Bloomberg Assessment: Sample Test Questions

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BLOOMBERG ASSESSMENT (BAT)
SAMPLE TEST QUESTIONS
I. Economics
You have just been transferred to Sydney and cover Australia and New Zealand on the sovereign research desk. Australia and New Zealand operate under a free trade agreement. No barriers to trade exist, and both currencies float. In this environment, an increase in expected inflation in New Zealand would most likely cause what effect? Choose One Answer

o o o 

An increase in exports from New Zealand to Australia An increase in imports to New Zealand from Australia An increase in the New Zealand Dollar versus the Australian Dollar A decline in the New Zealand Dollar versus the Australian Dollar

II. Financial Statements Analysis
Pinnacle Entertainment is a gaming company with operations in the United States. As a result of increased competition and weakness in the Missouri market, the company took an impairment charge to write down the value of its three properties in the region. How will this charge be reflected on the cash flow statement? Choose One Answer

o o o 

A use of cash from investing A use of cash from discontinued operations A source of cash from financing A source of cash from operations

© 2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

III. Corporate Valuation
As an investment banking analyst at Deutsche Bank, you are asked to perform a discounted cash flow analysis. Your associate provides you with the following information from the company’s operating model and asks you to calculate the present value of the company’s first five years of unlevered free cash flows assuming a 10% discount rate and a 40% tax rate. Projections (millions) Fiscal Year (FY) Net Sales EBITDA Depreciation & Amortization Capital Expenditures Net Change in Working Capital FY+1 €300.0 66.0 10.0 7.5 0.0 FY+2 €374.1 84.2 12.5 10.6 0.0 FY+3 €417.7 94.0 15.0 13.5 0.0 FY+4 €466.5 105.0 17.5 16.6 0.0 FY+5 €521.0 117.3 20.0 20.0 0.0

Which of the following is the present value of the company’s free cash flows in millions? Choose One Answer

o  o o

€168 €179 €201 €242

© 2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

IV. Investment Banking
As an investment banking analyst at HSBC, you are working on an M&A pitch for an upcoming client meeting. Your managing director feels the client is particularly sensitive to dilution and would not be interested in a transaction that was not accretive. Based on the information provided in the table, which of the following transactions would you recommend including in the presentation? Acquiror Price EPS CNY 200.0 CNY 10.60 Target A 115.0 6.00 Target B 400.0 9.50

Choose One Answer

o o  o

A 100% stock acquisition of Target A A 100% stock acquisition of Target B A 100% debt-financed, all cash acquisition of Target A (assuming a 5% after-tax cost of debt) A 100% debt-financed, all cash acquisition of Target B (assuming a 5% after-tax cost of debt)

© 2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

V. Financial Markets
You are a junior treasury trader at JP Morgan. The yield curve is currently positively sloped, with the spread between the 2 year and 10 year treasuries at 100 basis points. Which of the following announcements by the Fed would most likely cause the 2s-10s spread to increase? Choose One Answer

o o o o

Fed is raising short term interest rates to slow the economy Fed has changed its outlook from favorable to cautious regarding inflation Fed is buying 2 year notes in the open market Fed is buying 10 year notes in the open market

VI. Investment Management
You are completing due diligence on a quantitative-trading (black box) hedge fund. Upon first glance, the returns of the hedge fund seem highly correlated with the returns for oil. What type of analysis can you do to ascertain how much of the hedge fund’s returns are driven by investments in oil? Choose One Answer

o o  o

Discounted cash flow analysis Histogram analysis Regression analysis T-test analysis

© 2011 BLOOMBERG L.P. ALL RIGHTS...
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