Friday, February 29, 2008

High and dry for the summer: How can I prepare for full-time interviews this fall?

by David Calder

Some of you might be feeling dazed by the rush and then quick disappearance of the investment banking summer internship recruiting season. As the dust settles and you realize that your dreams of interning at a bulge bracket investment bank will not materialize, feelings of exhaustion and discouragement may seem overwhelming. It’s normal to feel disappointed and it’s okay, too. Among bankers it’s recognized that this year has been a “tougher year” for finding a summer internship. Don’t dwell on your misfortune too long, however; there is a lot of work and studying to get done! Maybe it will turn out that not getting the investment banking summer internship is more advantageous to your long-term career development. Either way, the ball is back in your court now and the time has come to reevaluate and plan your next move. What is your plan b for this summer? How about plan c? Hopefully you have been preparing for the possibility that you might not land your dream internship this summer. If you haven’t, here are few suggestions you might consider.

5 things you can do this summer:

  1. Look for international experience

  2. Investment banks are looking for smart, driven and well-rounded individuals to fill their lower ranks. An overseas experience this summer, whether it’s a study abroad, internship or some type of service or volunteer work, will build a naturally compelling story to offer recruiters this fall. If you don’t speak a foreign language consider picking one up. In my experience, investment bankers generally value international experience because it demonstrates a broader level of interest and a global-centric attitude. I value my experience overseas just as much or more than my other internship experience.

  3. Find another internship

  4. This is quite obvious but the more difficult accompanying part of this question is: what type of internship? If you are interested in starting your career in the front office of an investment bank, I recommend that you avoid back office or operational internships. There are fantastic opportunities in the back offices of investment banks and you might be interested in working operations; if you are, good for you. If you’re not, these internships should be at the tail end of your list. It’s not impossible but it’s very difficult to jump from an operational role into an analyst role.

  5. Study the markets and interviewing materials

  6. No matter what you end up doing this summer, if you are serious about working on Wall St., this is a must. Do you have a subscription to the Wall Street Journal? If you don’t, today is the time to invest. I also read The Economist on a semi-religious basis. Reading it will keep you up to date on political happenings around the world as well as build your business acumen. One of the first posts on this blog outlines a list of books that you also will want to consider reading.

  7. Network, Network, Network

  8. Reach out to anybody and everybody you can in the industry. Networking is the key getting your foot in the door. Who are the Alumni from your university that currently work in the industry? Which other students are interested in investment banking at your university? What kinds of resources on campus are available to students interested in investment banking? Keep building your network. Plan a trip out to New York to maintain and expand your network.

  9. Frequent this blog

  10. I know the creator of this blog personally and am very impressed with the content and structure of it. This blog is quickly becoming a one stop shop for learning the ins and outs of getting into investment banking. Come here often and spread the word. The more people that come and contribute to this blog, the more effective hand helpful this community will be.

Prospects for a full-time offer this fall

Coming from a non-core recruiting school I have seen more full-time offers extended to seniors in the fall than I have seen juniors receive summer internships. Sometimes you might hear people argue that summer internships are harder to come by because there are fewer positions and it’s more competitive. On the other hand, I have also heard it argued that finding a full-time offer is more difficult because interns are cheap and full-time analysts are relatively more expensive. You are welcome to think whatever you want about the level of difficulty in the two but the truth of it all is: it doesn’t matter. From the articles I have read and the conversations I have had with recruiters, indicators suggest that recruiting will remain relatively strong this fall. There are still a lot of things in the air that will determine to what degree recruiting is hampered but generally prospects look strong at this point. If you weren’t able to make the summer internship happen you can still make things happen in the fall. Whatever you end up doing this fall be sure that you can tell a good story about how it has prepared you for investment banking.

Related article

Banking crisis may curb job demand in the short term

Wednesday, February 27, 2008

Investment Bank Profile & Market DataTemplates

Please provide me with feedback regarding if you like these templates, if you find them helpful, and any changes you think would make them better. These are for you, so let me know how you want them!

Investment Bank Profile Template

Market Data Template

I have created an Investment Bank Profile Template and a Market Data Template using Google Docs. I have adjusted the formatting on these docs so they will print off cleanly. Make sure to print off the Market Data doc in landscape format so the entire table prints out.

The purpose of these Google Doc is so you can have a short and dirty one page summary of must know info on each bank you are currently interviewing with and on current market data. Now you can print out a bank profile, fill out one for each investment bank you are interviewing with, and take this sheet with you to your interviews, classes, etc... so you can review it any time.

The Market Data sheet is easy to fill in by going to and copying down the information. To get the Fed Funds Rate I recommend using It gives a simple and quick overview of key interest rates.

In order to keep your information organized, I suggest using a three ring binder to hold these sheets. There is a lot of information to remember when you are interviewing with 5 - 10 banks at a time. Or just print them off one-by-one as your interviews come up. This should help make your life a little easier and you should not miss any of these basic questions in an interview.

M&A Advice: Is it worth the price?

When first entering any industry, it takes a lot to learn the in and outs. In your informational and formal interviews with bankers, you need to be able to speak in the language and terminology of the industry. One of the biggest areas of investment banking is mergers and acquisitions (M&A). The picture to the left comes from the Deal Book by New York Times. This graphic shows the number of M&A deals a specific bank has performed, deal size, and performance of the company relative to their sector. This is a great article to read to get another perspective on banking. When you read this article come up with questions or points you can speak to when interviewing and meeting with bankers. These questions could be great to ask at the end of the interview. The link to this article is found below.

Merger Advice: Is it worth the price?

I also recommend you check out this video on YouTube from Thomson Financial. It gives a current up-to-date review of M&A activity this year. It is another great way to stay on top of the markets while learning more about banking. If you like like what you see here you should subscribe to the ThomsonFinancial channel to easily continue getting more of these videos via your YouTube account.

Thomson Financial Video: Merger Moment February 2008

Tuesday, February 26, 2008

Brainteaser Interview Questions

This list of Brainteasers is brought to you by Gabe M., a summer analyst with Bear Stearns. Feel free to post a comment if you know the answer to these questions. I will add more questions to this list in the coming month.

  1. There are 100 people in line to board a train. Each person is holding a ticket corresponding to both his place in line and his seat (i.e. Person 1 is supposed to sit in Seat 1, Person 2 is supposed to sit in Seat 2, etc.). All of the people in line are normal, except for Person 1, who is "crazy". When Person 1 boards the train, he will ignore his seat number and sit in a random seat. Following Person 1, each person will sit in his own seat, unless his seat is occupied. In this case, the Person who's seat is occupied becomes the new "crazy person" and will sit in a random seat. For example, if Person 1 sat in Seat 2, Person 2 will become the "crazy person" and sit in a random seat. What is the probability that Person 100 will end up in Seat 100?

  2. McNuggets come in boxes of 6, 9, and 20. What is the largest number of McNuggets that is not possible to obtain using some combination of these three box sizes?

  3. There are 100 closed windows and 100 people. The first person opens every window. The second person closes every 2nd window. The third person visits every 3rd window; if the window is closed, he opens it; if it is open, he closes it. So on and so forth. After the 100th person, how many windows are open?

  4. Three men are at a picnic. One man brought 3 loaves of bread, one man brought 4 loaves of bread. The third man did not bring any bread, but promised to pay the other 2 men the $14 he had in his pocket for a share of the bread. The men agreed, and each subsequently eats an equal share of the bread. Following the lunch, the men had a dispute as to how the $14 should be divided; what is the most fair way?

  5. Three men (A, B, C) are in a dual, where they take turns shooting. Person A gets to shoot first, Person B gets to shoot second, and Person C gets to shoot third. Person A and C are both amateur shots; Person A hits his target 1/3 of the time, person C hits his target 1/2 of the time. Person B is an expert and hits 100% of the time. Where should person A first shoot to maximize his chances of winning the game?

