Tuesday, October 17th 2017

Investment Banking

Investment banks offer a variety of services to public companies, governmental entities, companies wishing to go public, and consumers who wish to invest in these companies. Companies who want to issue shares publicly often use an investment bank to determine how many shares to issue and at what price. This is known as the underwriting process.

It is the investment bank's job to guide their client though the process of issuing new securities. For example, an investment bank will often buy the shares of these companies at a predetermined price before reselling them to the open market. Aside from potentially making a large profit for the investment bank, this also serves the company going public as they are guaranteed a certain dollar amount at the time of share issuance. Investment banks may also provide advice, or raise funds for, companies wishing to merge with or acquire another company.

Investment banks are often divided into three separate sections. The "front office" refers to sales and/or any other activity that deals directly with customers. The "middle office" seeks to ensure that the rest of the investment bank is in compliance with applicable governmental regulations. Finally, the "back office" refers to the operations that support the other operations of the company. These tasks include data checking and human resources.


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