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How This Infrastructure Bonds Vital to Investment Banking?

September 28, 2017

Many people have not recognized the fact that the modern economy is a huge global network. Banking is comprised of commercial banking, consumer banking, investment, asset management, global corporate and investment banking. Investment bank render financial services for clients, such as foreign exchange, fixed income, trading of derivatives, commodity, equities or advisory services for acquisitions and mergers.

 

Investment banks are defined as firms that assist other companies in growing their financial capital in the capital markets. And this is done through bonds and stock. They perform initial public offerings, act as brokers and trades on bonds and securities. In this write-up, we will give you the seven importance of investment banking

 

The importance of investment banking is numerous to mention, but the following are some of them.

  • Initial Public Offerings: They are responsible in facilitating private and public corporation's initial public offering through the provision of underwritten services. Other services include foreign exchange management, acting like intermediaries in trading for clients.
  • Investment management: Investment Bankers provides advice to investors to manage and trade various securities such as bonds and shares, to purchase securities and other assets like mutual funds, hedge fund, and real estate etc. Those known as investor may be big fund houses, financial institutions or private investors. In the investment banks, there is the investment division and it is divided into different groups, namely private client services and private wealth management.
  • Boutiques: Boutiques are small investment banking companies that provide financial services. They are specialized in the trading of bonds, provision of technical analysis, advising for acquisitions and mergers etc.
  • Mergers and Acquisitions: Another importance of the investment banking includes the corporate finance and mergers and acquisitions, which comprises of coordinating with bidders, subscribing to a security insurance or the negotiation with a merger target. 
  • Structuring of Derivatives: This is a recent division comprising of highly technical and proficient workers working on the creation of a complex structured derivate products. These products normally render much greater returns and margins than basic cash securities.
  • Research: This is another importance in investment banking. They review companies and write reports about their prospect with buying or selling ratings. There isn't any direct revenue generation through research, instead the information produced or gathered by them is used in guiding investors and for acquisitions and mergers.
  • Risk management: This is an activity that is continuous and involves the analyzing of the credit risk and market, which buyers are taking onto the balance sheet in carrying out their daily trades. With this, they are able to set limits on the amount of capital.

 

In general, Investment banks are banks that

  • Acts as middlemen between investors and issuers.
  • Delivers financial, strategic and valuation counselling services.
  • Increases capital via the issuance of private equity, securities and debt.
  • Counsels companies in merger and acquisition and rearranging transactions
  • Offers special products and services to the corporate and government clients.

 

C.L. King & Associates is a full-service investment bank and self-clearing broker-dealer founded in 1972. We provide investment banking, equity research, sales and trading, and investor services to corporations and institutions.

Also read: CL King Tips for Investing in High Yield Bond Mutual Funds

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