Investment Banking & M&A Analysis: 2026
Study
Valuation, Deal Structuring & Financial Modeling (100 Questions)
1. In a standard sell-side M&A process, what is a "Teaser"?
A) A detailed 50-page document with the company's financial model
B) A short, 1-2 page typically anonymous document outlining the investment opportunity to
gauge initial buyer interest
C) A legal contract binding the buyer to purchase the company
D) A list of the target company's employees
Correct Answer: B) A short, 1-2 page typically anonymous document outlining the
investment opportunity to gauge initial buyer interest
2. What does "CIM" stand for in investment banking?
A) Corporate Investment Model
B) Confidential Information Memorandum
C) Capital Integration Matrix
D) Cash Investment Margin
Correct Answer: B) Confidential Information Memorandum
3. An "NDA" (Non-Disclosure Agreement) must typically be signed before a potential
buyer receives:
A) The Teaser
B) The CIM (Confidential Information Memorandum)
C) The name of the investment bank
D) The public stock price
Correct Answer: B) The CIM (Confidential Information Memorandum)
4. What is an "IOI" (Indication of Interest)?
A) A binding legal contract to buy the company
B) A non-binding written offer submitted by a buyer proposing a valuation range and general
terms
C) A letter from the bank refusing the deal
D) A document filed with the SEC
Correct Answer: B) A non-binding written offer submitted by a buyer proposing a
valuation range and general terms
,5. What is an "LOI" (Letter of Intent)?
A) A completely informal chat between CEOs
B) A document outlining the main terms of a prospective deal, often including exclusivity
(no-shop) clauses, prior to final due diligence
C) A receipt for advisory fees
D) A public press release
Correct Answer: B) A document outlining the main terms of a prospective deal, often
including exclusivity (no-shop) clauses, prior to final due diligence
6. In M&A, what is a "Data Room" (VDR)?
A) A physical room where bankers sleep
B) A secure digital repository where the target company stores detailed financial, legal, and
operational documents for buyer due diligence
C) A database of all public stock prices
D) A room where the servers are kept
Correct Answer: B) A secure digital repository where the target company stores detailed
financial, legal, and operational documents for buyer due diligence
7. A "Fairness Opinion" is typically provided by an investment bank to:
A) Prove the bank worked hard
B) Assure the target company's board of directors and shareholders that the deal price is
financially fair
C) Guarantee the buyer will make a profit
D) Appraise the value of real estate
Correct Answer: B) Assure the target company's board of directors and shareholders
that the deal price is financially fair
8. "Enterprise Value" (EV) represents the value of the firm to:
A) Only the equity shareholders
B) Both debt and equity holders (core operating value)
C) Only the government
D) Only the management team
Correct Answer: B) Both debt and equity holders (core operating value)
9. The standard formula to move from Equity Value to Enterprise Value is:
A) Equity Value + Cash - Debt = Enterprise Value
B) Equity Value + Debt + Preferred Stock + Minority Interest - Cash = Enterprise Value
C) Equity Value / Debt = Enterprise Value
D) Equity Value - Net Income = Enterprise Value
, Correct Answer: B) Equity Value + Debt + Preferred Stock + Minority Interest - Cash =
Enterprise Value
10. Why do we subtract Cash when calculating Enterprise Value?
A) Because cash is highly volatile
B) Because cash is a non-operating asset and it conceptually pays for itself (it can be used to
pay down debt immediately)
C) Because cash belongs to the bank
D) Because cash causes inflation
Correct Answer: B) Because cash is a non-operating asset and it conceptually pays for
itself (it can be used to pay down debt immediately)
11. The "Treasury Stock Method" (TSM) is used to calculate:
A) The amount of debt a company can issue
B) The fully diluted number of shares outstanding, assuming in-the-money options are exercised
and the proceeds are used to repurchase shares
C) The amount of cash in the treasury
D) The interest rate on treasury bonds
Correct Answer: B) The fully diluted number of shares outstanding, assuming
in-the-money options are exercised and the proceeds are used to repurchase shares
12. When calculating fully diluted shares, an option is "in-the-money" if:
A) The strike price is greater than the current share price
B) The strike price is less than the current share price
C) The strike price equals the current share price
D) The option is expired
Correct Answer: B) The strike price is less than the current share price
13. "Unlevered Free Cash Flow" (UFCF) is also known as:
A) Free Cash Flow to Equity (FCFE)
B) Free Cash Flow to the Firm (FCFF)
C) Operating Cash Flow
D) Net Income
Correct Answer: B) Free Cash Flow to the Firm (FCFF)
14. UFCF is calculated BEFORE paying:
A) Taxes
B) Capital Expenditures (CapEx)
C) Interest expense (debt obligations)
D) Operating expenses
Correct Answer: C) Interest expense (debt obligations)
15. A standard formula for UFCF starting from EBIT is:
A) EBIT * (1 - Tax Rate) + D&A - CapEx - Change in Net Working Capital
B) EBIT - Interest - Taxes
C) Net Income + D&A - CapEx
D) EBITDA - CapEx
Study
Valuation, Deal Structuring & Financial Modeling (100 Questions)
