MBA 6400 Case 2
4-5 pages of text, double spaced, not including Cover page and References page. Investment Banking U.S. based investment banks have undergone what many would consider substantive changes in the last decade, over the period 2008 to 2019. This period coincides with the Great Recession, which was a significant driver of changes to investment bank business and characteristics. Such changes include wider fluctuations in mergers and acquisitions, reduced initial public offering underwriting, reductions in staffing, and associated impact on investment bank balance sheets, followed by an economic expansion. For this case study, address the following items: 1.Identify one of the top ten investments banks as of 2019. Get the annual reports for 2008 and 2019. Include both reports as part of your submission, along with your Word document and Excel spreadsheet.
2.Provide a concise descriiption of the bank’s core competency with examples of recent activities or transactions. Be sure to provide specific $ data on the magnitude of the bank’s recent activities.
3.How has the size of your selected investment bank changed from 2008-2019? Use $valuations to illustrate the change. In which investment bank functions did their overall business increase and/or decrease? Only use these two years; do not do intermediate years.
4.Balance Sheet
a.Prepare a balance sheet analysis of the bank, comparing 2008 balance sheet Totals values to the 2019 balance sheet Totals values. Be sure to include the following items in Excel: $change and % change in Total assets, Total liabilities, and Total equity positions over this period. Annual Report20082019$Change%ChangeTotal Assets$###$###$#####%Total Liabilities$###$###$#####%Total Equity$###$###$#####%
b.Expand the above table with the past and current leverage position (Totals D/E ratio (Total Liabilities/Total Equity)) of the investment bank, $change and % change over this period. c.Expand the above table with $change and %change comparisons of book value (per share) to market value (closing common stock price of the year) of the bank, 2008 to 2019. This is to compare:
i2008 book value to 2019 book value,
ii2008 market value to 2019 market value,
iii2008 book value to 2008 market value,
iv2019 book value to 2019 market value. If your bank does not already have the info in the annual report, then get the market values from the closing stock price of the year. https://finance.yahoo.com/ > Company symbol > Historical Data d.Describe and discuss all of item 4-Balance Sheet in your Word document.
5.Refer to the following article and address the question in detail iArticle: Edelmann, C., & Hunt, P. (2017). How the Great Recession Changed Banking. Harvard Business Review Digital Articles, 2–9
iiQuestion: Compare the financial analysis completed in item #3 above to the main points in the article, including changes in B/S valuation.
6.Answer the following questions for a fictitious public offering, and show all calculations:
a.An investment bank offers underwriters an IPO of up to 19m shares for ABC Company at a price of $12.80 per share. Show the $ return to the investment bank under both scenarios:
iThe 19m shares sell at $13.50 per share.
iiWhat happens if the IPO price is overstated and the shares sell for $12.25 per share?
