IBC

Middle Market Banks

&50 million to $500, or usually provide some range as bulge bracket. Some resemble regional by offering services to a particular industry or sector.

Middle Market Banks

* $50-500 million * many cities * many services, Equity capital markets, Debt capital markets, restructuring, M&A o BMO Capital Markets o Duff and Phelps o RBC capital markets o Royal Bank of Scotland o William Blair & Co. o KPMG o Robert W Baird

Bulge Bracket Banks

* Biggest deals, over $1 billion * National and global * Both advisory and financing services, asset management, trading, commercial banking o Bank of a Merrill Lynch o Barclays o Citigroup o Goldman Sachs o JP Morgan o Morgan Stanley

Types of Markets(Sector)

* Broad describe larger terms * Basic materials * More general

Commodities

* Energy, metals, livestock, agriculture * Traded in exchanges * Can secure insurance against volatile prices

ETFs(Exchange Traded Funds)

* Exchange traded fund * One single ETF represents an entire segment of the market * Track index, clearly defines an index * No manager, computer based * Cost effective * Give investors ability to diversify around single sector

Capitial Markets

* Longer maturities - longer than a year * Stock and bond markets * Stock exchanges * Use capital for long term purposes * Issue debt for bond markets * New securities bought and sold on primary markets

Types of Markets(Industry)

* More defined sectors, life insurance vs. financial sector Mutual Funds * Diversified, easy to invest in * Managed portfolio * Ex;Morningstar

Hedge Funds

* Open to only accredited investors who have a net worth of at least a million dollars * must give up liquidity * Higher rates

Boutique Banks

* Regional * Smaller amounts - under $50 million * M&A mostly o Babson Capital Market o Grace Matthews o Berkshire Capital o Boston Capital

5 company CEO's

*JPMorgan Chase: James Dimon * Goldman Sachs: Lloyd Blankfein * Morgan Stanley: James Gorman * Bank of America Merrill Lynch: Brian Moynihan * Deutsche Bank: christian sewing * Wells Fargo: Tim Sloan

Liquidity

*describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.

What did the S&P, Dow Jones, NASDAQ, MSCI inc stock close at today

2,488.03 - 2,940.91 22,219- 26,769 6,343 - 8057 116-176

Bear Market territory?

A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases.

Subsidiary

A company with stock that is more than 50% controlled by another company. (parent company)

What can I bring to IBC?

A strong interest in Investment Banking. I haven't taken any business classes in college, so everything i've talked about today I have learned on my own outside of the classroom. I will continue to do the same thing in IBC, learning as much about investment banking in club meetings, or in my free time. I also bring an advantage. Im a mechanical engineering major which means i'm different then the majority of majors applying for Investment Banking. Besides networking, this will be a way I can put my foot into companies doors, or get my resume pulled for an interview. Going along with my first point, I have shown I can work hard and that I am a quick learner. I know there is more parts of investment banking I need to learn, I will put in the work to learn everything I can to become a successful investment banker.

Favorite company

Amazon. Just recently hit a market valuation of $1 Trillion and dominate the online retail industry. This became my favorite company based off of a recent article I read on Jeff bezos the amazon ceo. He explained how it's important to make 3 high quality decisions a day. This includes getting 8 hours of sleep which I wouldn't really expect from a man worth hundreds of billions of dollars. He also schedules his important meetings in the afternoon while his mind is functionig best. Its a good philosophy and reminds people that working too much and not taking the correct amount of time to give your mind a break, will prevent you from being your best

FED

Conduct Monetary Policy: increasing or decreasing the money supply to speed up or slow down the overall economy. When interest rates are low, borrowers will spend more and borrow more from the banks. Fed manipulates interest rates by changing the money supply. When the fed supplies more money, rates go down because banks will be forced to lower them because shoppers will be going around for the best deal. Decrease has the opposite effect.

M&A

Consolidation of companies or a assets through financial transactions merges, acquisitions, consolidations, tender offers, 2 companies involved.

