Investment banking is an important industry that helps large corporations and governments raise money. Investment banks advise clients on financial transactions like mergers and acquisitions, and help companies issue new securities to raise funds by finding buyers. Unlike traditional banks, investment banks do not accept deposits or provide loans directly to individuals. The role of investment banks is significant because problems in the industry can impact the broader economy and lives of ordinary citizens through channels like mortgage lending. There are different types of investments including ownership investments in stocks, businesses, real estate, and collectibles, as well as lending investments through bonds and cash equivalents like savings accounts.
The major credit rating agencies, Moody's, Standard & Poors, and Fitch, bear a heavy burden of responsibility for the financial meltdown. It was their seal of approval that enabled Wall Street to develop a multi-trillion-dollar market for bonds resting on a foundation of tricky loans and bubbly housing prices. Institutional investors around the world were seduced into buying these high-risk securities by credit ratings that made them out to be as safe as the most conventional corporate and municipal bonds.
The major credit rating agencies, Moody's, Standard & Poors, and Fitch, bear a heavy burden of responsibility for the financial meltdown. It was their seal of approval that enabled Wall Street to develop a multi-trillion-dollar market for bonds resting on a foundation of tricky loans and bubbly housing prices. Institutional investors around the world were seduced into buying these high-risk securities by credit ratings that made them out to be as safe as the most conventional corporate and municipal bonds.
An Intro to the Financial Services IndustryEric Tachibana
The Financial Service Industry is one of the most attractive industries to target if you are a consultant. However, when selling into, or delivering for, Financial Services Institutions (FSIs), it is useful to have some understanding of how FSI business models work, and the unique requirements that drive their IT strategies.This deck is a living document that hopes to act as a primer for consultants who need to support FSI clients, but who may not have prior experience in the sector.
How to get appropriate finance for your business in the UKViktor Todorov
This is a presentation on the various sources of finance available to SME and Startup companines in the UK. The second part discusses the company business model, it's connection with the business plan and introduces the evidence based entrepreneurship concept.
Exploring small business financing at the intersection of alternative lending...Crest Hill Capital LLC
The idea of small business financing and traditional lending outlets like banks is almost an oxymoron in itself. With myriad restraints, such as restricted cash flow, delayed payments, and constant capital demands, small businesses have often found themselves struggling to avail financing.
The financial crisis was tough on asset-backed lending funds, and a spate of redemptions saw the space shrink considerably. But the launch this year of a new $1bn fund from FrontPoint Partners suggests that direct lending and ABL is making a comeback, and, due to the restrictions of Dodd-Frank, the space offers a wealth of opportunity for smaller niche players.
ICMA has prepared a paper for policy makers about why corporate bond markets are so important for economic growth, for investors, for companies, and for governments, around the world; and why it is therefore essential that laws and regulations that affect them avoid any unintended adverse consequences that could inhibit those markets.
The Financial services sector in India is blooming and has become one of the lucrative areas to professionalism. The sector has undergone metamorphosis since 1990. Indian economy got liberalized during 1991 and the financial sector was kept open for private and foreign players. During the late eighties, the financial services industry in India was dominated by commercial banks and other financial institutions governed by the Central Government. The economic liberalization has brought in a complete transformation in the Indian financial services industry. Prior to the economic liberalization, the Indian financial service sector was characterized by various other factors, which was related to the growth of this sectorThe term Financial services in its broader sense refers to ― mobilizing and allocation of savings‘‘. It is identified as all those activities involved in the process of converting savings into investment. Financial services also include FINANCIAL INTERMEDIARIES such as Merchant Bankers, Venture capitalists, Commercial banks, Insurance Companies etc.
Crowdfinance -101 (Series: Crypto, Crowdfunding & Other Crazy Concepts)Financial Poise
What is the “crowd” in Crowdfinance? What does the crowd thus buy and by what means and modes? And why should the crowd do this rather than put its money to work otherwise? What are the old (and continuing) modes for marketing and selling private securities? What is it like to purchase private securities from on-line portals? How are risks of fraud and mistake allocated there? Do on-line portals help get the rest of us in on unicorns in utero? How are equity securities purchased by the crowd turned into money? Is there a secondary market for private securities? Should ICOs be understood as crowdfinance by other means?
