The Investment Banking Industry

Paper Summary:

This paper explains that issuers of securities and investors are the two major players in the investment banking industry. The author points out that investment bankers usually act as intermediaries by advising and assisting corporations in issuing securities and often underwrite the issues by purchasing the instruments directly from the firm and reselling them to the public. The paper relates that the public purchases securities to add to their investment portfolios. The author discuses that investors have numerous instruments from which to choose, depending on factors such as risk tolerance, personal preference and tax considerations. The paper states that stocks and bonds are among the most prominent of investment vehicles; however, instruments such as treasury bills and certificates of deposit (CDs) are also used to construct well-diversified portfolios.

Table of Contents
Investment Banking Process
Asset Classes
Capital Market Instruments
Portfolio Recommendation
Conclusion

From the Paper:

"Certificates of Deposit are time deposits held at banks. When the term of the CD ends, banks pay interest and principal to the depositor. Though terms vary widely, short-term CDs are the most marketable. Unlike many other investments, CDs are insured by the Federal Deposit Insurance Corporation (FDIC); which provides a reasonable trade-off between risk and return. Derivatives are financial arrangements that are derived from other benchmarks. Including items such as currency, mortgages, and stocks, derivatives are loved or loathed depending on the investor."

Sample of Sources Used:

• Bodie, Z., Kane, A., & Marcus, A. (2007). Essentials of Investments (6th ed). New York: The McGraw-Hill Companies, Inc.
• Hirt, G., & Block, S. (2006). Fundamentals of Investment Management (8th ed). New York: The McGraw-Hill Companies, Inc.

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