Investment Banking For Dummies

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This article is a guide to Investment Banking for Dummies. Here, we discuss the introduction, who is an investment banker, and the various Investment Banking Functions. You may also look at the following articles to learn more – Written in the straightforward and approachable tone the For Dummies series is known for the world over, authors Matthew Krantz and Robert Johnson have created an indispensable resource for students and professionals new to investment banking. But barring all the pros and cons, the work is exciting for those who work passionately for an investment bank. Hybrid securities: Most of what investment banks sell can be classified as either debt or equity. But some securities take on traits of both, or are an interesting spin on both. One example is preferred shares, which give investors an income stream that’s higher than what’s paid on the regular equity. But preferred shares don’t come with as high a claim to assets as bonds, and this income stream can be suspended by the company if it chooses. The services investment banks provide

Financing large projects: Massive projects, such as building giant bridges or power plants, usually require enormous amounts of cash up front. These projects may ultimately make money, but they require loads of cash to be built. The need for upfront cash is so great, it may outstrip the lending capacity of traditional banks, or it may be too risky for traditional banks. That’s where investment banks can come in. Investment banks gather cash by selling securities to investors with excess money looking for a chance at a good return. Now that you see that the chief role of investment banks is selling securities, the next question is: What types of securities do they sell? The primary forms of financial instruments sold by investment banks include the following:To draw your attention to certain kinds of information, we use a series of icons. Here’s what the icons mean: During my search for the best investment banking books, I discovered that the publishing industry has divided the genre into several distinct sub-genres, which I'll set out here: Technical guides for investment bankers - these textbooks act like a 'catch-up' education for professionals who didn't cover investment banking in detail at university. They also work well as a refresher of other parts of a bank which you're not already familiar with.

Wrap your head around the complicated world of investment banking with thisunderstandableand comprehensive resourceKeep in mind that this book, like all the books in the For Dummies series, doesn’t have to be read cover-to-cover (although we’ll be flattered if you read it all). Each of the topics is broken down into easy-to-digest parts and chapters. Feel free to skip around the book to areas that interest you most, and save the parts that seem irrelevant until you’re curious about them later. Companies are constantly scanning the corporate landscape for other firms that may be for sale, or may own assets that are worth buying. Buying companies can be a risky proposition. After all, the only way to buy a healthy company is to offer a price higher than the current market price, called a premium. By paying up for the company, the buying company had better make the right moves to get the deal to work. Investment banks help companies on the prowl find buyout targets, make the deal, and sometimes even finance it. Equity Research – The research department of an investment bank comes up with various research reports on the industries or other companies and helps its clients with investment decisions. When it comes to the top skills that serious investment bankers must hone, the discounted cash flow analysis is certainly high on the list. The discounted cash flow is a culmination of many of the tools beginning investment bankers have to create in-depth and comprehensive models of what companies are worth.

Brokerage services: Some investment banking operations include brokerage services where they may hold clients’ assets or help them conduct trades. Debt capital: Some investors have no interest in owning a piece of the company, but they’re more than willing to lend money to it, for a price. That’s the role of debt capital. Investment banks help companies borrow money by issuing bonds, or IOUs, that are sold to investors. The company must pay the prearranged rate of interest, but it doesn’t give up any ownership of the company. If a company falls onto hard times, though, the owners of the debt have a higher claim to assets than do the equity owners if a liquidation of the company is necessary. But in many ways, the idea of an IPO is a bit of a misnomer, because they’re not entirely public. Investment bankers typically follow a process that can make it difficult for regular investors to get a piece of an IPO. To be a successful investment banker or finance professional, immerse yourself in your industry and keep learning. Why? Because in this everchanging world, macroeconomic and technological shifts are constantly changing the landscape and throwing curveballs. But investment banking is so much a part of the financial system that, whether you realize it or not, you fall into its shadow. The fact of the matter is, if you’re like most people, managing your money is falling increasingly on your shoulders. Gone are the days when you could work at a company for 40 years and expect to have a fat pension waiting for you in retirement.Paul Pignataro is an acclaimed author, banker, and M&A consultant who has written several books on these topics. This text is a practical guide to understanding and performing fundamental analysis. The book covers all the crucial topics required to understand the fundamentals of the industry, including: We also assume you’re not an investment banker, because we haven’t met many investment bankers who would admit to being a dummy. But you’re probably someone who wants to know what investment bankers do and maybe even think about being one every time you watch Wall Street. Investment bankers perform services for customers and collect money in a number of ways, include the following: