What are some investment banking activities?

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What are some investment banking activities?


What are some investment banking activities?

Explanation & AnswerSolution by a verified expert


Investment banking includes the following activities:

Mergers and acquisitions:

a) Investment banks help finding weak or small firms to be acquired by powerful firms in the industry in return of fixed commission.
b) Investment banks act as the underwriters for performing issues of new share capital by the acquirer firm after the process of merger and acquisition.
c) Investment banks often serve as advisors for both acquirer and acquired firms while dealing with the merger and acquisitions.

Securitization: Investment banks serve as advisors for the firm while converting its financial assets or debts into financial securities.

They also perform the task of securitizer by purchasing assets or debt from various companies, pooling them into attractive portfolios and then selling the portfolios to potential investors.

Asset Management: Investment banks manage the investments of investors in order to expand their portfolio and yield higher returns through investing in valuable securities or withdrawing money from the securities going to incur losses in the coming future on the behalf of investors.
Trading operations: Investment banks have to perform various trading operations to earn their own profits as well as to work on behalf of the investors.

They analyse the market and purchase securities at low prices, sell them at higher prices as the favourable market condition arises, thereby earning profits.
They help the investors in selling and buying profitable stocks while mitigating risk.

Verified Answer

Investment banking activities includes:

Mergers and acquisitions: Banks provide assistance to the firms who want to merge their holdings with other firms and also assist them in acquiring other firms.
Securitization: Banks purchase the debt and assets of the companies, convert them into financial instruments and issue them to the investors.
Asset management: Investment banks manage the investments of investors in order to expand their portfolio and yield higher returns
Trading operations: Banks perform the trading operations that are buying and selling of securities on behalf of the company.

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