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Hi, need to submit a 1000 words essay on the topic Description of Investment Banking.In addition, investment banks can also assist the mergers and acquisitions of companies and provide services such a
Hi, need to submit a 1000 words essay on the topic Description of Investment Banking.
In addition, investment banks can also assist the mergers and acquisitions of companies and provide services such as trading of derivatives and securities. It trades and promotes securities for assets or other securities (i.e. derivatives) on its selling side. On the other hand, it also advises individuals and companies on how to invest their monies as its buying function. Advise typically dispensed by investment banking usually involves equity, insurance companies, mutual funds and hedge funds.
An investment banker or the person who provides investment banking services to his or her clients are licensed and subject to the regulations of the Securities and Exchange Commission (SEC) and Financial Regulatory Authority (SEC).
a. Front office – is the most common function of investment banking where it helps its client to raise capital for their business or give advise during acquisitions and mergers. Raising funds for its clients could take in the form of issuing marketable securities (such as stocks), coordinate and negotiate with the company to be acquired or merged with and coordinate with bidders.
Investment banks do not take in deposits from the general public and instead, it involves itself in the buying and selling of investment securities and other tradable securities. The investment banker assumes the role of a trader as he or she buys and then sell securities with a spread or margin on every trade completed. This function of investment banking, however, was blamed as the culprit of the recent financial crisis because the “financial bubble” that burst and precipitated the crisis came from reselling of complex derivates and debts that cannot collect until ultimately, it took its toll on the US financial system.
b. Middle office – the middle office involves the research function of investment banking.