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/crowdfinance-101-2021/
An Intro to the Financial Services IndustryEric Tachibana
The Financial Service Industry is one of the most attractive industries to target if you are a consultant. However, when selling into, or delivering for, Financial Services Institutions (FSIs), it is useful to have some understanding of how FSI business models work, and the unique requirements that drive their IT strategies.This deck is a living document that hopes to act as a primer for consultants who need to support FSI clients, but who may not have prior experience in the sector.
How to get appropriate finance for your business in the UKViktor Todorov
This is a presentation on the various sources of finance available to SME and Startup companines in the UK. The second part discusses the company business model, it's connection with the business plan and introduces the evidence based entrepreneurship concept.
Exploring small business financing at the intersection of alternative lending...Crest Hill Capital LLC
The idea of small business financing and traditional lending outlets like banks is almost an oxymoron in itself. With myriad restraints, such as restricted cash flow, delayed payments, and constant capital demands, small businesses have often found themselves struggling to avail financing.
The financial crisis was tough on asset-backed lending funds, and a spate of redemptions saw the space shrink considerably. But the launch this year of a new $1bn fund from FrontPoint Partners suggests that direct lending and ABL is making a comeback, and, due to the restrictions of Dodd-Frank, the space offers a wealth of opportunity for smaller niche players.
ICMA has prepared a paper for policy makers about why corporate bond markets are so important for economic growth, for investors, for companies, and for governments, around the world; and why it is therefore essential that laws and regulations that affect them avoid any unintended adverse consequences that could inhibit those markets.
The Financial services sector in India is blooming and has become one of the lucrative areas to professionalism. The sector has undergone metamorphosis since 1990. Indian economy got liberalized during 1991 and the financial sector was kept open for private and foreign players. During the late eighties, the financial services industry in India was dominated by commercial banks and other financial institutions governed by the Central Government. The economic liberalization has brought in a complete transformation in the Indian financial services industry. Prior to the economic liberalization, the Indian financial service sector was characterized by various other factors, which was related to the growth of this sectorThe term Financial services in its broader sense refers to ― mobilizing and allocation of savings‘‘. It is identified as all those activities involved in the process of converting savings into investment. Financial services also include FINANCIAL INTERMEDIARIES such as Merchant Bankers, Venture capitalists, Commercial banks, Insurance Companies etc.
Crowdfinance -101 (Series: Crypto, Crowdfunding & Other Crazy Concepts)Financial Poise
What is the “crowd” in Crowdfinance? What does the crowd thus buy and by what means and modes? And why should the crowd do this rather than put its money to work otherwise? What are the old (and continuing) modes for marketing and selling private securities? What is it like to purchase private securities from on-line portals? How are risks of fraud and mistake allocated there? Do on-line portals help get the rest of us in on unicorns in utero? How are equity securities purchased by the crowd turned into money? Is there a secondary market for private securities? Should ICOs be understood as crowdfinance by other means?
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/crowdfinance-101-2021/
If you want to savor the flavor of a great tasting cigar, there are thousands on the market. In fact, there are so many available that it is hard to know what to choose, especially if you are smoking cigars for the first time. Check out the list of the top 10 cheap cigars that are perfect for both beginners and seasoned cigar smokers.
To kick of 2015, momentology had a ‘Facebook month’ devoted to marketing insights on the platform. Last January we gave you a daily tactical Facebook tip on our social channels. We've collected all the tips in this useful Slideshare presentation. Enjoy!
