What is Equity Research?

Question 1

what is the role of brokerage/research department in an investment bank?

Answer 1

conduct research into company stocks (equities)

recommend the buy/sell price recommendation on the stock

Question 2

how does brokerage/research link to sales & trading department?

Answer 2

once clients receive a quote on a stock’s buy/sell price, they contact the sales & trading team to execute the transaction

Question 3

what are the types of IB clients?

Answer 3

individual investor
institutional investor

Question 4

individual investor?

Answer 4

regular individual that wants to invest in a stock, for example

wants to invest small amounts of money

AKA retail investors

often very wealthy/high net-worth individuals

Question 5

examples of institutional investors?

Answer 5

mutual funds
companies
pension funds
insurance companies

Question 6

mutual fund?

Answer 6

a fund created by a group of individuals who invest in a diversified portfolio

Question 7

pension funds?

Answer 7

financial intermediary that accumulates money from employee & employer contributions

they then invest the proceeds in securities (e.g., bonds, equities, gilts, properties)

Question 8

what do research do in short?

Answer 8

give clients buy/sell recommendations

clients consist of institutional and individual investors

Question 9

how do clients execute trades?

Answer 9

they go to an investment bank’s sales & trading team to help find buyers/sellers of the security

the investment bank will earn commission from this - that is how investment banks make money