Investment banks perform several key functions: they advise corporations on mergers and acquisitions and help raise capital through arranging debt and equity financing; they engage in trading and market making activities for both their own accounts and on behalf of clients; and they provide research on markets, economies, and industries. Investment banks generate revenue primarily from fees earned through mergers and acquisitions advisory work, trading and underwriting of equity and debt instruments, and fees from products constructed for investors.

1. BANKING
Banks do banking that is lending
and borrowing in common & acts
as an intermediary.
Banks are of two types:-
Commercial Banks
Investment Banks
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2. Investment banks are high risky& they trade only on cash
market, commodities, derivatives on their own or on behalf of
client.
Example:-
Investment banks-BARKLEYS, UBS, J P MORGAN etc.
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3. INVESTMENT BANK
Investment bank Division/ Corporate
Finance
i)IBD/Trading:-
Merger and acquisition advisory, Arranging
finance by raising debt & equity, Product
creation, Corporate reconstruction, underwriting
activities as trade.
II) Sales/ Global capital marketing:-
Market making(buying and selling activity)
Agency making(buy & sell on behalf of
others)
Proprietary making ( trade for self).
III) Research:-
Market, Economy, Industry specific research
done by this division sell those papers to fund
managers and hedge funders.
Capital market division/Global capital
markets
Capital Markets
Primary (New Issues) Market
Secondary Market (existing
market)
Primary:
I)Direct Securities
Ordinary Shares, Preference Shares,
Debentures, Innovative Debt Instruments
Participating Debentures
Convertible Debentures
Debt Equity Swaps …etc.
II)Indirect Securities
Mutual Funds
Securitized Debt
Derivatives
Forwards
Futures
Options
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4. Activities in capital market:
Charging commission for doing trade on behalf of institutions.
Mutual fund, Hedge fund, Insurance companies take advisory services from
capital market advisors in return pays advisory fee.
Charging broking charges for broking services.
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Investment banks act as prime brokers/underwriters/Hedge
funders to the required organizations.
Underwriters comes into picture when there is initial public offer (IPO)
Underwriters agreement (u/w) are of three types:
Firm u/w (definite Quantity of shares)
Best effort u/w (partial)
Stand by u/w.(complete)
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5. Investment Bank serves
Corporate client:
Activities like
Corporate research, raising capital,
advisory, product structure, corporate
restructure.
Institute/Investor client:
Activities like
Trading and broking, Prime
brokerage,& research to mutual fund,
hedge fund and private equities.
Investment bank revenue generates from Merger and acquisition, Equity, Bonds
and Constructive products
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6. Investment Bank serves
Corporate client:
Activities like
Corporate research, raising capital,
advisory, product structure, corporate
restructure.
Institute/Investor client:
Activities like
Trading and broking, Prime
brokerage,& research to mutual fund,
hedge fund and private equities.
Investment bank revenue generates from Merger and acquisition, Equity, Bonds
and Constructive products
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