  6. There is a spider in the corner of a 10 ft x 10 ft x 10 ft room. The spider wants to get to the opposite corner of the room [i.e. he is in the bottom back left corner and wants to get to the top front right corner]. He can not fly; thus must stay along the wall at all times. What is the shortest distance to the opposite corner?

  7. What is the present value of a zero-coupon perpetuity?*

  8. It’s 9:45 pm, how would you go about finding the angle between the minute and hour hand?*

  9. Two boats are going at 10miles/hour. They are 5 miles from one another. How long before they hit?*

  10. What is the sum of all the numbers between one and one hundred?*

  11. If this table was full of pennies, do you think they could stack up to measure this building?*


Sunday, February 24, 2008

Commonly Asked I-Banking Interview Questions

Commonly Asked I-Banking Questions (printable)

  1. Tell me about yourself. / Walk me through your resume. (by far the most important question asked)

  2. Why investment banking? (the second most important question)

  3. How do you get to Free Cash Flow (FCF) from EBIT (or Net Income)?

  4. Once you get to FCF, then what?

  5. In picking a stock, what do you typically look at?

  6. If you have $1 more of depreciation, how does that flow through the income statement, balance sheet, and statement of cash flows?

  7. Why finance?

  8. Would you rather have $100 today or $200 four years from now?

  9. What are the formulas for CAPM, WACC, and Terminal Value?

  10. What is Terminal Value?

  11. How do you value a company?

  12. How would you value a sandwich shop on Wall Street?

  13. Are markets efficient?

  14. Explain accretion and dilution.

  15. How do you calculate Enterprise Value?

  16. What is 7 cubed (7^3)?

  17. What is the square root of 3?

  18. What is 16*14?

  19. What is 18*18?

  20. What is an asset beta and how do you calculate it?

  21. If you have tow dice, both with six sides, what is the probability that when you roll both, they will sum to less than three?

  22. Is it mathematically/financially possible to buy a company for $100 million, sell if for $100 million, and make $80 million? If so, how? If not, why not? (Hint: LBO)

  23. How do the three major financial statements interrelate?

  24. What is the difference between fundamental and technical analysis?

  25. What was your SAT score?

  26. What is the worst grade and received in school? Why?

  27. Walk me through a Discounted Cash Flow (DCF) valuation.

  28. What recent deals has our firm done?

  29. What does an analyst do?

  30. What is a P/E ratio?

  31. What is beta and how do you calculate it?

  32. What is the difference between an accurately and efficiently priced security?

  33. If a bond's coupon rate is 7% and the expected return in the market is 5%, is the bond priced at a premium or a discount?

  34. If interest rates rise by 1%, what would happen to stock prices? Why?

  35. If you have $100 in assets and sell off $10 of those assets, what effect does it have on the three major financial statements?

  36. What do you want me to know about yourself that isn't on your resume or that I haven't asked you?

  37. What makes you different from the other individuals that are applying?

  38. Why did you decide to go to the University of ________?

  39. What is the Statement of Cash Flow?

  40. What is Free Cash Flow?
    • The answer the interviewer is looking for is FCF is the amount of cash that debt AND equity holder's have claim to after all obligations have been met.

  41. What is the difference between book and GAAP reported net income?

  42. Which of the three valuation techniques (DCF, Comparable Companies, Precedent Transactions) is the best? Why?

  43. What is the difference between Free Cash Flows vs. Cash Flows?

  44. What are two methods of depreciation?

  45. What is accumulated depreciation?

  46. Which would provide more incentive to an executive, stock options or straight stock? Why?

  47. What are the fixed and variable costs of a ski resort?

  48. What do you expect by holding funds in an index vs. cash?

  49. If our bank was to give you $50 million and you had one year to invest it, would you rather hold a one-year bond or a five-year bond? Why?

  50. What differences do you perceive between the firms you are interviewing with?

  51. If you and a friend start a company and have equal ownership, then take the company pubic and issue 20% equity, how much of the firm do you own?

  52. What are the differences between a WACC and an asset beta?

  53. What is your life goal/ambition?

  54. What motivates you?

  55. What will motivate you to continue working, after working 80+ hrs/week for three straight weeks?

  56. How much are you motivated by greed?

  57. Why not Sales & Trading, Private Equity, or Research?

  58. Describe to me a team process or activity where there was a major conflict. Tell me what you did to resolve the situation?

  59. On an analog clock, when it is precisely 3:15, what is the angle between the minute hand and the hour hand?

  60. We all know that analysts do valuation, what else do they do?

  61. What did you do in the last 24 hours?

  62. Tell me a joke.

Saturday, February 23, 2008

Finance Interview Questions

Finance Interview Questions (printable)

Why would two companies merge? What major factors drive mergers and acquisitions?
  1. Companies merge with other companies to enter new product markets. The will either gain access into new product markets or broaden the spectrum of their product line. For example, Cisco was famous for its speed of acquiring small/medium companies during its booming period. A series of acquisitions enabled it to build the full-range network architecture for its customers.
  2. Companies merge to enter new geographical markets.
  3. Enhance brand recognition.
  4. Consolidate operations to lower costs by achieving the economies of scale. They also consolidate to gain market share
  5. Defensive merger: Buy their way in to prevent them from entering
  6. Buy technology / Research and Development

What are some common anti-takeover tactics?
  • Repurchase the outstanding stock

  • Poison Pill: The targeted company may issue a new series of preferred stock that gives shareholders the right to redeem it at a premium price after a take over.

    1. Three Variations:
      • Flip-in poison pill allows all existing share holders of the target company, except for the acquirer, to buy additional shares at a bargain price.
      • Flip-over poison pill allows holders of common stock to buy the acquirer's shares at a bargain price in the event of an unwelcome merger.
      • People Pill is the threat that in the event of a successful takeover, the entire management team will resign at once.

  • The major share holders can become allies in order to gain majority control (ie. 51% or more).

  • White Knight: Find another company to be the acquirer or another investor to provide a large infusion of capital.

What is an LBO? Why leverage up a firm?

A LBO or leveraged buyout is the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of the acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.

In an LBO, there is usually a ration of 90% debt to 10% equity. Because of this high debt/equity ratio, the bonds usually are not investment grade and are referred to as junk bonds. Leveraged buyouts have had a notorious history, especially in the 1980s when several prominent buyouts led to the eventual bankruptcy of the acquired companies. This was mainly due to the fact that the leverage ratio was nearly 100% and the interest payments were so large that the company's operating cash flows were unable to meet the obligation.

As of 2006, the largest LBO to date was the acquisition of HCA Inc. in 2006 by Kohlberg Kravis Roberts & Co. (KKR), Bain & Co., and Merrill Lynch. According to the Washington Post, the three companies paid around $33 billion for the acquisition. (

A major reason for leverage buyouts is because the target company is somehow undervalued. Thus investors think that by gaining control of the company, building up the management team, and improving the performance, they can then sell the company at a huge premium because of the higher valuation.

Why might a company choose to issue debt vs. equity?
  • Positive Equity:
    1. Does not require dividend payments
    2. If the company is highly leveraged it can raise money
    3. Weak cash flow
    4. Currency for acquisitions

  • Negative Equity:
    1. Dilution
    2. More expensive

  • Interest on debt is tax deductible and saving on tax increases a firm's value.

  • When a company has sufficient earning to utilize the tax shield over the life of the debt, the company will typically choose to issue debt.

  • When a company's debt level is still relatively low, they will issue more debt to increase the ratio of debt/equity. Companies have to be careful as the amount of debt increase because a higher debt level also increases the probability of bankruptcy. This threat will eventually out weigh the tax advantage if they cross their debt/equity threshold and the company's value will fall with the increase in debt.

  • Companies with predominantly tangible assets are more likely to issue more debt than companies with predominantly intangible assets because of the lower bankruptcy cost.

