INVESTMENT BANKS.pptx

Financial Statement Analysis for Investment Banks Investment Bank Bank?  Firm performing the function of creating capital for companies, government, and other entities. Business Investmen t Bank Savers Investment Bank functions Bring new securities to the market Underwriting Market-making Clien...

Financial Statement Analysis for Investment Banks Investment Bank Bank?  Firm performing the function of creating capital for companies, government, and other entities. Business Investmen t Bank Savers Investment Bank functions Bring new securities to the market Underwriting Market-making Client-related trading Proprietary Trading Mergers and Acquisitions Investment Bank functions Bring new securities to the market Company A B/S Investme nt Bank Prospectu s Legal document containing information about the issuer Primary Offering Initial Public Offering (IPO) Seasoned Offering Private Placement Investment Bank functions Bring new securities to the market Investment Bank Road Show! Company A B/S Investme nt Bank Co.’s management and Investment Banker: Potential investors meet Analysts Investment Bank functions Underwriting Underwriting t Bank Syndicate Investmen Company A B/S Investme nt Bank Investme nt Bank Buy Sell Underwriting Gross Spread Underwriting Underwriting t Bank Syndicate Investmen Company A B/S Investme nt Bank Investme nt Bank Buy Sell Underwriting Gross Spread Underwriting Underwriting t Bank Syndicate Investmen Company A B/S Investme nt Bank Investme nt Bank Buy Sell Underwriting Gross Spread Firm commitment = Underwriter buys all securities at a specified price Best efforts bid = Underwriter only attempts to sell the securities Settlemen t Risk The other side of the transaction will not deliver. Investment Bank functions Market-making Secondary Market Investme nt Bank Bid-Ask Spread Investment Bank functions Client-related trading Proprietary trading Mergers and Acquisitions Co. B Company A  Equity Securities  Fixed income securities  Credit products  Commodities  Valuation  Due Diligence Investment Bank Issues Deregulation Revolving  Gatekeepers  Profit Oriented Door Securities Brokerage  Closely related to an investment bank  Rather than issuing securities, it has a distinct role, it is involved in trading securities in the open market: Pairing buyers with the stock.  Earns commissions by facilitating buy and sell transactions between investors.