Q40:
Investment banks often have conflicting roles. They sometimes act for a client company by raising capital from other investment institutions as advantageously as possible, but their analysts also sometimes send unfavorable reports on the financial health of companies for whom they are raising capital to other clients who wish to make investments. Analyses of companies’ financial health need to be unbiased if an investment bank is to achieve long-term success.
If the statements above are true, which of the following practices, if adopted by an investment bank, would hinder its long-term success?
ANS:A
請教一下,這題的思路,謝謝^_^
A)Evaluating and rewarding the bank’s analysts on the basis of recommendations made by managers who are solely engaged in raising capital for clients.
Mmanagers who are solely engaged in raising capital don't care what happen to the other department as long as they can raise capital for clients from whom they can get money. So if the bank only rely on those managers, it is running the risk that their opinion can be biased.
totally agree with MBZ
I think the explaination is much clear to none
agree,
Criteria:
Analyses of companies’ financial health need to be unbiased if an investment bank is to achieve long-term success.
If A, then analysts would always saying clients are promising in order to get good review from manager. This is bias and hence will hinder long-term success
B is wrong since it saying “to determine HOW to raise fund”, irrelevant.
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