  • Earning per share (EPS) is a good measure when choosing between debt or equity financing. Although debt financing saves money from taxes, this newly created interest expense also reduces net income. For equity financing there is no interest expense, but there is a possible dividend expense. More importantly, due to the increase in total number of shares outstanding, equity financing has a dilution effect on earnings.

What could a company do with excess cash on the balance sheet?
  • Invest in capital expenditures and/or research and development

  • Invest in the stock and bond market

  • Buy back shares

  • Look for acquisition targets

How would you calculate a firm's WACC? What would you use it for?

Weighted Average Cost of Capital (WACC)

WACC = [ (Equity / (Debt + Equity)) * Return on Equity] + [ (Debt / (Debt + Equity)) * Return on Debt * (1 - tax rate)]
  • Return on Debt: Yields implied by the trading price of a company's outstanding debt

  • Return on Equity (also known as CAPM): Risk Free Rate + Beta*(Market Premium - Risk Free Rate)

  • Capital Structure: Debt / (Debt + Equity)
    Since a company's capital structure changes over tie, this is usually not based on the company's current structure, but rather a target capital structure is derived from examination of the industry average.

WACC is used:

  1. to discount a company's unlevered free cash flow and terminal value to derive the value of the company is a DCF valuation

  2. in capital budgeting to find the net present value of a particular project

What is the Beta and where would you go to find a firm's Beta? How and why would you unlever a beta?

Beta measures the systematic risk of an equity portfolio. It describes the sensitivity of the portfolio to broad market movements. For example, a portfolio or company that has a beta of 0.5 is half as volatile as the rest of the market. A different portfolio or company with a beta of 1.2 is 20% more volatile than the market and will fluctuate more than the rest of the market.

Various brokerage houses, such as Merrill Lynch, publish beta books where the results of such regressions are published for a large number of stocks. Bloomberg also supplies information on different betas.

Unlevered Beta

A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta of a company without any debt. Unlevering a beta removes the financial effects from leverage. Unlevered Beta

Please refer to the Investopedia link above to view the actual formula.

What is the Capital Asset Pricing Model (CAPM)?

CAPM is a model that describes the relationship between risk and expected return, which is used in the pricing of risky securities. CAPM

The general idea behind CAPM is that investors need to be compensated in two ways: time value of money and risk. The time value of money is represented by the risk-free rate (typically denoted rf in the formula) and compensates the investors for placing money in any investment over a period of time. The other half of the formula represents risk and calculates the amount of compensation the investor needs for taking on additional risk. This is calculated by taking a risk measure (beta) that compares the returns of the asset to the market over a period of time and to the market premium (Rm - rf).

What is the calculation for EPS? Does that include preferred stock? Does preferred stock trade at a discount or a premium to common stock and why? (similar question for convertible bonds)

Net Earnings Per Share (EPS) is the portion of a company's net earning allocated to each share of stock. It is calculated by dividing net earnings by common shares outstanding adjusted for the assumed conversion of all potentially dilutive securities. It does not include preferred stock.

Securities having a dilutive effect may include convertible debentures, warrants, options, and convertible preferred stock.

Say you have two high yield bonds with identical coupons and maturities, one from a supermarket and one from a high tech company. Which one do you buy and why?

The price of a bond is decided by the discount rate for each bond. It would be reasonable to expect high tech companies to have a larger spread vs. the treasury than a bond issued by the supermarket chain.

If there is no arbitrage opportunity in the market and if the investors are risk averse, then the investor should buy the supermarket bond.

How do you calculate the firm value for the firm below?

Shares outstanding: 100,000
Stock price: $20
Debt: $500,000
Cash and equivalents: $500,000

Using a market valuation, you take the number of shares outstanding and multiply it by the current stock price to find the value of the firm.

Shares outstanding * Stock price = 100,000 * $20 = $2,000,000

What major factors affect the yield on a corporate bond?

The short answer: (1) interest rates on comparable US Treasury bonds and (2) the company's credit risk.

A more elaborate answer would include a discussion of the fact that corporate bond yields trade at a premium or spread, over the interest rate on comparable US Treasury bonds. The size of this spread depends on the company's credit risk. The riskier the company, the higher the interest rate the company will have to pay to convince investors to lend them money, thus creating a wider spread over US Treasuries.

What did our firm's stock close at yesterday?

Find the companies stock price via the internet (Yahoo! Finance), the newspaper (WSJ), or from any other source that publishes this information. You can also refer to the banking profiles I have posted on this blog.

Yahoo! Finance

What is the DJIA at today? NASDAQ? S&P 500? What is the long bond at? Fed Funds Rate? Gold? Oil?

You should be following this information every day. This information is published on the top of the front page of the WSJ. (lower right hand side of website)

Tip: Don't say the exact number because if you are wrong and your interviewer calls you on it, your done! Plus these numbers are changing all the time, so give "ball park" answers. (ie. instead of saying the DJIA closed yesterday at 12,345, say "Lately the DJIA average has been hovering between 12,300 - 12,400. I believe it closed yesterday around 12,340.)

What happened on the markets in the past three months?

To answer this you need to be actively reading the WSJ, Deal Book by New York Times, etc... to get "expert" opinions on where they think the market is going. Let them answer these hard questions, pick a few points from their answer to speak about, and build out an answer around these points.

Do you read the Wall Street Journal everyday? What's on the front page today?

In my opinion you have to answer yes to this question because this is something you should be doing. It's almost like saying you love sports and want to work for a professional team and you don't read Sports Illustrated. Make sure you are reading the WSJ and take note of one story on the day of interview.

Do you follow an industry and/or a stock?

If you answer yes (which you almost have to), be prepared to speak in-depth about the industry or stock. In my opinion, I feel that once you say yes, you go from a student interviewer to a supposed "expert". This is a high level or as I call them, a "bate question". I call it a bate question because once you say yes, a barrage of follow-up questions will be released and it is hard to predict which ones you are more likely to be asked than others. Be prepared to talk about different multiples used in the industry you say you follow. This can be a tricky question, so if you get asked it, hope and pray your interviewer is in a good mood!

What do you personally invest in?

Once again, when you answer this question, be prepared to speak to your specific investments.

What is LIBOR?
_______________________________________________________________________________________________________________ LIBOR

London Interbank Offered Rate is an interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year.

The LIBOR is the world's most widely used benchmark for short-term interest rates. It's important because it is the rate at which the world's most preferred borrowers are able to borrow money. It is also the rate upon which rates for less preferred borrowers are based. For example, a multinational corporation with a very good credit rating may be able to borrow money for one year at LIBOR plus four or five points.

Countries that rely on the LIBOR for a reference rate include the US, Canada, Switzerland, and the U.K.

What indicators are considered by Ben Bernanke when deciding on interest rate changes?

When deciding on interest rate changes, we can look at the inflation rate (ie. Consumer Price Index (CPI) and Producer Price Index (PPI)), unemployment rate, economic growth rate, and financial market performance.

Why is everyone worried about inflation?

Inflation is the rate at which the general level of prices for goods and services is rising and subsequently, purchasing power is falling.

As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 hamburger will cost $1.02 in a year.

Most countries' central banks will try to sustain an inflation rate of 2-3%.

Expected Inflation

When inflation is expected, it will result in two kinds of cost. (1)Menu Cost: It incurs because all the commodities need to reprice and consumers then have to pay additional money to make the price adjustment. (2)Shoe Leather Cost: When experiencing inflation, people will increase consumption by shopping more because the cost of holding money increases. In this way, the increased trading frequency and trading time bring extra cost to the consumers.

Unexpected Inflation

On the other hand, when inflation is unexpected, the result is two negative effects. (1)Redistribution of Wealth: Employers and banks would benefit from unexpected inflation since the salary and interest rate can not adjust immediately. (2)Decreased Resources Allocation Efficiency: Inflation would increase uncertainty, which might decrease companies' willingness to invest or result in wrong decision making.

Draw the forward rate curve over the Treasury curve and explain which apex occurs first since the Treasury curve is now inverted?

