement for the award of degree of BACHELOR OF BUSINESS ADMINISTRATION (HONS.) Submitted by: KOMAL MARWAHA 7020070003 Supervisor: Miss Monika Kanali (lect,lpu) LOVELY PROFESSIONAL UNIVERSITY PHAGWARA 2010 1 TO WHOMSOEVER IT MAY CONCERN This is to certify that the project report titled “Comparative study of home loans of PNB and SBI” carried out by Miss KOMAL MARWAHA, D/o RAJESH MARWAHA has been accomplished under my guidance & supervision as a duly registered BBA(Hons) student of the Department of Management, Lovely Professional University, Phagwara. This project is being submitted by him/her in the partial fulfillment of the requirements for the award of the BBA(Hons) from Lovely Professional University. Her dissertation represents her original work and is worthy of consideration for the award of the degree of BBA(Hons) ___________________________________ (Name & Signature of the Faculty Advisor) Title: ______________________________ Dare: ______________________________ 2 DECLARATION I KOMAL MARWAHA, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in...

Words: 15791 - Pages: 64

Premium Essay

Financial Crisis

...Th Fi ncial Cris he inan sis: 2007 2 7-2009 gar N g A. Norton, Jr. Illin nois Sta Uni ate iversity y Cover page im mage ©2010 Pho otoDisc, Inc. Copyright © 2010 by John Wiley & Sons, Inc W c. All rights rese erved. No part of thi publication ma be reproduced stored in a ret is ay d, trieval system or transmitted r in any form o by any means, electronic, mec or , chanical, photoco opying, recordin scanning ng, or otherwise, except as permi itted under Sections 107 or 108 o the 1976 Unit States of ted Copyright Ac without either the prior writte permission of the Publisher, o authorization t ct, r en f or through payment of th appropriate pe he er-copy fee to th Copyright Cle he earance Center, I Inc., 222 Rosewo Drive, ood Danvers, MA 01923, website www.copyright A e t.com. Requests to the Publisher for permission should be r addressed to t Permissions Department, Joh Wiley & Son Inc., 111 Rive Street, Hobok NJ 07030the hn ns, er ken, 5774, (201)74 48-6011, fax (20 01)748-6008, we ebsite http://www w.wiley.com/go/ /permissions. To order book or for custom service, pleas call 1(800)-CA ks mer se ALL-WILEY (2 225-5945). Printed in the United States of America. e o ISBN 978- 0-470-56516-2 The Financial Crisis: 2007-2009 Objectives Understand the major influences that led to the 2007 2009 Financial Crises Describe the role that agency cost issues played in the financing of mortgages to developing...

Words: 17010 - Pages: 69

Premium Essay

Merchant Banking

...INTRODUCTION: Financial institution that specializes in services such as acceptance of bills of exchange, hire purchase or installment buying, international trade financing, long-term loans, and management of INVESTMENT portfolios. Merchant banks also advise on (and INVEST own funds in) acquisitions, mergers, and takeovers. In the US, a merchant account provider is sometimes called a merchant bank. The Notification of the Ministry of Finance defines merchant banker as ³Any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities as manager-consultant, advisor or rendering corporate advisory services in relation to such issue management. In the words of Skully A Merchant Bank could be best defined as a financial institution conducting money market activities and lending, underwriting and financial advice, and INVESTMENTservices whose organization is characterized by a high proportion of professional staff able to able to approach problems in an innovative manner and to make and implement decisions rapidly. A merchant bank differs from a regular investment bank as it generally deals in the commercial banking requirements of international finance as well as stock underwriting and long-term corporate loans. A merchant bank is known as a wholesale bank and isn't used by the general public. Most merchant banks deal with large corporations as well as with other merchant banks, large financial...