SEO Trends 2015 - Expert Opinions On The Future Of Searchmomentology
What key trends will shape 2015 search engine optimization (SEO) strategies? Is it all about mobile? Smarter content? Personalization? Delivering amazing user experiences? How can you best reach, grow, and engage your audience? How can you make sure your brand is found at those moments when people are searching for a product you sell or a topic you know lots about? To find out, Momentology reached out to 45 experienced SEO experts. Their insights into SEO trends and their predictions for 2015 have been summarized in this presentation.
Securities Firms and Investment Banks.docxjeffreye3
Securities Firms and Investment Banks
Securities Firms and Investment Banks (IBs)
Investment banks (IBs) help corporations and governments raise capital through debt and equity security issues in the primary market
Underwriting is assisting in issuing new securities
IBs also advise on mergers and acquisitions (M&As) and corporate restructuring
Securities firms assist in the trading of securities in secondary markets
Broker-dealers assist in the trading of existing securities
2
Investment bankers assist borrowers in raising capital in debt and equity markets and provide advice about mergers and acquisitions, corporate restructuring and general assistance in finance. Bankers also provide many creative over the counter derivative products. Securities firms provide brokerage and market making services. The investment banking and securities industries are complementary and many firms provide a broad range of services. Some specialized entities with advantages in certain market niches remain less diversified. The industry underwent tremendous consolidation in the last decade due to increasing scale and scope economies and the need for greater capital. The face of the industry was changed forever during the financial crisis of 2007-2008 with forced buyouts of Merrill-Lynch and Bear-Stearns, failure of Lehman Brothers and Goldman-Sachs and Morgan Stanley becoming commercial banks. Nevertheless, working for many of these firms is often considered the penultimate finance career, with prestige and remuneration to match. With industry profits down, firms on the Street are having a difficult time maintaining their large salaries and bonuses. A very significant portion of profits are paid out in the form of remuneration to executives. The chapter presents an overview of the size of the industry and the general strategies of the participants, major activities, primary assets and liabilities on the balance sheet, recent in the news events concerning breaches of ethics and the trend toward globalization.
Size, Structure and Composition of Industry
The size of the industry is usually measured by the equity capital of firms rather than total asset size
Equity capital in the industry in 2015 was $235 billion
The number of firms in the industry changed due to economies of scale and scope, losses with the economy, scandals at some firms, and regulations that allowed both inter- and intra-industry mergers
5,248 firms in 1980
9,515 firms in 1987
6,016 firms in 2006
4,115 firms in 2016
As with commercial banks, consolidation has largely occurred through mergers and acquisitions
.
Securities Firms and Investment Banks.docxkenjordan97598
Securities Firms and Investment Banks
Securities Firms and Investment Banks (IBs)
Investment banks (IBs) help corporations and governments raise capital through debt and equity security issues in the primary market
Underwriting is assisting in issuing new securities
IBs also advise on mergers and acquisitions (M&As) and corporate restructuring
Securities firms assist in the trading of securities in secondary markets
Broker-dealers assist in the trading of existing securities
2
Investment bankers assist borrowers in raising capital in debt and equity markets and provide advice about mergers and acquisitions, corporate restructuring and general assistance in finance. Bankers also provide many creative over the counter derivative products. Securities firms provide brokerage and market making services. The investment banking and securities industries are complementary and many firms provide a broad range of services. Some specialized entities with advantages in certain market niches remain less diversified. The industry underwent tremendous consolidation in the last decade due to increasing scale and scope economies and the need for greater capital. The face of the industry was changed forever during the financial crisis of 2007-2008 with forced buyouts of Merrill-Lynch and Bear-Stearns, failure of Lehman Brothers and Goldman-Sachs and Morgan Stanley becoming commercial banks. Nevertheless, working for many of these firms is often considered the penultimate finance career, with prestige and remuneration to match. With industry profits down, firms on the Street are having a difficult time maintaining their large salaries and bonuses. A very significant portion of profits are paid out in the form of remuneration to executives. The chapter presents an overview of the size of the industry and the general strategies of the participants, major activities, primary assets and liabilities on the balance sheet, recent in the news events concerning breaches of ethics and the trend toward globalization.