This question is specifically for a fixed income interview. It is essentially a question of current rates vs. future rates. The answer would depend on your opinion of the forward rate (ie. Will the Fed be cutting or raising interest rates in the future?).

If you answer that the Fed is to cut rates, then bond prices would be expected to go up, thereby reducing the yield for the forward rates.

If your answer is to raise rates, then bond prices would be expected to go down, thereby increasing the yield for the forward rates.

What does the current shape of the yield curve imply about the market's expectation for economic growth?

The yield curve is the term structure of interest rates. When the economy is good, the yield curve is increasing upward. However, the yield curve is inverted when the economy is bad.

Yield Curve:
  • Economy Good = Increasing Upward

  • Economy Bad = Inverted

  • Definitely check out this link. It explains step-by-step how to create a real time chart of the current yield curve by pulling new data from the market every time you run the program. It's sweet!

    How to Chart the Yield Curve Using Yahoo! Finance and Excel

    If I gave you $1 for 10 years or $1000 today, which one will you choose?

    I am risk adverse and like to invest in risk-free T-Bills. In addition, I have no urgent need of money to expense, so I will do the following calculation to make the decision.

    I expect over the next 10 years the risk-free rate will be 6% and I will purchase bonds at the end of every year. The Present Value (PV) of my investment is $2686, which is more than $1000. As such, I will choose $1 every day for 10 years.

    Give me 4 ways to calculate terminal value.

    Terminal Value (TV) refers to the interest's value at the end of a given projection period.

    Method 1

    The TV can be calculated by using either a market derived pricing multiple or a growth model. The most commonly used is the Gordon Growth Model shown below:

      TV = ( NCF * (1 + g) ) / (k - g)

      NCF: normalized net cash flow in the terminal year
      g: expected annual long-term growth rates in NCF
      k: the cost of capital

    Method 2

    Using a multiple of EBIT or EBITDA in the final year. Often the current pricing multiple for guideline companies is used.

    Method 3

    Using a P/E ratio based on the net income in the terminal year. Assuming the company will be worth some multiple of its future earnings in the continuing period. The difficulty of this approach is to estimate an appropriate P/E ratio.

    Method 4

    Using liquidation value. Suppose the company will be liquidated at the terminal year. If this is the case then all of the assets will be sold at book value.

    What is EBITDA?

    Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) EBITDA

    EBITDA is an indicator of a company's financial performance, which is calculated as follows:

      EBITDA = Revenue - Expenses (excluding tax, interest, depreciation, and amortization)

    EBITDA can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. However, this is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next.

    EBITDA first came into common use with leveraged buyouts in the 1980s, when it was used to indicate the ability of a company to service debt. As time passed, it became popular in industries with expensive assets that had to be written down over long periods of time. EBITDA is now commonly quoted by many companies, especially in the tech sector - even when it isn't warranted.

    A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability, but NOT cash flow. EBITDA also leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's earnings. When using this metric, it's key that investors also focus on other performance measures to make sure the company is not trying to hide something with EBITDA.

    Walk me through the major line items of a Income Statement.

    - COGs (Cost of Goods)
    Gross Margins
    - OE (Operating Expenses)
    - DA (Depreciation & Amortization)
    - IT (Interest & Taxes)
    Net Income

    Walk me through the major line items of a Cash Flow Statement.

    Beginning Cash Balance
    Operating Activities

      Net Income
      Accounts Receivable (A/R)
      Accounts Payable (A/P)
      Accretive Liabilities
      Cash from Operations

    Investing Activities

      Capital Expenditures: Sale of Equipment, Purchase of Land, etc...

    Financing Activities

      Repurchase of bonds
      Dividend paid

    Ending Cash Balance

    If you have an accounting background, be prepared to describe how the disposal of a fixed asset in exchange for cash would be reflected on a GAAP/IAS statement of cash flows.

    In general, disposal of fixed assets is under "net cash flow from investing activities". The proceeds from the sale are recorded in the Statement of Cash Flows. The gain/loss is recognized in the Income Statement and the removal of book value of the assets and accumulated depreciation thereof is booked on the Balance sheet.

    What is the difference between a balance sheet and an income statement?

    A Balance Sheet describes a firm's financial status at a specific point in time. It is like a snap shot of the company's financials.

    An Income Statement represents a firm's operating results over a period of time (ie. a fiscal year or quarter).

    What is goodwill? How does it affect net income?
    _______________________________________________________________________________________________________________ Goodwill

    Goodwill is an account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company is purchased by another company (M&A). In an acquisition, the amount paid for the company over book value usually accounts for the target firm's intangible assets.

    Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings or equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations, and any patents or proprietary technology.

    What are deferred taxes? How do they rise?

    Deferred taxes are an indeterminate-term liability that arises when the pretax income shown on the tax return is less than what it would have been had the firm used the same accounting principles and cost basis for assets and liability in tax returns as it is used for financial reporting. SFAS No. 109 requires that the firm debit income tax expense and credit deferred income tax with the amount of the taxes delayed by using accounting principles in tax returns different from those used in financial reports. If as a result a temporary difference, cumulative taxable income exceeds cumulative reported income before taxes., the deferred income tax account will have debit balance, which the firm will report as a deferred charge.

    What is working capital?
    _______________________________________________________________________________________________________________ Working Capital

    Working Capital is a measure of both a company's efficiency and its short-term financial health. The woring capital ratio is calculated as:

      Working Capital = Current Assets - Current Liabilities

    Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory).

    Also known as "net working capital"

    If a company's current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. A declining working capital ratio over a longer time period could also be a red flag that warrants further analysis. For example, it could be that the company's sales volumes are decreasing and, as a result, its accounts receivables number continues to get smaller and smaller.

    Working capital also gives investors an idea of the company's underlying operational efficiency. Money that is tied up in inventory or money that customers still owe to the company cannot be used to pay off any of the company's obligations. So, if a company is not operating in the most efficient manner (slow collection), it will show up as an increase in working capital. This can be seen by comparing the working capital from one period to another; slow collection may signal an underlying problem in the company's operations.

    Who is n the bulge bracket?

    Goldman Sachs
    Morgan Stanley
    Merrill Lynch
    JPMorgan Chase
    Credit Suisse

    Describe a typical day of an investment banking associate.

    Refer to my blog post entitled, Life of an Investment Banker.

    Investement Bank Contact Info

    Tip: Do not fill out the online applications found on each bank's website until you have had a first round interview or are at least scheduled to have one. From my experience, those application submissions are black holes. Don't waste your time! The recruiters will tell you and/or remind you after your first round interview to fill out the application. Do it then! Instead, spend the majority of your time networking like crazy to get in front of people! Look for a blog post coming soon in the future on networking.

    Allen C. Ewing & Co.

      50 North Laura Street, Suite 3625
      Jacksonville, FL 32202

    Bank of America

      100 N. Tryon Street
      Bank of America Corporate Center
      Charlotte, NC 28225

      9 West 57th Street
      New York, NY 10019


      1 Churchill Place
      London, E14 5HP, England
      United Kingdom
      +44 20 7116 1000

      Primary US Address
      200 Park Avenue, 3rd Floor
      New York, NY 10166

    Bear Stearns

      383 Madison Avenue (47th Street)
      New York, NY 10179

    BMO Capital Markets

      100 King Street, West
      1 First Canadian Place
      Toronto, ON M5X 1A1

      Primary US Address
      111 W. Monroe St.
      Chicago, IL 60603

    BNP Paribas

      16, boulevard des Italiens
      75009 Paris France
      +33 1 40 14 45 46

      Primary US Address
      787 7th Avenue
      New York, NY 10019

    Brown Brothers Harriman

      140 Broadway
      New York, NY 10005

    CIBC World Markets

      161 Bay Street, BCE Place
      Toronto, ON M5J 2S8,

      *Primary US Address
      300 Madison Avenue
      New York, NY 10017

      *CIBC sold its investment banking US arm to Oppenheimer in late 2007


      388 Greenwich Street
      New York, NY 10013


      Comerica Bank Tower
      1717 Main Street
      Dallas, TX 75201

    Cowen & Company LLC

      1221 Avenue of the Americas
      New York, NY 10020

    Credit Suisse

      Paradeplatz 8
      8070 Zurich, Switzerland
      +41 44 333 11 11

      Primary US Address
      11 Madison Avenue
      New York, NY 10010

    D.A. Davidson & Co.

