Capital Markets and Investment Banking Process Paper

Capital Markets and Investment Banking Process Paper -...

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Capital Markets and Investment Banking Capital Markets and Investment Banking Process Paper INVESTMENT FUNDAMENTALS AND PORTFOLIO MANAGEMENT FIN/402 November 24th, 2008 Introduction 1
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Capital Markets and Investment Banking When investing funds it is important to know the different ways one can go about investing. How can a person make an informed choice about where to invest their money without knowing the different types of investments and also the pros and cons of each type. Investing involves a number of different types of transactions that facilitate moving money from entities that are saving money to those that need money. The different types of instruments that accomplish this tend to be suited to one type of investor or another. Knowing which type of vehicle will work best for a specific situation makes all the difference in the world when assembling a portfolio. Investment Banking In order for firms to raise capital for operations and for individuals to invest money in firms, investment securities must be brought to market to be sold. When a company wishes to issue investment securities they must go through an investment bank. Investment banks advise firms on various issues regarding the initial sale of their securities such as prices and interest rates. “ Ultimately, the investment banking firm handles the marketing of the security in the primary market, where new issues of securities are offered to the public.” (Marcus, Kane, & Bodie, 2008). An investment bank must be careful which securities they market for initial sale as backing a bad offering may negatively effect their reputation and inhibit their ability to successfully market
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