The Wall Street Skinny 21. Q&A! Prop Trading, DCF vs. LBO, Beta, Consulting vs. Banking and More!
We tackle these listener questions and more in our latest Q&A episode!
1. What is the difference is between prop trading and the trading you hear about in the sales & trading division of an investment bank? And how does a prop shop differ from a hedge fund?
2. When running a DCF and choosing your beta for CAPM, when do you use the industry average beta vs. when do you use the company beta? We also get into predicted betas vs. historicals, levering and unlevering betas, if R squared is useful in making decisions about your beta, why banks purposefully don't use what the academics say to use and more.
3. What are these mysterious Greek letters that people in finance toss around like delta, beta, and gamma?
4. Why would some industries like natural resources not use LBOs and instead only use a DCF, like for example when constructing a toll road.
5. How do you choose between a career in banking or consulting?
If you want us to answer YOUR questions in our next Q&A, please write to questions@wallstreetskinny.com.
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