Size, Structure and Composition of Industry
The size of the industry is usually measured by the equity capital of firms rather than total asset size
Equity capital in the industry in 2015 was $235 billion
The number of firms in the industry changed due to economies of scale and scope, losses with the economy, scandals at some firms, and regulations that allowed both inter- and intra-industry mergers
5,248 firms in 1980
9,515 firms in 1987
6,016 firms in 2006
4,115 firms in 2016
As with commercial banks, consolidation has largely occurred through mergers and acquisitions
.
Week-1 Into to Money and Bankingand Basic Overview of U.S. Fin.docxalanfhall8953
Week-1 Into to Money and Banking
and Basic Overview of U.S. Financial System
Money and Banking Econ 311
Instructor: Thomas L. Thomas
Financial markets transfer funds from people who have excess available funds to people who have a shortage.
They promote grater economic efficiency by channeling funds from people who do not have a productive use for them to those who do.
Well functioning financial markets are a key factor in producing economic growth, where as, poor functioning financial markets are a major reason many countries in the world remain poor.
Financial Markets
A security or financial instrument is a claim on the issuer’s future income or assets.
A bond is a debt security (IOU) that promises to make payments periodically for a specified period of time.
The bond market is especially important economic activity because it enables businesses and the government to borrow and finance their activities and because it is where interest rates are determined.
An interest rate is the cost of borrowing money or the price to rent (use someone else’s) funds.
Because different interest rates tend to move in unison, economist frequently lump interest rates together and refer to the “interest rate”.
Interest rates are important on a number of levels:
High interest rates retard borrowing
High interest rates induce saving.
Lower interest rates induce borrowing
Lower Interest rates retard saving
Information Asymmetry and Information costs
Why Financial Intermediaries
In the neo-classical world economists have argued financial intermediaries are not necessary. Savers (investors) could manage their risks through diversification.
The logic rests on the perfect market assumption – that is investors can always through their own borrowing and lending compose their portfolios as they see fit, without costs. In such a world there are no bankruptcy costs.
In such a world if taken to the extreme, perfect and complete markets imply that there is no need for financial institutions to intermediate in the financial (capital markets) as every investor (saver) has complete information and can contract with the market at the same terms as banks. E.g. Information Asymmetry
Why Financial Intermediaries Bonds
A common stock (usually called stock) represents a share of ownership in a corporation.
It is usually a security that is a claim on the earnings and assets of the corporation.
Issuing stock and selling it to the public (called a public offering) is a way for corporations to raise the funds to finance their activities.
The stock market is the most widely followed financial market in almost every country that has one – that is why it is generally called the market – here “Wall Street.”
The stock market is also an important factor in business investment decisions, because the price of shares affects the amount of funds that can be raised by selling newly issued stock to finance investment spending. (Note impact examples..
Joseph Stone Capital ! Joseph Stone Capital Reviews - Investment Banking.pdfJoseph Stone Capital
"Joseph Stone Capital, LLC has upheld a culture of powerful philosophies and unique
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An overview of our company and the work we do with funding of large projects such as infrastructure, humanitarian and environmentally beneficial developments.
1. Dr. SNS RAJALAKSHMI COLLEGE OF ARTS & SCIENCE
INVESTMENT OF BANKING
Mr. K Mugibur Rahuman
Mr. T Manikandan
ABSTRACT
As interest-bearing deposits are not permitted by the rules and principles of the islamic
shari’ah, Islamic banks typically raise deposits in the form of profit-sharing investment accounts.
these accounts differ from conventional deposits not merely by virtue of the profit-sharing nature
of the returns they offer, but also because the contact between the depositors and the bank is not
a debt contract, and the deposits are in consequence not ‘capital certain’ (that is, the depositors
are required to accept negative returns or losses). this latter characteristic leads to serious
regulatory problems in jurisdictions where bank deposits are required by legal definition to be
‘capital certain’. more generally, the presence of such ‘puttable instruments’ in the capital
structure of islamic banks leads to complications in assessing their capital adequacy. in addition,
the fact that the profit-sharing investment account holders are a type of equity investor without
the governance rights of either creditors or shareholders raises a major problem of supervision.
