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?

1. Evaluating and rewarding the bank’s analysts on the basis of recommendations made by managers who are solely engaged in raising capital for clients
2. Using reports by the investment bank’s analysts to determine how best to raise capital for a client
3. Sharing the task of raising capital for a client with other investment banks
4. Ensuring that conflicts between analysts and those who raise capital for clients are carefully mediated and resolved by impartial arbitrators
5. Monitoring the success or failure of analysts’ current predictions about how companies will perform financially, in order to determine the value of future predictions                                                         

    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.

agree

I think the explaination is much clear to none

i see. thanks!