Introduction
Investment banking is a service in which an investment banker will instruct the sale of securities in order to raise money for a specific person or company. This person will provide recommendations on these sales as well as transactions of mergers and acquisitions. The following document is a synopsis of investment banking and the variables of portfolio management. This document will provide a general overview of the investment banking process and different methods for portfolio construction. In addition, the document will outline the factors considered when selecting assets for investments and provide an overview of some of the different types of capital market instruments that are commonly used for investments. Lastly, the document will provide recommendations for composition of an investment portfolio and explain the reasoning behind the recommendations.
Investment Banking Process
Investment banking brings efficiency to corporate fund raising. Investment bankers develop expertise in pricing new issues and in marketing them to investors. In explaining the process, when a company wants raise the necessary money to go public, they will issue securities called IPO’s, or Initial Public Offerings, which is a type of security that is most commonly used. IPO’s are shares of a company that has not gone public, however, will go public as soon as enough money has been raised through the sale of these specific shares. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. Investment bankers will advise the firm regarding the terms on which it should attempt to sell the securities.
Once the Security Exchange Commission, ...