4-29 Activity and performance trends in the investment banking industry are highly correlated with general economic expansions and recessions.

Question

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Investment banking activities, such as underwriting initial public offerings (IPOs) and mergers and acquisitions (M&A), tend to increase during economic expansions as companies seek to raise capital or expand their businesses through acquisitions. Conversely, during recessions, investment banking activities tend to slow down as the demand for capital decreases. Therefore, activity and performance trends in the investment banking industry are highly correlated with the general economic conditions.

4-29 Activity and Performance Trends in the Investment Banking Industry