9ed FIN421 PP_CH001

Investment bankers o firms that specialize in primary

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Unformatted text preview: mercial loans funded by deposits loans – Investment companies – Insurance companies – Pension Funds – Hedge Funds 1-32 The Players Cont. Investment Bankers o Firms that specialize in primary market Firms transactions transactions o Primary market: A market where newly issued securities are offered to market the public. The investment banker typically ‘underwrites’ the issue. The o Secondary market A market where pre-existing securities are traded among market investors. investors. 1-33 Investment Bankers Investment Bankers o Commercial and investment banks’ functions and Commercial organizations were separated by law from 1933 to 1999. o Post 1999 large investment banks, collectively Post known as “Wall Street,” operated independently from commercial banks, although many of the large commercial banks increased their investment banking activities, pressuring profit margins of investment banks. investment o In September 2008 major investment banks either In went bankrupt, reorganized as commercial banks or were purchased by commercial banks as a result of the collapse of the mortgage markets. the 1-34 Cont. • Investment Bankers • Investment banks may become commercial banks • Obtain deposit funding • Have access to government assistance • Major banks now under stricter commercial bank regulations 1-35 Table 1.3 Balance Sheet of Table Commercial Banks, 2011 Commercial Assets Real assets Equipment and premises Other real estate Total real assets Finan...
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