Debt vs Equity financing

Debt: Biggest advantage of using debt is control and ownership. You get to make all decisions and keep all the profits. Business debt can create more tax deductions, payments on debt-interest-are before earnings and receive a tax deduction as a business expense. Fault of debt is repayment. You could be faced with having to sell your car. Equity: The process of raising capital through the sale of shares in an enterprise. Startups fail at a very high rate so equity financing is the most used option because banks wont often loan to an entrepreneur. (includes a few thousand dollars to an entrepreneur from a private investor or to an initial public offering(IPO). Vs First, interest on debt is tax deductible (tax shield), In when a company filed for bankruptcy and is liquidating debt has seniority over equity (they will get paid before the shareholders)

Contractionary Fiscal policy

Decrease gov spending, increase taxes (in inflamatory gap)

Discounted Cash Flow

Determines intrinsic value. Uses a company's free cash flows and weighted average cost of capital, which accounts for the time value of money, and then discounts all its future cash flow back to present day.

So what happens?

Does not directly affect the stock market. It might slow the earnings of companies since they are not as tempted to grow since interest rates are higher. So since earnings may decrease, the stock price could decrease. Nothing really happens to the stock market.

Five world leaders:

Donald Trump US, Vladimir Putin Russia, Xi Jinping (shziii jinpang, Kim Jong-un north korea, Germany chancoler angela merkel. Prime minister United Kingdom Theresa May

Extra Cash

Extra Cash In the short term, buybacks can often lift a company's stock price. Once the company repurchases stock, there are fewer shares outstanding, which, in turn, lifts earning per share. They can invest it into adding new products to attract a different target market. This will hopefully increase profits down the road. They could increase their dividends to award shareholders. Depends on the companies strategy. You could reinvest it to improve infrastructure, streamline manufacturing, strengthening customer support, a refined marketing strategy. Maybe with the extra cash you decided your business is ready to expand so you take out a loan, I know this is kind of indirect but can be a reason for having extra cash. If it's a small company maybe hire someone to free up your time so you can network more. Invest in training for yourself or your employees. Offer an apprenticeship program to your favorite employee, offer them education and in return have them sign a long term contract. Well educated workforce can be a significant asset to your company.

Company Evaluation

For a big company first decide if market capitalization is the best option. (multiplying the total number of shares by the present share price.) For any or smaller that isn't public evaluate it intrinsically. This would involve looking at their financials and analyzing their growth potential. A good method is to use Discounted cash flow for public companies. This specifically measures the attractiveness of an investment opportunity. Uses future free cash flow values and discountes them to reach enterprise value. Look for dcf above current cost. Use Wacc(weighted average cost of capital) the risk of the cash flow and uses it as the discount rate. DCF = [CF1 / (1+r)1] + [CF2 / (1+r)2] + ... + [CFn / (1+r)n] where r is the discount rate, CF future cash flow in multiple periods. The formula calculates enterprise value. Subtracts net debt from its enterprise value. Divide this new fair value by the value of the company's outstanding shares, this gets the DCF. Or you could look at the company relative to other companies in the industry. This would be (name similar companies). This begins with a peer group of similar companies of similar size in the same industry. By comparing the company to its competitors on a regular basis one can eventually obtain a companies enterprise value and other ratios to compare the company.

Product Groups

Have a focus on specific IB financial products. IPOs, M&As corporate restructure. Product groups organized according to their principal activities. Debt Capital markets - Equity capital markets Leveraged finance M&As Debt advisory services

Inflation thing in world and markets?

Higher interest rates in one country tend to increase the value of its currency. This also tends to attract foreign investors, thus increasing the demand for the currency. But the relationship between high interest rates and inflation complicates matters. When interest rates in a company rise, inflation often follows. Higher inflation tends to decrease a currencies value. When evaluating its currency analyst use GDP and trade balance. They also look at debt because high levels will also lead to higher inflation rates, and possibly a currency devaluation. Seen as a safe haven even with all the debt, and it is a reserve currency for much of the world. Debt for the previous 12 months was 19.19 trillion, GDP 18.15 trillion.

Tell me about yourself?

