What is Investment Banking?
Helping companies to acquire more funds is often called as investment banking. Moreover, it not only deals with extending monetary aid, but also recommends guidance on an extensive range of operations a business might take on.
Typically, banks take on either investment banking or commercial banking. Commercial banking is characterized by activities of banks collecting money via deposits from clients. These deposits will be utilized as direct loans given to businesses or other individuals. Banks are prohibited to be involved in both commercial and investment banking in the United States. However, in 1999, the Gramm-Leach-Bliley Act legalized such bank activities.
Investment banking gives an institution two distinctive ways in generating funds. One way is to use the public funds by drawing as much fund by selling stock. On the other hand, the other way is to find a private equity or venture capital in the condition that stake in their company will be exchanged.
When it comes to consulting, investment banking does a lot of this process. Mergers and acquisitions are some of the examples that investment bankers give advice to. When it comes to advice regarding the public market, investment bankers also provide guidance to other institutions or individuals regarding the best way to manage their business in relation to public assets. Moreover, investment bankers also give advice as when to make public offerings. Typically, private brokerage is often engaged in by investment bankers by providing consultative activities. This has something to do with the advice pertaining to buy-and-sell.
Deregulation permitted investment banking firms to engage on more sectors. This has resulted to the blurring of the line between other forms of banking and investment banking. Today, there are numerous mega banks which operate at a great degree of services. Such banking institutions are capable of providing funds for clients who would seem to be very small to be profitable.
In the money market world, a career in investment banking is considered to be the most sought after. It is considered to be one of the most lucrative careers in investments. However, some of the downsides of such career are far-reaching travels, demanding hours, and exhausting lifestyle. On the other hand, such career also has great perks. One of the most common things why many people seek such career is the high financial incentives. Nowadays, people will tend to look for lucrative careers no matter how hard or difficult it may be.
Though difficult, who would decline a career offering $90,000 of income per year for a bachelor’s degree? How about a $300,000 per year for those who have a 3rd year associate in Masters in Business Administration? Moreover, who would decline for a position of a department head earning a huge $2,000,000 per year? Such careers could give one the financial stability everyone is dreaming of. The figures mentioned were extracted from the Careers-in-Finance, which projected the salary ranges forecast for the years 2009 to 2011. The figures are predicted based on the first-year analyst in an investment company. Despite the financial disruption associated by the huge salary ranges of such careers in investment banking, it was still forecasted that careers will continue to be relatively paid highly.
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