this article explains these problems in further detail, and proposes a solution in the form of a
structural distinction between the Islamic bank in the narrow sense on the one hand, and the
entity that manages the profit-sharing investment accounts on the other hand.long-term
relationships between business firms and investment banks are pervasive in developed security
markets and there is evidence that better monitoring and information result from these
relationships. therefore, security markets should allocate resources better when an investment
banking industry exists. we study the necessary conditions for the emergence of sustainable
relationships and explore whether policy can foster them. we show that policy can help alleviate
the costs of relationships, but an investment banking industry will not emerge with only a small
number of large firms.
2. INTRODUCTION:
As the credit crisis unfolded, I've heard a lot of investors asking the question "What is an
investment bank and how does it differ from a regular, commercial bank?" Unless you work in
finance, you may not have come across the term investment bank before the global meltdown
began.
To put it simply, an investment bank is nothing like the corner institution you're used to
dealing with to get a business loan or deposit your paycheck. Instead, an investment bank is a
special type of financial institution that works primarily in higher finance by helping company
access the capital markets (stock market and bond market, for instance) to raise money for
expansion or other needs. If Coca-Cola Enterprises wanted to sell $10 billion worth of bonds to
build new bottling plants in Asia, an investment bank would help them find buyers for the bonds
and handle the paperwork, along with a team of lawyers and accountants.
MEANING:
The importance of an investment banker is what they do. they are important because of the
services they provide to the economy. they advise for financial transactions such as mergers and
acquisitions for companies. When a corporation sells new securities to raise funds, the agent is
responsible for finding buyers for these securities. the investment banker purchases securities
from corporation and arranges immediate resell of these securities to the investors.
DEFINITION:
An individual or institution which acts as an underwriter or agent for corporations and
municipalities issuing securities.Mostalsomaintain broker/dealer operations,
maintain markets for previously issued securities, and offer advisory services to investors.
investment banks also have LARGE role in facilitating merger and acquisitions, private
equity placements and corporate restructuring. Unlike traditional banks, investment banks do
not accept deposits from and provide loans to individuals. ALSO called investment banker.
3. HOW TO WORK:
A career in banking and investment is all about making money. Graduate recruiters in
banking and investment provide financial services to clients at the top end of the market, such as
corporations, institutions and governments.
Amongst other services, clients are assisted to raise loans, invest surplus cash, take over and
merge with other businesses or float shares on the stock exchange.
Banking and investment employers actively search for talented graduates to take the business
forward and run graduate recruitment schemes to which you can apply directly.
Many of them also offer internships or work placements – these schemes are very competitive
and an offer of one of these sought-after positions will give you a real head-start to getting
offered a permanent job, either with the employer where you undertake the placement or
elsewhere.
Communication skills – verbal and written
Enthusiasm, self-motivation
Team working skills
The ability to learn quickly
Genuine interest in finance
Ability to work under pressure
Attention to detail.
IMPORTANCE:
The industry of investment banking is large and far-reaching. It is complex and confusing. It
is mysterious and even frightening. Fortunes and lives depend on it. What happens behind the
walls of an investment bank each day can affect millions of families, even entire nations. While
many Americans think that what happens on Wall Street really does not influence their daily
lives, when in reality nothing can be further from the truth.
4. Investment banks exist to help large-scale corporations and governments get money. They
help these clients invest in financial products that they buy, sell, or create and, hopefully, make a
return on the money they invested in the financial vehicles suggested by investment banks. Many
investment banks also give loans to their clients, which is one of the leading factors that
influence the lives of individuals not directly associated with such a firm. In the late 1990s to
mid-2000s the now infamous housing and credit bubbles were stewing and the American
economic system was undergoing the process of financialization the depreciation in value of all
exchanges contributing to the fragility of the overall economy. Simultaneously the size of
investment banks and other financial entities were rapidly expanding, until in 2008 experts
estimated they were roughly the same size as traditional commercial and retail banks. During
that time, several commercial and retail banks were writing mortgages to individuals who would
later default; many of those banks received the funds they were using to make those toxic loans
was borrowed from investment banks.