I grew up in Naperville, IL, where my interest for finance began. My grandpa was big on finance and encouraged me to start investing while I was young. By the time I was 11 years old I had my first online trading account, and was so intrigued by how volatile my money became compared to my savings account. While I was in highschool I took as many business electives as I could. Including my favorite class, Virtual Enterprises International, which was a student led company. Throughout High School I made many visits to my Dad who lived in Madison. The exciting sports and social atmosphere, along with exploring all parts of campus initially sparked my interest in becoming a student here. It was when I found out the strong academic reputation that Madison had to offer, I knew it was the school for me. When picking a major, I decided on mechanical engineering even with my strong interest in business. Ultimately, I was influenced by my mom who always explained how getting a technical degree helped her excell in business. I made my decision based on how I could offer a creative perspective in business by learning the critical thinking and problem solving skills involved in mechanical engineering. The same creativity involved in working the large complicated transactions investment bankers deal with everyday. Which leads to another big aspect of Investment banking, being surrounded by some of the smartest individuals across the world to value these deals. I know I can offer leverage with my strong technical background and skill set. Sometimes approaching a problem in a different way can be more beneficial than the norm. IBC will put me on the right track to success in investment banking. It will develop my networking skills which I believe are the most important skills to get jobs in banking, and skills that engineers don't usually get hired for. Not to mention helping me get in contact with the right people, and improving my interviewing skills. I know I can put in the work required for investment banking jobs, as I've already proven great time management skills already with high grades on my coursework.

Expansionary monetary policy

If the fed wants to speed up the economy they will increase money supply, decrease interest rates, this will lead to more borrowing and spending.

What is IB and why do you want to do it?

If the investment bankers customer is looking for an acquisition, merger, or deal, its the investment bankers job to assist them with how much the company is worth and how to best structure the deal. 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.investment bankers are experts in their field who have their finger on the pulse of the current investing climate, so businesses and institutions turn to investment banks for advice on how best to plan their development, as investment bankers can tailor their recommendations to the present state of economic affairs. When a company holds its initial public offering (IPO), an investment bank will buy all or much of that company's shares directly from the company. Subsequently, as a proxy for the company holding the IPO, the investment bank will sell the shares on the market process of financing a large transaction is very intriguing to me how many ppl need to be involved, very fast past environment and deals are of such high value. Such as an IPO could be the biggest and most important deal of that company's life.

Private Equity

In PE funds and investors seek out under performances or under valued companies that they can take private and turn around, before going public years later. PE investments mostly come from institution investors and accredited investors.

Inflation vs unemployment?

In times of high unemployment, employers don't really feel the need to bid their employees since jobs are scarce. Wage inflation non existent. Inverse relationship. M&A Deal: PillPack delivers medicine to customers doors on a monthly basis, drugstocks dropped on the news. PillPack CEO TJ Parker: PIll Pack is a full service pharmacy that makes it simple and easy for folks that are managing multiple medications. We presort and package their medications into individual dose packs based on when they take them and deliver them to their door automatically. They also have pharmacist you can talk with on your mobile phone. This move shows amazons intent to push further into the health-care industry. It threaten to remove one of the few distinguishing factors pharmacy chains have relied on to fend off Amazon, the sale of prescription drugs. Shares of Walgreens CVS and Rite Aid all fell due to the news. The lost about 12.8 billion in market value on thursday alone. Terms for the deal were not disclosed buy is was said to be roughly $1 billion. Its expected to close during the second half of the year. The startup has raised $118 million in funding from investors and reached more than $100 million in revenue in 2017

Expansionary Fiscal policy

Increase gov spending, cut taxes (in recession gap), creates jobs, tax cut will increase disposable income which will increase spending.

Inflation Dollar Strength

Inflation is around 2%, this is good because previously it was low recovering from the reccession. Use consumer price index to calculate It will only be for sure good if it stays around this value. The US Dollar $1 dollar = .85 Euros, 6.84 Yen, .76 pound, 1.29 canadian dollar, 18.83 Peso

Intrinsic (fundamental) Value

Looks at qualitative (business model, governance and target market factors) and quantitative (ratios and financial statement analysis). This value is then compared with the market value.

Market

Major indexes rose a day earlier alongside commodities and other risk assets after analysts said new tariffs announced by the U.S. and China were less stringent than previously anticipated. More importantly I believe the market will continue to increase as we approach the fourth quarter because people feel the confidence of US economic stability, by the market rising over these past few months during the trade talks. S&P 500 increased by 428 points (16%) (based on 500 large companies having common stock in the NASDAQ. NASDAQ increased by 1800 points. This and NYSE biggest stock exchanges Dow jones industrial average: average value of 30 large industrial stocks. Increased by 8% since the start of the year.

M&A

Merger: 2 into 1 to expand a company's reach, expand into new segments, or gain market share.