      8 3rd Street North
      Great Falls, MT 59401

    Deutsche Bank

      Taunusanlage 12
      60262 Frankfurt, Germany
      +49 69 910 00

      Primary US Address
      60 Wall Street
      New York, NY 10005

    Dresdner Kleinwort

      30 Gresham Street
      London, EC2P 2XY, England
      United Kingdom
      +44 20 7623 8000

      Primary US Address
      1301 Avenue of the Americas
      New York, NY 10019

    Evercore Partners

      55 East 52nd Street, 43rd Floor
      New York, NY 10055

    Friedman, Billings, Ramsey (FBR)

      1001 19th Street North
      Arlington, VA 22209

    Gleacher Partners

      660 Madison Avenue
      New York, NY 10021

    Goldman Sachs

      85 Broad Street
      New York, NY 10004

    Greenhill & Co. Inc

      300 Park Avenue, 23rd Floor
      New York, NY 10022

    Houlihan Lokey

      1930 Century Park West
      Los Angeles, CA 90067


      8 Canada Square
      London, E14 5HQ, England
      United Kingdom
      +44 20 7991 8888

      Primary US Address
      452 5th Avenue
      New York, NY 10018


      520 Madison Avenue, 12th Floor
      New York, NY 10022

    JPMorgan Chase

      270 Park Avenue
      New York, NY 10017
      Email: FirstName.Middle

    KBW (formerly Keefe, Bruyette & Woods)

      The Equitable Building
      787 7th Avenue, 4th Floor
      New York, NY 10019


      Clarendon House
      2 Church Street
      Hamilton, HM 11, Bermuda

      Primary US Address
      30 Rockefeller Plaza
      New York, NY 10020

    Lehman Brothers

      745 7th Avenue
      New York, NY 10019

    Macquarie Group

      No. 1 Martin Place
      Sydney, 2000, Australia
      +61 2 8232 3333

      Primary US Address
      125 West 55th Street
      New York, NY 10019

    Marlin & Associates

      330 Madison Avenue, 9th Floor
      New York, NY 10017

    Merrill Lynch

      4 World Financial Center
      250 Vesey Street
      New York, NY 10080

    Morgan Keegan

      Morgan Keegan Tower
      50 North Front Street
      Memphis, TN 38103

    Morgan Stanley

      1585 Broadway (Corner of Broadway and 48th Street)
      New York, NY 10036

      750 Seventh Avenue
      New York, NY 10019

    Nomura Holdings

      1-9-1, Nihonbashi, Chuo-ku
      Tokyo, 103-8645, Japan
      +81 3 3211 1811

      Primary US Address
      2 World Financial Center
      Building B
      New York, NY 10281


      20 Eglinton Avenue West, Ste. 1110
      Toronto, ON M4R 1K8

      Primary US Address
      125 Broad Street
      New York, NY 10004

    Perella Weinberg Partners

      767 5th Avenue, 26th Floor
      New York, NY 10153

    Piper Jaffray

      800 Nicollet Mall, Ste. 800
      Minneapolis, MN 55402

    Raymond James

      880 Carillon Parkway
      St. Petersburg, FL 33716

    Royal Bank of Canada

      200 Bay Street
      Royal Bank Plaza
      Toronto, ON M5J 2J5

      Primary US Address
      1 Liberty Plaza
      New York, NY 10006

    Robert W. Baird & Co.

      777 East Wisconsin Avenue
      Milwaukee, WI 53201


      1251 Avenue of the Americas
      51st Floor
      New York, NY 10020

    Societe Generale

      29, boulevard Haussmann
      75009 Paris France
      +33 1 42 14 20 00

      Primary US Address
      1221 Avenue of the Americas
      New York, NY 10020

    The Bank of New York Mellon

      1 Wall Street, 10th Floor
      New York, NY 10286

    The Blackstone Group

      345 Park Avenue
      New York, NY 10154

    Thomas Weisel Partners

      1 Montgomery Tower
      1 Montgomery Street
      San Francisco, CA 94104

      390 Park Avenue, 16th Floor
      New York, NY 10022


      Bahnhofstrasse 45
      CH-8098 Zurich, Switzerland
      +41 44 234 11 11

      Primary US Address
      1285 Avenue of the Americas, 2nd Floor
      New York, NY 10019

      299 Park Avenue (NE Corner of 48th Street)
      New York, NY


      1 Wachovia Center
      Charlotte, NC 28288

    Wells Fargo

      420 Montgomery Street
      San Francisco, CA 94163

      119 West 40th Street, 10th Floor
      New York, NY 10018

    William Blair & Company

      222 West Adams Street
      Chicago, IL 60606

    Friday, February 22, 2008

    Citigroup Profile
    Citigroup Annual Report

    Citigroup: Vault Employer Profile

    This PowerPoint presentation was put together by University of Utah alumnus currently working at Citigroup in investment banking. It's a great presentation to get up to speed on Citigroup, current deals, learn a little more about banking, etc...

    CEO: Vikram Pandit (2007 - present)
    Chairman: Sir Win Bischoff (2007 - present)
    Notable Prior CEOs: Charles "Chuck" Prince (2003 - 2007), Sanford "Sandy" Weill ( - 2003)

    Stock Symbol: C (NYSE)

    Recent Close: Yahoo! Finance: C

    Guiding Principles:
    • Integrity: We do the right thing

    • Excellence: We deliver superior products and services to our clients and take pride in the quality of our work

    • Respect: We treat people with respect

    • Teamwork: We work together to get the job done

    • Ownership: We act like owners and take responsibility for our actions

    • Leadership: We believe in leadership by example, in the office and in the community

    Why Our Bank?

    • Financial Platform

    • In a relatively short period of time, Citi has become one of the industry's most powerful platforms for financial products and services. A key factor in this success has been our ability to attract some of the most talented people in any industry.

      Working at Citi gives employees the chance to create an exciting and wide-ranging career in one of the world's leading organizations. Our belief in employee ownership offers a unique experience in entrepreneurialism on a global scale, and an unparalleled geographic footprint enables our employees to work with and learn from a diverse group of colleagues whose insight, integrity, and commitment set the standard for success in our industry.

    • Entrepreneurialism

    • Mobility / Geographic Footprint

    • Most Global Firm on Wall Street

    • Most Renowned Training Program on Wall Street

    • Top 5 in all Product Areas

    • The Power of Citigroup

    How Are We Structured:

    Citigroup: Investment Banking Structure

    Notable Deals:

    • Dollar General - Advisor to KKR on its $7.3bn acquisition of Dollar General

    • Liberty Acquisition Holdings - Sole Book-Running Manager in Dec. 2007 of a $1bn SPAC (Special Purpose Acquisition Company). Largest SPAC in the world


      Citigroup was formed on October 8, 1998 following the $140 billion merger of Citicorp and Travelers Group to create the world's largest financial services organization. The history of the company is, thus, divided into the history of several firms that over time amalgamated into Citicorp, a multinational banking corporation operating in more than 100 countries; or Travelers Group, whose businesses covered credit services, consumer finance, brokerage, and insurance. As such, the company history dates back to the founding of: the City Bank of New York (later Citibank) in 1812; Bank Handlowy in 1870; Smith Barney in 1873, Banamex in 1884; Salomon Brothers in 1910.