As the shadow banking system expanded to rival or even surpass conventional banking in
importance, politicians and government officials should have realized that they were re-creating
the kind of financial vulnerability that made the Great Depression possible—and they should
have responded by extending regulations and the financial safety net to cover these new
institutions.
The role of investment banks in the American economic system is important. The United
States is seeing and feeling the impact that problems in the investment banking industry can have
on the everyday lives of its people, proving that such a financial entity can touch the lives of
individuals who may not even directly interact with it. Nothing happens or is contained in a
vacuum, and investment banking is certainly no exception.
TYPE OF INVESTMENT:
Investment, as the dictionary defines it, is something that is purchased with money that is
expected to produce income or profit. Investments can be broken into three basic groups:
ownership, lending and cash equivalents.
5. Ownership investments:
Ownership investments are what COME to mind for most people when the word
"investment" is batted around. Ownership investments are the most volatile and profitable
class of investment. The following are exampleS of ownership investments:
Stocks
Stocks are literally certificates that say you own a portion of a company. More broadly
speaking, all traded securities, from futures to currency swaps, are ownership
investments.
Your expectation of profit is realized (or not) by how the market values the asset you
own the rights to. If you own shares in Sony and Sony posts a record profit, other
investors are going to want Sony shares too. Their demand for shares drives up the price,
increasing your profit if you choose to sell the shares.
Business
The money put into starting and running a business is an
investment. Entrepreneurship is one of the hardest investments to make because it
requires more than just money. Consequently, it is also an ownership investment with
extremely large potential returns. By creating a product or service and selling it to people
who want it, entrepreneurs can make huge personal fortunes. Bill Gates, founder of
Microsoft and one of the world's richest men, is a prime example.
Real Estate
Houses, apartments or other dwellings that you buy to rent out or repair and resell are
investments. The house you live in, however, is a different matter because it is filling a
basic need. The house you live in fills your need for shelter and, although it may
appreciate over time, it shouldn't be purchased with an expectation of profit. The
mortgage meltdown of 2008 and the underwater mortgages it produced are a good
illustration of the dangers in considering your primary residence an investment.
Precious Objects
Gold, Da Vinci paintings and a signed LIBRAN James jersey can all be considered an
ownership investment - provided that these are objects that are bought with the intention
of reselling them for a profit. Precious metals and collectibles are not necessarily a good
investment for a number of reasons, but they can be classified as an investment
6. nonetheless. Like a house, they have a risk of physical depreciation (damage) and require
upkeep and storage costs that cut into eventual profits.
Lending investments:
Lending investments allow you to be the bank. They tend to be lower risk than
ownership investments and return less as a result. A bond issued by a company will pay a
set amount over a certain period, while during the same period the stock of a company
can double or triple in value, paying far more than a bond - or it can lose heavily and
go bankrupt, in which case bond holders usually still get their money and the stockholder
often gets nothing.
Your Savings Account
Even if you have nothing but a regular savings account, you can call yourself an investor.
You are essentially lending money to the bank, which it will dole out in the form of
loans. The return is pitiful, but the risk is also next to nil because of the Federal Deposit
Insurance Corporation (FDIC).
Bonds
Bond is a catchall category for a wide variety of investments from CDs and Treasuries to
corporate junk bonds and international debt issues. The risks and returns vary widely
between the different types of bonds, but overall, lending investments pose a lower risk
and provide a lower return than ownership investments.
FUNCTION OF INVESTMENTBANKING:
The traditional primary function of an investment banker is to assist companies in raising
money through the sale of financial securities in the capital markets. These securities are usually
either bonds, preferred stock, or common stock. When helping a company to raise money, an
investment bank provides three primary functions for its clients.