Tender Offer

Offer to purchase some or all of a shareholder's shares in a corporation. Price offered usually at a premium to the market.

Contractionary Monetary policy

Opposite of this, increases unemployment After .com burst output was low, and unemployment was high. Fed used expansionary monetary policy and the economy began growing again

Leveraged Finance

Providing advice and loans to private equity firms and corporations for leveraged buyouts.

Federal funds rate?

Rate at which banks borrow from and lend to each other.

Bulge Bracket Banks

Regular handle multi billion dollar M&A deals. Unless economy is in bad state - operates internationally. Most have commercial and retail banking divisions.

Debt to Equity Ratio

Risk or leverage, indicates the relative proportion of shareholder's equity and debt used to finance a company's assets.

M&A Deal (Synergies).

SS&C technologies Holding Inc. is a financial software company that is a global provider of investment and financial software enabled services. Back in January they acquired DST Systems, Inc. (DST).DST Systems They are an American provider of advisory, technology and operations outsourcing to the financial and healthcare industries.The deal helped the two companies by creating a larger outsourcing of financial services and better enable clients to address increasing competitive and regulatory pressure. The biggest benefit I saw was how it Accelerates SS&C's move into the US retirement market. SS&C agreed to purchase Eze Software for an all cash transaction of 1.45 Billion in July to cater more to buyside investors (mutual funds, pension funds...). SS&C's award-winning outsourcing services, combined with our technology platform, will enable us to further distance ourselves from the competition." SS&C technologies is nearing its third major acquisition deal has agreed to buy Intralinks Holdings Inc. from Siris Capital Group LLC in a cash and stock deal worth about $1.5 Billion. $1 billion in cash and $500 million in SS&C stock, expected to close in the fourth quarter. Intralinks is a financial data provider focused on assisting customers with deal making, capital raising, and investor reporting. Another effort for SS&C to expand its business beyond clientele of hedge funds and private equity firms.

Coverage Groups

Separate groups within a bank, each having expertise in specific industries or market sectors. Develop client relationships with companies within various industries to bring financing, equity issue, or M&A business. A consumer & detail, financial institutions, technology, health care, energy and power, media and telecom.

Elite Boutiques

Similar to bulge bracket bonus (over $7 billion) (M&A) may not provide compute range of IB services. May limit to M&A. Usually start as regional.

Regional Boutique Banks

Smallest of the investment banks in terms of employee size and deal size. Specialize in a single area, such as M&As in a particular market sector. More commonly serve smaller firms and organizations. M&A deal size under 50 million.

Average annual return on index funds

The average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent. For 2017, in just under half a year, the S&P 500's total return is 9.7 percent.

When Interest rates rise?

The dollar appreciates or rises in value. Because our interest rates are increasing, other countries are buying our capital which cause the demand from us dollars to increase and increases the exchange rate, it takes more of another currency to buy an american dollar.

How it affects stocks?

The interest rate that moves markets is the federal funds rate. Rate banks are charged for borrowing money from the FED. Used to attempt to control inflation. By increasing the Federal funds rate, the fed attempts to shrink the supply of money available for purchasing or doing things, by making money more expensive to obtain. (expansionary vs contractionary monetary)

Security

Trade-able financial asset

Time I failed, what I learned?

When I first applied to UW Madison I got waitlisted. I think of this as a time I failed, and something that I still carry around with me, even after my first year here. Initially it was a let down because I know I would succeed at any school no matter how hard it was. I guess it was hard for them to initially see how driven I was. Now I have a 3.93 in mechanical engineering, and I am still trying to do more. Because of the time I failed, it motivates me even more to continue to succeed at the school that was at first unsure about me.

Bonds

When interest rates fall, bond prices go up. This is because you buy a bond at a fixed interest rate. So if your interest rate is 5% and new bonds are being issued at 3% then your bond is more attractive so your price goes up.

World

World poverty falls below 750 Million, it has declined by more than 1 billion in the last 25 years.

Consolidation

combining more things into a single thing to make it stronger

Money Markets

financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending the short term, maturities that usually range from overnight to just under a year.

P/E ratio:

price to earning ratio. Amount an investor is willing to pay for a $1 of earnings. A low P/E can indicate either that a company may currently be undervalued or that the company is doing exceptionally well relative to its past trends.