1. In a standard sell-side M&A process, what is a "Teaser"?
A) A detailed 50-page document with the company's financial model
B) A short, 1-2 page typically anonymous document outlining the investment opportunity to
gauge initial buyer interest
C) A legal contract binding the buyer to purchase the company
D) A list of the target company's employees
Correct Answer: B) A short, 1-2 page typically anonymous document outlining the
investment opportunity to gauge initial buyer interest
2. What does "CIM" stand for in investment banking?
A) Corporate Investment Model
B) Confidential Information Memorandum
C) Capital Integration Matrix
D) Cash Investment Margin
Correct Answer: B) Confidential Information Memorandum
3. An "NDA" (Non-Disclosure Agreement) must typically be signed before a potential
buyer receives:
A) The Teaser
B) The CIM (Confidential Information Memorandum)
C) The name of the investment bank
D) The public stock price
Correct Answer: B) The CIM (Confidential Information Memorandum)
4. What is an "IOI" (Indication of Interest)?
A) A binding legal contract to buy the company
B) A non-binding written offer submitted by a buyer proposing a valuation range and general
terms
C) A letter from the bank refusing the deal
D) A document filed with the SEC
Correct Answer: B) A non-binding written offer submitted by a buyer proposing a
valuation range and general terms
,5. What is an "LOI" (Letter of Intent)?
A) A completely informal chat between CEOs
B) A document outlining the main terms of a prospective deal, often including exclusivity
(no-shop) clauses, prior to final due diligence
C) A receipt for advisory fees
D) A public press release
Correct Answer: B) A document outlining the main terms of a prospective deal, often
including exclusivity (no-shop) clauses, prior to final due diligence
6. In M&A, what is a "Data Room" (VDR)?
A) A physical room where bankers sleep
B) A secure digital repository where the target company stores detailed financial, legal, and
operational documents for buyer due diligence
C) A database of all public stock prices
D) A room where the servers are kept
Correct Answer: B) A secure digital repository where the target company stores detailed
financial, legal, and operational documents for buyer due diligence
7. A "Fairness Opinion" is typically provided by an investment bank to:
A) Prove the bank worked hard
B) Assure the target company's board of directors and shareholders that the deal price is
financially fair
C) Guarantee the buyer will make a profit
D) Appraise the value of real estate
Correct Answer: B) Assure the target company's board of directors and shareholders
that the deal price is financially fair
8. "Enterprise Value" (EV) represents the value of the firm to:
A) Only the equity shareholders
B) Both debt and equity holders (core operating value)
C) Only the government
D) Only the management team
Correct Answer: B) Both debt and equity holders (core operating value)
9. The standard formula to move from Equity Value to Enterprise Value is:
A) Equity Value + Cash - Debt = Enterprise Value
B) Equity Value + Debt + Preferred Stock + Minority Interest - Cash = Enterprise Value
C) Equity Value / Debt = Enterprise Value
D) Equity Value - Net Income = Enterprise Value
, Correct Answer: B) Equity Value + Debt + Preferred Stock + Minority Interest - Cash =
Enterprise Value
10. Why do we subtract Cash when calculating Enterprise Value?
A) Because cash is highly volatile
B) Because cash is a non-operating asset and it conceptually pays for itself (it can be used to
pay down debt immediately)
C) Because cash belongs to the bank
D) Because cash causes inflation
Correct Answer: B) Because cash is a non-operating asset and it conceptually pays for
itself (it can be used to pay down debt immediately)
11. The "Treasury Stock Method" (TSM) is used to calculate:
A) The amount of debt a company can issue
B) The fully diluted number of shares outstanding, assuming in-the-money options are exercised
and the proceeds are used to repurchase shares
C) The amount of cash in the treasury
D) The interest rate on treasury bonds
Correct Answer: B) The fully diluted number of shares outstanding, assuming
in-the-money options are exercised and the proceeds are used to repurchase shares
12. When calculating fully diluted shares, an option is "in-the-money" if:
A) The strike price is greater than the current share price
B) The strike price is less than the current share price
C) The strike price equals the current share price
D) The option is expired
Correct Answer: B) The strike price is less than the current share price
13. "Unlevered Free Cash Flow" (UFCF) is also known as:
A) Free Cash Flow to Equity (FCFE)
B) Free Cash Flow to the Firm (FCFF)
C) Operating Cash Flow
D) Net Income
Correct Answer: B) Free Cash Flow to the Firm (FCFF)
14. UFCF is calculated BEFORE paying:
A) Taxes
B) Capital Expenditures (CapEx)
C) Interest expense (debt obligations)
D) Operating expenses
Correct Answer: C) Interest expense (debt obligations)
15. A standard formula for UFCF starting from EBIT is:
A) EBIT * (1 - Tax Rate) + D&A - CapEx - Change in Net Working Capital
B) EBIT - Interest - Taxes
C) Net Income + D&A - CapEx
D) EBITDA - CapEx