Words: 16273 - Pages: 66

Premium Essay

Adms 3660

...ADMS 3660R 2016 Final Take-home Exam Due 9 April 2016 Please read the following hypothetical scenario and the follow the instructions below. Scenario TideeKleen Waste Management Inc. (TK) has been regarded as a leader in corporate citizenship within the Canadian commercial waste recycling and disposal sector, with a strong reputation for social and environmental responsibility. The company’s workers are unionized, well-paid, and enjoy a generous health benefits package and defined-benefit pension plan. Unfortunately, TK has been in a financial and reputational slump of late. Although there are no foreseeable threats to its solvency, TK’s profit margins are thinner than in the past and its stock price has been sagging. TK operates several facilities for sorting and processing solid waste (some of which, such as fluorescent tubes and electronic devices, containing potential hazardous components). Its newer facilities are state-of-the-art: high-tech, largely automated, and very safe for both workers and the environment. These new facilities employ a small, mostly young and highly skilled work force. They are very profitable. The older facilities are approaching the end of their functional lifespans, and the company will need to replace their capacity in order to continue to fulfill their contracts with waste generators. Many of the workers at the older facilities are themselves older and are approaching retirement. One of the older facilities, though complying with...

Words: 2231 - Pages: 9

Premium Essay

Career Guide to Hedge Funds

...purchased by academic libraries for their career sections [and] university career centers.” – Library Journal “The granddaddy of worker sites.” – US News and World Report “A killer app.” – New York Times One of Forbes’ 33 “Favorite Sites” – Forbes “To get the unvarnished scoop, check out Vault.” – Smart Money Magazine “Vault has a wealth of information about major employers and jobsearching strategies as well as comments from workers about their experiences at specific companies.” – The Washington Post “A key reference for those who want to know what it takes to get hired by a law firm and what to expect once they get there.” – New York Law Journal “Vault [provides] the skinny on working conditions at all kinds of companies from current and former employees.” – USA Today HEDG FUND CARE VAULT CAREER GUIDE TO HEDGE FUNDS © 2007 Vault, Inc. HEDG FUND VAULT CAREER GUIDE TO HEDGE FUNDS ADITI A. DAVARE, HOLLY GOODRICH, MICHAEL MARTINEZ AND THE STAFF OF VAULT © 2007 Vault, Inc. Copyright © 2007 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and “the most trusted...

Words: 59940 - Pages: 240

Premium Essay

Reader Englisch M1.2 Business School 2014-2015

...previous field of study, no exemption will be granted for following the Start-Up English module as we thoroughly prepare you for all other Business English modules you may have in the future. The module consists of seven two-hour lessons in which you will be able to display your language skills: reading, writing, listening and speaking. Whether or not you have the necessary knowledge to meet the required level of proficiency will be tested in a written (multiple choice) examination during the exam period. The final grade must be at least 5.5 for you to be awarded the 2 credits available for this module. Again, this module serves as the starting point for all English courses at the Windesheim Business School, irrespective of your field of study. We believe it is of vital importance to not only acquire passive language skills but also practise and acquire active skills in English. Make sure that you actively participate in the English classes to prepare yourself for the final exam in which both of these skills will be tested. We hope this is a challenging experience and that you will do your utmost to come “up to scratch”. Good luck! July 2013, Dinand Warringa Marianne van Vlierden Ellen Keates August 2014, Revised by Bas de Leve 2. Study guide...

Words: 9648 - Pages: 39

Premium Essay

Abcd

...global financial system. These ―Legal Enablers‖ fostered the boom that enriched a class of financial intermediaries who followed a storied tradition of gambling away ―other people‘s money.‖2 These mechanisms also made the pain of the bust disproportionately felt by the middle class and poor while shielding the middlemen who created the problems. These legal Enablers permitted the growth of a shadow banking system, without investment limits, transparency or government oversight. In the shadows grew a variety of highly leveraged private investment pools, undercapitalized conduits of securitized loans and speculation in complex credit derivatives. The rationale for allowing this unregulated, parallel system was that it helped to create innovation and provide liquidity. The conventional wisdom was that any risks associated with a hands-off approach could be managed by the ―invisible hand‖3 of the market. In other words, instead of public police, it relied upon private gatekeepers. A legal framework including legislation, rules and court decisions supported this system. This legal structure depended upon corporate managers, counterparties, ―sophisticated investors‖ and the market generally to prevent irrational conduct. 4 The hands-off approach was premised upon a series of beliefs or expectations. The first was that corporate managers would not sacrifice long-term shareholder value for short-term gains. The second was that trading counterparties would monitor each other closely and discourage...

Words: 54952 - Pages: 220