7. 1. Investigation
A company that desires to raise money will approach an investment banking firm for its
assistance. From that point on, that investment banking firm is known as the manager or lead
investment bank in the process. The manager will provide two investigations, or type of
analyses, for its client:
A). Legal Analysis - Since a security is being sold, the security must first be created. Most of us
think of a bond or a common stock is being merely a certificate. In reality, the certificates are
evidence of a legal document that defines the rights of the security holder and the rights of the
company. The investment bank's staff attorneys will construct the bond or stock agreement and
submit it to the Securities Exchange Commission (SEC) 0 for its approval.
B.) Market Analysis - The investment banker will then determine the fair price to be placed on
the securities. In the case of bonds, the investment banker will recommend an interest rate a rate
high enough to attract investors and low enough to be in the company's best interest.
2. Underwriting
To underwrite something means "to assume the risk of loss". In this case, the company that is
issuing new shares needs to be assured that it will raise the amount of money necessary. It does
not want to take the chance that only part of the available shares will be sold and the company
will raise only part of the necessary funds. The investment banker assumes this risk by
underwriting the securities offering. In a typical underwriting, the investment banker underwrites
the issue by buying the entire block of securities at a discounted price from the company. The
investment bank will then mark-up the securities to the full retail price and try to sell the
securities to the investing public.
Investment banking firms will place their own capital at risk by using their own money to buy
the issue. In addition, it will frequently borrow money from commercial banks to raise part of the
funds necessary for the purchase. the investment bank will be forced to sell the stock at the lower
price, perhaps even taking a loss on the transaction.
8. 3. Selling
Each of the investment banks will likely have its own sales force. However, additional
brokerage firms may be invited to help sell the issue in return for a commission on the sale.
These firms may easily number in the dozens for a large issue. Collectively, these brokerage
firms are known as the selling group.
FUTURES OF INVESTMENT BANKING:
JPMorgan’s plan to double its workforce in India and employ a further 4,500 staff there by
2007 to support its global structured finance and derivatives business is yet another sign that
more highly skilled jobs on Wall Street could eventually be shipped to the subcontinent and
performed for a fraction of the US cost. This has already happened in other product areas. The
days when the only services that banks outsourced or off shored to India was basic number-
crunching and data entry are longgone.Investment...
ADVANTAGES &DISADVANTAGES:
A bank account is probably not on your list of hot investment ideas, but the various options a
bank offers might fit some of your needs. Banks pay different interest rates on different accounts,
and you typically earn more the longer you are willing to let your money sit. While security is an
important benefit of a bank account, limited profit potential is one drawback to this type of
investment.
Insurance
A bank account is one of the safest places you can invest your cash. As long as your bank is
insured by the Federal Deposit Insurance Corp., money in a savings account, CD and certain
other accounts is insured up to $250,000 per bank. If your bank goes under, the government has
you covered. For example, say you have $150,000 in a savings account and another $50,000 in a
CD in the same bank.
9. Certainty
When you invest in a bank account, you can determine fairly accurately the amount of money
you will have at a specific date in the future. Bank accounts avoid market fluctuations that are
typical of other investments, such as stocks, and typically pay fixed interest. This certainty is an
advantage when you need a specific amount of money within a short time frame, such as for a
down payment on a house, or if you need to preserve your capital for emergencies.
Low Returns
The interest you earn in a bank account is typically lower than the returns of other
investments. When you factor in income taxes on interest, your money might fail to keep up with
inflation, or the gradual increase in the prices of goods and services. For example, if you earn 4
percent annually in a savings account, pay one-third of that in taxes and inflation is 3 percent a
year, your money’s purchasing power will erode.
Fees
Banks sometimes charge fees that can exceed the interest rate on your account and eat away
at your investment. Some fees might come standard with a particular account, such as a
maintenance fee or ATM fees. A bank could impose other charges or possibly lower your
interest rate if you fail to meet certain requirements, such as a minimum balance. Always read
the fine print to understand your accounts.