What Is an Investment Bank?
How do investment banks help in mergers and acquisitions?
Hi, my name is Jon, I'm an independent investor from Kansas City and I'm here to today to talk about what is an investment bank for about.com. An investment bank is a specific division of banking related to the creation of capital, mainly for other companies. Like a retail bank is like your local bank where you have your checking and savings account or your able to take out a loan or a mortgage. An investment bank is different in the roles it plays in dealing corporations and investments. They have proprietary trading. They have their own trading or investment funds and trade stocks, bonds, currencies and commodities. Market making. They trade regularly so that when you place a trade in your investment account there is someone on the other side in order to complete the trade. In other words, they stand ready to make the market happen by providing shares when some one places a buy or sell order in their investment account. Mergers and acquisitions. Investment banks provide structure and help advise the sale and timing between the deals between companies purchasing other companies. For this help they charge a fee. New Issues, such as IPO's. If a company needs to raise funds for more capital they need to issue shares and an investment bank help to bring those shares to the market by structuring and advising. Thanks for watching and for more information about stocks and investing, be sure to check us out on the web at About.com.