Chapter 10 - Financial Markets & Indentification of Financing Needs

Question 1

8 Other sources of financing from the private market (need a summary of each )

Answer 1

• Institutional investors
• Private equity
• Venture capital
• Pledge funds
• Unit trusts
• Pension schemes
• EIS
• Banks

Question 2

4 main groups of banks

Answer 2

• Retail banks focus on the general public/consumers by operating with multiple branch locations. Services offered
  include providing current and saving accounts and issuing credit cards, mortgages and loans.
• Commercial banks focus on company customers by accepting deposits, offering checking (current) and saving
  accounts and providing company loans. They also support companies by offering additional services such as basic
  investment products, accepting payments from customers and providing letters of credit to companies overseas.
  Banks such as Barclays and HSBC provide retail and commercial banking.
• Investment banks such as JP Morgan, Deutsche Bank and Morgan Stanley help startup or expanding companies
  by issuing stocks or bonds to investors in financial markets. They help companies ‘go public’ or sell debt by
  locating interested investors. Similarly, corporations use investment bankers to negotiate the terms of a merger or
  acquisition.
• Central banks, also referred to as reserve banks (such as the US Federal Reserve Bank and the Bank of England),
  manage the monetary system for a government, including the state’s currency, money supply and interest rates.
  They also usually oversee the commercial banking system of their respective countries. These institutions are
  usually in charge of overseeing the commercial banking sector within their jurisdictions.