Investment Banks

Question 1

What are the 5 main things Investment Banks do?

Answer 1

1. Proprietary Trading
2. Market Trading
3. M & A Advisory
4. Corporate Events
5. Structured Products

Question 2

What is ‘Prop’ trading?

Answer 2

Investment banks gamble own funds on currencies, commodities, bonds etc.
Teams are tasked with gambling money on these things to make the bank money.

Question 3

What is Market making?

Answer 3

Investment banks often commit to trading regularly at the stock exchange to keep the market moving. So there are buyers and sellers.

Question 4

What is M & A Advisory?

Answer 4

Mergers and Acquisitions.
Banks can advise companies that are looking to take over others on things such as timing, offer structuring, regulating, screening the target, publicising etc

Question 5

What is corporate events/ New Issues?

Answer 5

When companies need to raise funds they can either sell shares or bonds and investment banks can advise when to do this, how to publicise, the price, get involved in underwriting (commuting to buy shares off the company).

Question 6

What is Structuring Products?

Answer 6

Offering certain amount of money to invest. Worst case money back after (eg) 2 years, with potential of interest.