FINA 469 Lecture Notes - Lecture 3: Investment Banking
26 Jan 2017
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Entities bring new securities to market i. ii. iii. New company offers stock for the first time in an ipo (initial public offering) Securities are already issued and are in portfolios/inventories of brokers. Tradi(cid:374)g of se(cid:272)urities does(cid:374) t i(cid:373)pa(cid:272)t (cid:374)u(cid:373)(cid:271)er of shares outsta(cid:374)di(cid:374)g or amount of debt. Determine that they have a need for capital. Responsible for financial analysis, preparation of legal documents, regulatory filings, earn massive fees. Investment bank lead firms add smaller investment banks to the team. Goal is to take the shares of stock/bonds to the market to investors who will absorb securities into their portfolios. Investment banks and company management market their securities to investors. Dealer markets: securities go into inventory of dealers who match orders a. b. Dealer may buy stock for inventory at price x. Dealers willing to pay x + s i. Auction markets: all participants and traders converge without a dealer as a middle man a.
