25 Questions
What is a major constraint in setting up or expanding a business on a large scale?
Availability of capital
Why is depending on a limited pool of savings from friends and relatives a limitation?
Because they may not have sufficient funds
What is an alternative to depending on a limited pool of savings from friends and relatives?
Selling shares of the company to the public
What is a key characteristic of investment banking firms that set them apart from other financial institutions?
They underwrite and distribute securities
What is the benefit of selling shares of a company to the public?
It enables business owners to raise money from a wider pool of investors
What is a common activity of investment banking firms that requires them to commit their own capital?
Trading securities on their own account
Why do investment banking firms need to commit their own capital in certain activities?
To manage risk and hedge their positions
What is the term for selling shares of a company to the public?
Issuing shares
What is a consequence of investment banking firms committing their own capital?
They can increase their leverage and take on more risk
What is a potential risk of investment banking firms committing their own capital?
They may face significant losses if their investments do not perform well
What is a primary way investment banking firms utilize their own capital?
Trading securities for their own account
Which of the following activities typically involves investment banking firms committing their own capital?
Market making
What is an example of a principal investment made by an investment banking firm?
Buying a stake in a publicly traded company
Why do investment banking firms commit their own capital to various activities?
To generate revenue through trading and investments
What is a potential risk associated with investment banking firms committing their own capital?
Potential losses due to market volatility
What is the second role in the context of financial investments?
Assisting investors in secondary market transactions
In what type of market transactions do assisting investors play a role?
Secondary market transactions
What is the primary function of assisting investors in the secondary market?
Acting as a broker or dealer
In what capacity do assisting investors act in the secondary market?
As brokers or dealers
What is the ultimate goal of assisting investors in the secondary market?
To facilitate transactions between buyers and sellers
What is a source of revenue for the bank from outside clients?
Executing trades through the trading desk
What service does the research division provide to outside clients?
Investment advice
How do outside clients interact with the bank's trading desk?
By executing trades through the trading desk
What is the role of the trading desk in the bank's revenue generation?
Generating revenue through trading commissions
Why is the research division's investment advice valuable to outside clients?
Because it allows clients to execute trades through the trading desk
Discover how businesses can raise capital by issuing shares to the public, overcoming limitations of personal savings. Learn about the benefits of selling company shares to expand or establish a business on a large scale. Understand the advantages of public funding over relying on friends and relatives. Explore the world of corporate finance and business growth.
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