– What do investment banks really do?
In: Economics
There are a number of roles they play:
– Advise companies on mergers, acquisitions, public offerings, bond offerings, etc. So they help companies finance buying other companies or internal expansion; help them seek partners to merge or buy them out; they help companies get themselves set financially and prepare to have an IPO and run the offering
– Trading on financial markets, executing trades for clients of all sizes, from bundling trades for small investors to executing billion dollar trades for hedge funds, institutional investors, etc.
– Money management for high net worth individuals. Like you have $10m in assets to invest, and you may have a person at the bank who manages your portfolio for you.
– Retail brokerage services for smaller investors, eg. you set up an account with Merrill Lynch for online trading and they manage the trade executions, etc. on the back-end.
– Proprietary trading, where banks trade their own money/employees’/partners’ money for investment gains.
Latest Answers