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Free IB — Certificate in Investment Banking Exam Questions and Answers

Last updated: March 30, 2025

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IB — Certificate in Investment Banking

#Question
In investment, what is often seen as the risk-free rate?
A.
Real estate returns
B.
Corporate bond yield
C.
Government bond yield
D.
Stock market average
Correct Answer: C
The yield on government bonds, particularly long-term, is generally considered the risk-free rate.

IB — Certificate in Investment Banking

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In investment, what is often seen as the risk-free rate?


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#Question
What is a common reason for a firm to go private?
A.
Regulatory scrutiny
B.
Reduce transparency
C.
Increase shareholder influence
D.
Enhance flexibility
Correct Answer: D
Going private allows firms to minimize regulatory scrutiny and enhance operational flexibility without public market pressures.

IB — Certificate in Investment Banking

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What is a common reason for a firm to go private?


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#Question
When a company conducts a reverse stock split, what is the main purpose?
A.
Increase stock price
B.
Lower market cap
C.
Retain shareholders
D.
Seek acquisition opportunities
Correct Answer: A
A reverse stock split is often executed to increase the share price to meet listing requirements or improve market perception.

IB — Certificate in Investment Banking

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When a company conducts a reverse stock split, what is the main purpose?


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#Question
What is one effect of raising interest rates on equity markets?
A.
Decreased consumption
B.
Higher stock valuations
C.
Lower investment
D.
Increased borrowing
Correct Answer: C
Higher interest rates typically lead to lower valuations in equity markets as borrowing becomes more expensive.

IB — Certificate in Investment Banking

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What is one effect of raising interest rates on equity markets?


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#Question
What is a key benefit of mutual funds for individual investors?
A.
Guaranteed returns
B.
Access to professional management
C.
Higher risk
D.
Direct stock ownership
Correct Answer: B
Mutual funds provide various individual investors access to professional fund management and diversified portfolios.

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#Question
A high yield bond often indicates what type of investment?
A.
High risk
B.
Low return
C.
Low risk
D.
Government-backed
Correct Answer: A
High yield bonds are generally associated with higher risk due to the issuers' lower credit ratings.

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A high yield bond often indicates what type of investment?


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#Question
What is a significant potential risk when investing in startups?
A.
Uncertain market conditions
B.
Limited growth potential
C.
High management costs
D.
Low demand
Correct Answer: A
Startups are often subject to unpredictable market conditions, which can significantly affect their viability.

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