Value Capture Model

Finance 101

by Karl - January 20, 20190

Porter's five forces, founded in the 1980's, is the classical framework used to understand and analyze competitive forces in an industry. In the 1990's, a new framework was formed, the Value Capture Model. The Value Capture Model extends on previous frameworks in two ways. One, it formally describes competition as a

Statistical Inference and Hypothesis Testing

Statistics 101

by Karl - December 9, 2018December 31, 20180

Whenever we observe data, we are usually observing one or a few samples from a much larger population. For example, if we are looking at daily stock market returns for AAPL for last year, we are looking at only a small portion of the overall daily returns. More often than

Interview With A Mergers & Acquisitions Investment Banker – Part II

by Karl - December 9, 2018December 9, 20180

What sector is interesting right now? Oil and gas. Despite the current oil price environment (which is very bad), you are actually seeing a fair bit of consolidation in the space because of the efficiencies of scale in the space. The oil prices are low and there is a lot of uncertainty right

Interview with a Mergers & Acquisitions Investment Banker – Part I

by Karl - December 9, 2018December 9, 20180

Why does everyone want to do M&A? M&A is probably the most flexible group in terms of exit opportunities and gives you the broadest and most technical experience. You will get the most modelling experience in M&A, but I would caveat that it is not as interesting as people seem to think

Multivariate Regression and Interpreting Regression Results

Statistics 101

by Karl - December 3, 2018December 31, 20180

Simple linear regression (univariate regression) is an important tool for understanding relationships between quantitative data, but it has its limitations. One obvious deficiency is the constraint of one independent variable, limiting models to one factor, such as the effect of the systematic risk of a stock on its expected returns.

Understanding Porter’s Five Forces

Finance 101

by Karl - December 3, 2018December 31, 20180

Porter's five forces is the most famous concept in strategy, and is a part of every business undergrad/MBA curriculum. The concept is a succinct yet brilliant way of describing the competitive forces in an industry. For banking, it is an immensely useful framework for industry analysis, a key part of

Modern Portfolio Theory and the Capital Allocation Line

Finance 101

by Karl - November 19, 2018December 31, 20180

In our Capital Asset Pricing Model post, we discussed risk and return for stocks. We also discussed the use of the relationship to value stocks, by interpolating what the return for a stock should be given a certain level of risk. We will build on these concepts and discuss how

Accounting Estimates: Managing Earnings

Accounting 101

by Karl - November 11, 2018December 31, 20180

In our other accounting estimates articles, we talked about the discretion that management has in the income statement and the balance sheet. In this article, we will dive deeper into the incentives that management may have to manage these estimates. What is Earnings Management? Despite the discretionary nature of some of the

Interview with Sales & Trading Associate in Hong Kong

by Karl - November 11, 2018November 14, 20180

What sales and trading capabilities do the Big 5 Canadian banks have in Asia? Generally, Canadian banks have very lean operations in Asia. The biggest player in Asia would be Scotiabank, with an onshore presence in many countries - Scotia is Canada's most international bank. Scotiabank has the widest range of capabilities;

M&A Deal Case Study

Finance 101

by Karl - November 5, 2018November 5, 20180

M&A Transaction Case Studies are commonly seen in case competitions, and sometimes in actual investment banking work. They are a quick analysis of an M&A transaction, summarized in a few PowerPoint slides. They can be a great way to prepare for interviews, while learning about the details of a transaction. Slide