Essay Title: 

US financial market

March 24, 2016 | Author: | Posted in finance, mathematics and economics

Investment bankers

their role in capital availability to

US corporations

The Role of Investment Bankers

Investment bankers prepare idea pitches that they bring to meetings with their clients , with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction Within the banking structure , they assist public and private HYPERLINK “http /en .wikipedia .org /wiki /Corporation ” \\o “Corporation corporations in raising funds in the HYPERLINK “http /en .wikipedia .org /wiki /Capital_market ” \\o “Capital market capital markets (both HYPERLINK “http /en .wikipedia .org [banner_entry_middle]

/wiki /Ownership_equity ” \\o “Ownership equity equity and HYPERLINK “http /en .wikipedia .org /wiki /Bond_ 28finance 29 \\o “Bond (finance ” debt , as well as in providing strategic advisory services for HYPERLINK “http /en .wikipedia .org /wiki /Mergers ” \\o “Mergers ” mergers , HYPERLINK “http /en .wikipedia .org /wiki /Acquisitions ” \\o “Acquisitions acquisitions and other types of financial transactions . They also act as intermediaries in trading for clients . Investment banks differ from HYPERLINK “http /en .wikipedia .org /wiki /Commercial_bank ” \\o “Commercial bank ” commercial banks , which take deposits and make commercial and retail loans . In recent years , however , the lines between the two types of structures have blurred , especially as commercial banks have offered more investment banking services

Investment Banking in the traditional aspect of investment banks , which involves helping customers , raises funds in the Capital Markets and advising on mergers and acquisitions

The investors to whom these issues are marketed include individuals insurance companies , pension funds , trust companies , investment companies , and other financial institutions . Investment banks are therefore careful to work closely with financial institutions to gauge the level of their demand and interest for current or other issues

Venture Capital via investment banking has developed as an important intermediary in financial markets , providing capital to firms that might otherwise have difficulty attracting financing . These firms are typically small and young , plagued by high levels of uncertainty and large differences between what entrepreneurs and investors know (Gompers and Lerner , 2001

Sources of Capital Available to Corporations

Fundamental sources such as commercial banks , government , institutional and individual investors are more familiar to most corporations Increasingly insurance companies and pension funds are attractive capital resources . In the process , foreign investors and U .S . mutual funds specifically are the sources of “hot money ” In other words portfolio managers and shareholders might display visible concern , in a developing and less than stable economy but as an untapped , unlimited source , the risk is acceptable (Rea , 2006 pg 2

The financing method chosen depends on the nature of the firm and industry , the reason for the financing , the size of the issue and the state of capital market supply and demand . Prior to the model choice the investment bank , financial advisers , accountants and lawyers analyze the circumstances . Once resolved , strategy is designed for the financing mix to fit

Short Term Capital Financing

Investment bankers can arrange the provision of capital for corporations by underwriting and distributing new issues of securities . By trading and executing s in secondary market transactions… [banner_entry_footer]

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