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functions of an investment bank

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 usha asked about 3 years ago

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7 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pankaj answered almost 3 years ago

Investment banks have many functions to perform. Some of the most important functions of investment banking are as follows: IPOs: Investment Banks facilitate public and Private Corporation’s Initial Public Offering known as IPO (issuing securities in the primary market) by providing underwriting services. Other services include acting as intermediaries in trading for clients and foreign exchange management. Investment management: Investment Bankers also provide advice to investors to purchase, manage and trade various securities (shares, bonds, etc.) and other assets like real estate, hedge fund, mutual funds etc. Investors may be financial institutions or big fund houses or private investors. The investment management division of an investment bank is divided into separate groups, namely, Private Wealth Management and Private Client Services. Boutiques: Small investment banking firms providing financial services are called boutiques. These mainly specialize in trading bonds, advising for mergers and acquisitions, providing technical analysis etc. Mergers and Acquisitions: Another major function of the investment banking include mergers and acquisitions (M&A) and corporate finance which involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Structuring of Derivatives: This has been a relatively recent division which involves highly technical and numerate employees working on creating complex structured derivative products which typically offer much greater margins and returns than underlying cash securities. Merchant banking is nothing but the private equity activity of investment banks. Goldman Sachs Capital Partners and JPMorgan’s One Equity Partners are the current examples. (Note: Originally, “merchant bank” was the British English term for an investment bank.)

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered almost 3 years ago

Other roles of investment banks include asset management for large investment funds and personal wealth management for high-net-worth individuals. Some of the major investment banks include Goldman Sachs, JPMorgan Chase and Credit Suisse. Roles of an investment bank -Underwriting New Stock Issues -Financial Advisory Roles -Mergers and Acquisitions

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered almost 3 years ago

> FUNCTIONS OF INVESTMENT BANK Investment banks serve a number of purposes in the financial and investment world, including underwriting of new stock issues, handling mergers and acquisitions, and acting as a financial adviser. Other roles of investment banks include asset management for large investment funds and personal wealth management for high-net-worth individuals. Some of the major investment banks include Goldman Sachs, JPMorgan Chase and Credit Suisse. **Roles of an investment bank** -Underwriting New Stock Issues -Financial Advisory Roles -Mergers and Acquisitions -Role as an adviser -Research analysis -Trading and Sales -Asset Management -Wealth Management -Securitized Products - IPO Funding etc.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered about 3 years ago

Research – Larger investment banks have large teams that gather information about companies and offer recommendations on whether to buy or sell their stock. They may use these reports internally but can also generate revenue by selling them to hedge funds and mutual fund managers. Trading and Sales – Most major firms have a trading department that can execute stock and bond transactions on behalf of their clients. In the past, some banks have also engaged in proprietary trading, where they essentially gamble their own money on securities; however, a recent regulation known as the Volcker Rule has clamped down on these activities.

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 20180702 145746 Vaibhav answered about 3 years ago

1. Underwriting When underwriting a security issue, an investment banker guarantees the issuer that it will receive a specific amount from the issue. In this process, investment banker buys the security at a lower price and then sells them at a higher price i.e. offer price to public. In this sense, underwriting is the insurance function of bearing the risks of adverse price fluctuation during the period of distribution. Investment bankers take this risk for a specific amount of underwriting spread or commission. If investment banker can not sell securities at specified price, the underwriter, not the company, suffers the loss. Underwriter's gain or loss is computed using the following equation. Gain or loss to underwriter = Gross proceed- proceed to the company- underwriter's expenses. Where, Gross proceed = price to public X number of shares to be issued. 2. Distributing Once the investment banker owns new securities. it must get them into the hands of ultimate investors. Hence, the second function of investment banker is marketing new issue of securities. The investment banker is a specialist with a staff and organization to distribute securities. So, they perform physical distribution functions more efficiently and more economically than and individual company. 3. Advising The investment banker, through experience becomes an expert in the issuance and marketing of new securities. Business firms may take valuable advice and counsel from the investment bankers. Thus, investment bankers perform an advisory function by analyzing the firm's financial needs and recommending appropriate means of financing. 4. Making A Market In case of a company going public for the first time, the investment banker may be obliged to maintain a market for the shares after the issue. The investment banker generally agrees to make a market in the stock and to keep it reasonably liquid. In making a market, the underwriter maintains an inventory in the stocks, quotes bid and asked prices, and stands ready to buy and sell it at those prices. Thus, investment banker also helps to maintain an active secondary market in the stock of small and newly established company.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered about 3 years ago

**FUNCTIONS OF INVESTMENT BANK** Research – Larger investment banks have large teams that gather information about companies and offer recommendations on whether to buy or sell their stock. They may use these reports internally but can also generate revenue by selling them to hedge funds and mutual fund managers. Trading and Sales – Most major firms have a trading department that can execute stock and bond transactions on behalf of their clients. In the past, some banks have also engaged in proprietary trading, where they essentially gamble their own money on securities; however, a recent regulation known as the Volcker Rule has clamped down on these activities. Asset Management – The likes of J.P. Morgan and Goldman Sachs manage huge portfolios for pension funds, foundations and insurance companies through their asset management department. Their experts help select the right mix of stocks, debt instruments, real estate trusts and other investment vehicles to achieve their clients’ unique goals. Wealth Management – Some of the same banks that perform investment banking functions for Fortune 500 businesses also cater to everyday investors. Through a team of financial advisors, they help individuals and families save for retirement and other long-term needs. Securitized Products – These days, companies often pool financial assets – from mortgages to credit card receivables – and sell them off to investors as a fixed-income products. An investment bank will recommend opportunities to “securitize” income streams, assemble the assets and market them to institutional investors. In fact, the term “investment bank” is something of a misnomer. In many cases, helping companies raise capital is just one part of a much bigger operation Thanks

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Open uri20170510 32134 8wx65y?1494421689 Charan Reddy answered about 3 years ago

Investment banks have many functions to perform. Some of the most important functions of investment banking are as follows: IPOs: Investment Banks facilitate public and Private Corporation’s Initial Public Offering known as IPO (issuing securities in the primary market) by providing underwriting services. Other services include acting as intermediaries in trading for clients and foreign exchange management. Investment management: Investment Bankers also provide advice to investors to purchase, manage and trade various securities (shares, bonds, etc.) and other assets like real estate, hedge fund, mutual funds etc. Investors may be financial institutions or big fund houses or private investors. The investment management division of an investment bank is divided into separate groups, namely, Private Wealth Management and Private Client Services. Boutiques: Small investment banking firms providing financial services are called boutiques. These mainly specialize in trading bonds, advising for mergers and acquisitions, providing technical analysis etc. Mergers and Acquisitions: Another major function of the investment banking include mergers and acquisitions (M&A) and corporate finance which involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Structuring of Derivatives: This has been a relatively recent division which involves highly technical and numerate employees working on creating complex structured derivative products which typically offer much greater margins and returns than underlying cash securities. Merchant banking is nothing but the private equity activity of investment banks. Goldman Sachs Capital Partners and JPMorgan’s One Equity Partners are the current examples. (Note: Originally, “merchant bank” was the British English term for an investment bank.) Research is another important function of an Investment bank which reviews companies and writes reports about their prospects with “buy” or “sell” ratings. Though this division does not generate direct revenues, the information gathered or produced by them is used to guide investors and in some cases for Mergers and Acquisitions. Risk management is a continuously ongoing activity which involves analyzing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades, and setting limits on the amount of capital that they are able to trade in order to prevent ‘bad’ trades having a detrimental effect to a desk overall.

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