      The history of Citicorp began with the founding of the City Bank of New York, which was chartered by New York State on June 16, 1812 with $2 million of capital. Serving a group of New York merchants, the bank opened for business on September 14 of that year, and Samuel Osgood was elected as the first President of the company. The company's name was changed to The National City Bank of New York in 1865 after the joining the new U.S. national banking system, and it became the largest American bank by 1895. It became the first contributor to the Federal Reserve Bank of New York in 1913, and the following year it inaugurated the first overseas branch of a U.S. bank in Buenos Aires. The 1918 purchase of U.S. overseas bank International Banking Corporation helped it become the first American bank to surpass $1 billion in assets, and it became the largest commercial bank in the world in 1929. As it grew, the bank became a leading innovator in financial services, becoming the first bank to offer compound interest on savings (1921); unsecured personal loans (1928); customer checking accounts (1936) and the negotiable certificate of deposit (1961).

      The bank changed its name to The First National City Bank of New York in 1955, which was shortened to First National City Bank on the 150th anniversary of the company's foundation in 1962. The company organically entered the leasing and credit card sectors, and its introduction of USD certificates of deposit in London marked the first new negotiable instrument in market since 1888. Later to become MasterCard, the bank introduced its First National City Charge Service credit card - popularly known as the "Everything card" - in 1967.

      During the mid-1970s, under the leadership of CEO Walter Wriston, First National City Bank (and its holding company First National City Corporation) was renamed as Citibank, N.A. (and Citicorp, respectively). Shortly afterward, the bank launched the Citicard, which pioneered the use of 24-hour ATMs. As the bank's expansion continued, the Narre Warren-Caroline Springs credit card company was purchased in 1981. John S. Reed was elected CEO in 1984, and Citi became a founding member of the CHAPS clearing house in London. Under his leadership, the next 14 years would see Citibank become the largest bank in the United States, the largest issuer of credit cards and charge cards in the world, and expand its global reach to over 90 countries.

      Travelers Group

      Travelers Group, at the time of merger, was a diverse group of financial concerns that had been brought together under CEO Sandy Weill. Its roots came from Commercial Credit, a subsidiary of Control Data Systems that was taken private by Weill in November 1986 after taking charge of the company earlier that year. Two years later, Weill mastered the buyout of Primerica - a conglomerate that had already bought life insurer A L Williams as well as stock broker Smith Barney. The new company took the Primerica name, and employed a "cross-selling" strategy such that each of the entities within the parent company aimed to sell each other's services. Its non-financial businesses were spun-off.

      In September 1992 Travelers Insurance, which had suffered from poor real estate investments and sustained significant losses in the aftermath of Hurricane Andrew, formed a strategic alliance with Primerica that would lead to its amalgamation into a single company in December 1993. With the acquisition, the group became Travelers Inc. Property & casualty and life & annuities underwriting capabilities were added to the business. Meanwhile, the distinctive Travelers red umbrella logo, which was also acquired in the deal, was applied to all the businesses within the newly named organization. During this period, Travelers acquired Shearson Lehman - a retail brokerage and asset management firm that was headed by Weill until 1985 - and merged it with Smith Barney. Finally, in November 1997, Travelers Group (which had been renamed again in April 1995), made the $9 billion deal to purchase Salomon Brothers, a major bond trader and investment bank.

      Citicorp and Travelers merger

      On April 6, 1998, the merger between Citicorp and Travelers Group was announced to the world creating a $140 billion firm with assets of almost $700 billion. The deal would enable Travelers to market mutual funds and insurance to Citicorp's retail customers while giving the banking divisions access to an expanded client base of investors and insurance buyers.

      Although presented as a merger, the deal was actually more like a stock swap, with Travelers Group purchasing the entirety of Citicorp shares for $70 billion, and issuing 2.5 new Citigroup shares for each Citicorp share. Through this mechanism, existing shareholders of each company owned about half of the new firm. While the new company maintained Citicorp's "Citi" brand in its name, it adopted Travelers' distinctive "red umbrella" as the new corporate logo, which was used until 2007.

      The chairmen of both parent companies, John Reed and Sandy Weill respectively, were announced as co-chairmen and co-CEOs of the new company, Citigroup, Inc., although the vast difference in management styles between the two immediately presented question marks over the wisdom of such a setup.

      The remaining provisions of the Glass-Steagall Act - enacted following the Great Depression - forbade banks to merge with insurance underwriters, and meant Citigroup had between two and five years to divest any prohibited assets. However, Weill stated at the time of the merger that they believed "that over that time the legislation will change...we have had enough discussions to believe this will not be a problem". Indeed, the passing of the Gramm-Leach-Bliley Act in November 1999 vindicated Reed and Weill's views, opening the door to financial services conglomerates offering a mix of commercial banking, investment banking, insurance underwriting and brokerage.

      Travelers spin off

      The company spun off its Travelers Property and Casualty insurance underwriting business. The spin off was prompted by the insurance unit's drag on Citigroup stock price because Traveler's earnings were more seasonal and vulnerable to large disasters. It was also difficult to sell this kind of insurance directly to customers since most industrial customers are accustomed to purchasing insurance through a broker.

      The Travelers Property Casualty Corporation merged with The St. Paul Companies Inc. in 2004 forming The St. Paul Travelers Companies. Citigroup retained the life insurance and annuities underwriting business; however, it sold those businesses to MetLife in 2005. Citigroup still heavily sells all forms of insurance, but it no longer underwrites insurance.

      Despite their divesting Travelers Insurance, Citigroup retained Travelers' signature red umbrella logo as its own until February 2007, when Citigroup agreed to sell the logo back to St. Paul Travelers,[14] which renamed itself Travelers Companies. Citigroup also decided to adopt the corporate brand "Citi" for itself and virtually all its subsidiaries, except Primerica and Banamex.

      On April 11, 2007 Citigroup said it will eliminate 17,000 jobs, or about 5 percent of its workforce, in a broad restructuring designed to cut costs and bolster its long underperforming stock.

      On January 7, 2008 Citigroup announced that it is considering cutting 5 percent to 10 percent of its work force, which totals 327,000.

    Thursday, February 21, 2008

    Merrill Lynch Profile
    Merrill Lynch Annual Report
    John Thain discusses the year (2008) ahead

    CEO: John Thain (2007 - present)
    Notable Prior CEOs: Stanley O'Neal (2003 - 2007)

    Stock Symbol: MER (NYSE)

    Recent Close: Yahoo! Finance: MER

    Guiding Principles:
    1. Client Focus: The client is the driving force behind what we do.

    2. Respect for the individual: We respect the dignity of each individual, whether an employee, shareholder, client, or member of the general public.

    3. Teamwork: We strive for seamless integration of services. In the client's eyes, there is only one Merrill Lynch.

    4. Responsible Citizenship: We seek to improve the quality of life in the communities where our employees live and work.

    5. Integrity: No one's personal bottom line is more important than the reputation of our company.

    Why Our Bank?
    1. Strong Momentum
      • Aggressive management team with a vision towards future success
      • Ongoing investment in the firm's capabilities
      • Focus on delivering innovative solutions to clients

    2. Expansive Opportunities
      • Global presence, with broad product capabilities and industry and country coverage
      • Wide range of opportunities to expand your experience and grow
      • Team structures that give you increased responsibility

    3. Professional Development
      • Flexible career paths with opportunities for mobility
      • World-class training
      • Disciplined feedback mechanisms and development programs

    4. Great People
      • Strong, firmwide commitment to diversity
      • Approachable individuals with a vested interest in your success
      • Mentors, role models and coleagues

      Refer to

    Investment Banking Groups:

    Global Investment Banking Groups at Merrill Lynch
    • Relationship Banking
    • Financial Sponsors
    • Leveraged Finance
    • Mergers & Acquisition Advisory
    • Debt & Equity Capital Markets
    • Corporate Finance

    Notable Deals:
    • Upcoming IPOs as Lead Manager: American Capital Agency; American Water Works; CDM Resources; Colfax; Concentric Medical; Global Entertainment & Media Holdings; National Energy Resources Acquisition; Stewart & Stevenson; Symetra Financial; Tensar


    The Merrill Lynch Story
      The company was founded on January 6, 1914, when Charles E. Merrill & Co. opened for business at 7 Wall Street in New York City. A few months later, Merrill's friend, Edmund C. Lynch, joined him, and in 1915 the name was officially changed to Merrill, Lynch & Co. At that time, the firm's name included a comma between Merrill and Lynch. In 1916, Winthrop H. Smith joined the firm. In 1940, the firm merged with E. A. Pierce & Co. and Cassatt & Co. and was briefly known as Merrill Lynch, E. A. Pierce, and Cassatt.

