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5 Cards in this Set
- Front
- Back
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What is an investment bank? |
An investment bank (IB) is a financial intermediary that performs a variety of services. Most Investment banks specialize in large and complex financial transactions, such as underwriting, acting as an intermediary between a securities issuer and the investing public, facilitating mergers and other corporate reorganizations and acting as a broker or financial adviser for institutional clients. |
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What roles do IBs play? |
Help corporations issue new shares of stock in an initial public offering (IPO) or follow-on offering (2PO) Help corporations obtain debt financing by finding investors for corporate bonds. Pre-underwriting counseling and continues after the distribution of securities in the form of advice. Examine the company’s financial statements for accuracy and publish a prospectus that explains the offering to investors before the securities are made available for purchase. |
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How does an IB act as a financial advisor |
As a financial advisor to large institutional investors, the job of an investment bank is to act as a trusted partner that delivers strategic advice on a variety of financial matters. They accomplish this mission by combining a thorough understanding of their clients' objectives, industry and global markets with strategic vision trained to spot and evaluate short- and long-term opportunities and challenges facing their client. |
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How does an IB help with M&A |
Handling mergers and acquisitions is a key element of an investment bank's work. The main contribution of an investment bank in a merger or acquisition is evaluating the worth of a possible acquisition and helping parties arrive at a fair price. An investment bank also assists in structuring and facilitating the acquisition in order to make the deal go as smoothly as possible. |
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How does an IB help with research |
The research divisions of investment banks review companies and author reports about their prospects, often with "buy", "hold" or "sell" ratings. While research may not generate revenue itself, the resulting knowledge is used to assist traders and sales. Investment bankers, meanwhile, receive publicity for their clients. Research also provides investment advice to outside clients in the hopes that these clients will take their advice and complete a trade through the trading desk of the bank, which would generate revenue for the bank. Research maintains an investment bank's institutional knowledge on credit research, fixed income research, macroeconomic research, and quantitative analysis, all of which are used internally and externally to advise clients. |