      In 1941, Fenner & Beane joined the firm, and the name became Merrill Lynch, Pierce, Fenner & Beane. On December 31, 1957, The New York Times referred to that name as "a sonorous bit of Americana" and said "After sixteen years of popularizing [it], Merrill Lynch, Pierce, Fenner, and Beane is going to change it—and thereby honor the man who has been largely responsible for making the name of a brokerage house part of an American saga," Winthrop H. Smith, who had been running the company since 1940. At the start of the firm's fiscal year on March 1, 1958, the firm's name became Merrill Lynch, Pierce, Fenner & Smith.

      Merrill Lynch rose to prominence on the strength of its brokerage network (15,000+ as of 2006), sometimes referred to as the "thundering herd", that allowed it to place securities it underwrote directly. In contrast, many established Wall Street firms, such as Morgan Stanley, relied on selling groups of independent brokers for placement of the securities they underwrote. Until as late as 1970, it was known as the "Catholic" firm of Wall Street. The firm went public in 1971 and has since become a multinational corporation with over US $1.8 trillion in client assets, operating in more than 40 countries around the world. In 1978, it significantly buttressed its securities underwriting business by acquiring White Weld & Co., a small but prestigious old-line investment bank. Merrill Lynch is best known for its Global Private Client services and its strong sales force.

      On November 1, 2007, Merrill Lynch CEO Stanley O'Neal left the company, after being criticized for the way he handled the subprime mortgage crisis, which resulted in about US $ 2.24 billion in unexpected losses, and for discussing in public the possible merger with Wachovia banking corporation, without being authorized by the board to do so. He left Merrill Lynch with about US $ 161 million worth of stock options and retirement benefits. John Thain, CEO of the New York Stock Exchange, succeeded him as CEO on December 1, 2007.

      On January 17, 2008, Merrill Lynch reported a $9.83 billion fourth quarter loss incorporating a $16.7 billion write down of assets associated with subprime mortgages.

    UBS Profile
    UBS Annual Report

    Discover UBS in a few video clips

    Chairman: Marcel Ospel (2001 - present)
    CEO: Marcel Rohner (? - present)

    Stock Symbol: UBS (NYSE)

    Recent Close: Yahoo! Finance: UBS

    Vision / Strategy:
      Our Vision

      We are determined to be the best global financial services company. We focus on wealth and asset management, and on investment banking and securities businesses. We continually earn recognition and trust from clients, shareholders, and staff through our ability to anticipate, learn and shape our future. We share a common ambition to succeed by delivering quality in what we do. Our purpose is to help our clients make financial decisions with confidence. We foster a distinctive, meritocratic culture of ambition, performance, and learning as this attracts, retains, and develops the best talent for our company.


      Our strategy is to concentrate on three global core businesses - wealth management, asset management, and investment banking and securities trading - as well as retail and corporate banking in Switzerland.

      Competitive Profile

      Our vision and consistent focus has led to the current business mix.

      Growth Strategy

      Our business is focused on areas with above-average growth rates, derived from sustainable societal and economic trends.

      One Firm Strategy

      We firmly believe our integrated business model creates more value than our businesses would as stand-alone units

    Why Our Bank? Why UBS
      Leading global financial firm

      As one of the world's foremost wealth managers, a top-tier investment bank, a leading global asset manager and one of the market leaders in retail and commercial banking in Switzerland, we offer an environment of excellence for your ambitions.

      International opportunities

      UBS is established in all of the world's major financial centers with offices in more than 50 countries. The value we place on mobility means working with us can broaden your horizons. With us you can go far.

      High-performance environment

      Our focus on growth means that you'll be asked to meet challenging targets as part of your job. Management and colleagues will provide support and you'll have the benefit of state-of-the-art tools to help you achieve outstanding results for you and your team.

      Open-minded and respectful working culture

      At UBS you'll find colleagues who are interested in your insights and always willing to share theirs. It's by combining our talents that we achieve the greatest shared success.

      Diverse and inspiring colleagues

      Being part of UBS means experiencing a cosmopolitan and exciting mix of backgrounds and perspectives. This is the place to encounter new points of view on a daily basis.

      Competitive compensation and benefits

      We want the most talented and motivated people to join UBS, so our packages combine attractive incentives with numerous benefits.

      World-class training and development

      Working alongside some of the best and brightest will inspire you to keep growing. We'll provide first-class resources to direct your development and support your goals.

      Our People

      Our people make us one of the world's leading financial firms. This is the place for people who want to make a difference and play an active part in our success.


      We promote diversity through workplace initiatives and by influencing attitudes and perceptions both inside and outside of UBS.

    Notable Deals:
    • Upcoming IPOs as Lead Manager: Alma Lasers Ltd.; ASM Acquisition; Big West Oil Partners; Cumberland Pharmaceuticals; Cypress Sharpridge Investment; Danger; Global Ship Lease; GT Solar International; Insys Therapeutics; Intcomex; Maxum Petroleum Holdings; MFResidential Investments; NY Credit; OGE Enogex Partners; Pioneer Southwest Energy Partners; PNA Group Holding; Resolute Energy Partners; Sonics; Stallion Oilfield Services; Venco Acquisition Company; Wattles Acquisition; Western Gas Partners

      History of UBS

      UBS has its roots as a Swiss Bank, originating in 1747, when its first branch was established in the Swiss region of Valposchiavo. However, the three core components of the company date back to the second half of the nineteenth century. Union Bank of Switzerland, Swiss Bank Corporation, and Paine Webber or their antecedents, were all founded in the 1860s and 1870s.

      Modern UBS was formed through a merger of the Union Bank of Switzerland and the Swiss Bank Corporation in June 1998. Although the merged company's new name was originally supposed to be the "United Bank of Switzerland," officials opted to call it simply "UBS."

      SBC had previously built a global investment banking business through its acquisitions of Dillon Read in New York and S.G. Warburg in London. The first chairman of the merged bank had to step down in October 1998 due to the Long-Term Capital Management crisis, which affected the Union Bank of Switzerland. In 2000, UBS acquired PaineWebber Group Inc. to become the world's largest wealth management firm for private clients. Invested assets in all wealth management businesses, including the U.S., total CHF 3.265 trillion.

      On June 9th, 2003, all UBS business groups rebranded under the UBS name as the company began operating as one large firm. UBS Paine Webber, UBS Warburg, UBS Asset Management, and others became simply "UBS". As a result of the rebranding, UBS took a $1B writedown for the loss of goodwill associated with the retirement of the Paine Webber brand. UBS is no longer an acronym but is the company's brand, like 3M. Its logo of three keys, carried over from SBC, stands for confidence, security, and discretion.

      UBS is present in all major financial centers worldwide, with offices in 50 countries. According to the UBS website, the bank had 81,557 employees on June 30, 2007. The 2007 Q2 report breaks these Financial Business permanent staff down by region as: 27,315 in Switzerland, 31,933 in the Americas, 13,355 in Europe, the Middle East and Africa (EMEA / not including Switzerland), and 8,954 in Asia and Australasia (APAC).

    JP Morgan Chase Profile
    JPMorgan Chase Annual Report

    CEO: Jamie Dimon (2007 - present)
    Notable Prior CEOs: William B. Harrison, Jr. (2000 - 2006)

    Stock Symbol: JPM (NYSE)

    Recent Close: Yahoo! Finance: JPM

    Business Principles: JPMorgan's Business Principles
    1. Aspire to be the best
    2. Execute superbly
    3. Build a great team and a winning culture

    Why Our Bank? Undergraduate Opportunities
    • History: Legacy of success, which reaches back more than 200 years
    • Business Lines: Operate in six distinct lines of business and offer a vast array of wholesale and retail financial products. This provides exposure to many different types of products and transactions.
    • Perspectives: Diverse work place where people bring their unique perspective to business life and how to succeed in the global marketplace.

    Culture: Our Culture
      JPMorgan has been helping its clients do business for more than 200 years. To describe our firm and our people we can find no better phrase than that of one of our founders: “at all times the idea of doing only first-class business, and that in a first-class way“.

      J.P. Morgan, Jr., first used this phrase in 1933 when he spoke to the banking and currency sub-committee of the U.S. Senate. He believed a banker's role was to provide clients with exceptional service coupled with outstanding execution and unquestioned integrity. More than 70 years later, his statement is as relevant now as it was then.

      JPMorgan's mission is to be the best financial services company in the world. To achieve this goal, we focus relentlessly on carrying out our business principles, which are fundamental to everything we do. They are to:
      1. Aspire to be the best
        • Develop a world-class franchise in every business we operate
        • Be client-drive, consistently delivering the best products and services in a cost-effective way
        • Innovate, test, and learn
        • Create powerful brands that carry a commitment of quality and integrity

      2. Execute superbly
        • Demand and maintain strong financial discipline, building for good times and bad
        • Create and maintain a fortress balance sheet
        • Design and maintain the best systems and operations
        • Eliminate waste and bureaucracy
        • Maintain a strong system of internal governance and controls
        • Measure performance through a complete and balanced scorecard

      3. Build a great team and a winning culture
        • Operate with the highest standards of integrity
        • Train and retain great managers
        • Be open and honest with ourselves, our colleagues, our shareholders and our communities
        • Get incentives right
        • Foster an environment of respect and inclusiveness
        • Give back to our communities

      Being a first-class firm also means doing "good", not just doing well. JPMorgan has a proud tradition of being a good corporate citizen around the world. We dedicate significant financial and human capital to supporting issues and causes important to our business and our people.

    Notable Deals:
    • Upcoming IPOs as Lead Manager: Apple Creek Acquisition; BlueArc; Current Media; Global Energy; IdleAire Technologies; INFONXX; LogMeln; Omneon, Inc.; RAI Acquisition; RHI Entertainment; SS&C Technologies Holdings; Stewart & Stevenson; Symetra Financial; Talecris BioTherapeutics; Varolii; ViewSonic; Visa; Wells Real Estate Investment Trust; XDx

    The History(s):
      JPMorgan: Our History and Heritage

      Chemical Banking Corporation

      The New York Chemical Manufacturing Company was founded in 1823 as a maker of various chemicals. In 1824, the company amended its charter to perform banking activities and created the Chemical Bank of New York. After 1851, the bank was separated from its parent and grew organically and through a series of mergers, most notably with Corn Exchange Bank in 1954, Texas Commerce Bank (a large bank in Texas) in 1986, and Manufacturer's Hanover Trust Company in 1991 (The first major bank merger "among equals.") At many points throughout this history, Chemical Bank was the largest bank in the United States (either in terms of assets or deposit market share).

      In 1996, the company acquired the Chase Manhattan Corporation and took the Chase name. In 2000, the company acquired J.P. Morgan & Co. and changed its name to J.P. Morgan Chase & Co. JPMorgan Chase retains Chemical Bank's headquarters and stock history.

      Chase Manhattan Bank

      The Chase Manhattan Bank was formed upon the 1978 purchase of Chase National Bank (established in 1877) by the Bank of the Manhattan Company (established in 1799), the company's oldest predecessor institution. Led by David Rockefeller during the 1970s and the 1980s, Chase Manhattan was one of the largest and most prestigious banking concerns, with leadership positions in syndicated lending, treasury and securities services, credit cards, mortgages, and retail financial services. Weakened by the real estate collapse in the early 1990s, it was acquired by Chemical Bank in 1996.

      The Bank of the Manhattan Company was the creation of Aaron Burr, who transformed The Manhattan Company from a water carrier into a bank.

      Bank One Corporation

      Bank One Corporation was formed upon the 1998 merger between Banc One of Ohio and First Chicago NBD. These two large banking companies had themselves been created through the merger of many banks.

      The bank traces its roots to First Bancgroup of Ohio, founded as a holding company for City National Bank of Columbus, Ohio and several other banks in that state, all of which were renamed "Bank One" when the holding company was renamed Banc One Corporation. With the beginning of interstate banking they spread into other states, always renaming acquired banks "Bank One", though for a long time they resisted combining them into one bank. After the NBD merger, adverse financial results led to the departure of CEO John B. McCoy, whose father and grandfather had headed Banc One and predecessors. Jamie Dimon, a former key executive of Citigroup, was brought in to head the company.

      J.P. Morgan & Company

      In 1895, Drexel, Morgan & Co. became J.P. Morgan & Co. (see also: John Pierpont Morgan). It financed the formation of the United States Steel Corporation, which took over the business of Andrew Carnegie and others and was the world's first billion-dollar corporation. In 1895, it supplied the United States government with $62 million in gold to float a bond issue and restore the treasury surplus of $100 million. In 1892, the company began to finance the New York, New Haven and Hartford Railroad and led it through a series of acquisitions that made it the dominant railroad transporter in New England.

      Its primary competitor, Kuhn, Loeb & Co., was a more successful adviser and financier to production companies and J.P. Morgan lost its first place in market cap and the league tables. Kuhn, Loeb & Co. would, through a series of mergers and divestitures, eventually become publicly held Lehman Brothers.

      Built in 1914, 23 Wall Street was known as the "House of Morgan," and for decades the bank's headquarters was the most important address in American finance. At noon, on September 16, 1920, a terrorist bomb exploded in front of the bank, injuring 400 and killing 38.[citation needed] Shortly before the bomb went off, a warning note was placed in a mailbox at the corner of Cedar Street and Broadway. The warning read: "Remember we will not tolerate any longer. Free the political prisoners or it will be sure death for all of you. American Anarchists Fighters." While theories abound about who was behind the Wall Street bombing and why they did it, after twenty years investigating the matter, the FBI rendered the file inactive in 1940 without ever finding the perpetrators.

      In August 1914, Henry P. Davison, a Morgan partner, traveled to the UK and made a deal with the Bank of England to make J.P. Morgan & Co. the monopoly underwriter of war bonds for UK and France. The Bank of England became a "fiscal agent" of J.P. Morgan & Co. and vice versa. The company also invested in the suppliers of war equipment to England and France. Thus, the company profited from the financing and buying activities of the two European governments.

      In the 1930s, J.P. Morgan & Co. was forced by the Glass-Steagall Act to choose either commercial banking or investment banking. J.P. Morgan & Co. chose to operate as a commercial bank, because it was perceived to be more profitable in the post depression era. Faced with this new paradigm shift, many Morgan partners, along with some Drexel partners, sought to begin what is now called Morgan Stanley. It is a common misconception that the "Morgan" in Morgan Stanley is the last name of John Pierpont Morgan, but, in fact, it is the last name of Henry Morgan, who was a J.P. Morgan partner. J.P. Morgan & Co. incorporated in 1940, and, in 1959, merged with the Guaranty Trust Company of New York to form the Morgan Guaranty Trust Company. Ten years later, it established a bank holding company called J.P. Morgan & Co. Incorporated as its parent. By the late 1990s, it was acquired by Chase Manhattan and the new company's name became JPMorgan Chase & Co. The Gramm-Leach-Bliley Act repealed the restrictions of Glass-Stegall and allowed Morgan to turn itself into an investment bank, too. Besides investment banking, it also offered private banking and private equity services.