Related Content: MGT604 - VU Lectures, Handouts, PPT Slides, Assignments, Quizzes, Papers & Books of Management of Financial Institutions
It helps companies and governments (or their agencies) raise money by issuing and selling securities in the capital markets (both equity and debt).
Almost all investment banks also offer strategic advisory services for mergers, acquisitions, divestiture, or other financial services for clients, such as the trading of derivatives, fixed income, and foreign exchange, commodity, and equity securities.
Trading securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is referred to as "sell side."
The "buy side" constitutes the pension funds, mutual funds, hedge funds, and the investing public who consume the products and services of the sell-side in order to maximize their return on investment. Many firms have both buy and sell side components.
The primary function of an investment bank is buying and selling products both on behalf of
the bank's clients and also for the bank itself. Banks undertake risk through proprietary
trading, done by a special set of traders who do not interface with clients and through
Principal Risk, risk undertaken by a trader after he or she buys or sells a product to a client
and does not hedge his or her total exposure. Banks seek to maximize profitability for a
given amount of risk on their balance sheet.
Read more: MGT604 - Management of Financial Institutions - Lecture Handout 28
Related Content: MGT604 - VU Lectures, Handouts, PPT Slides, Assignments, Quizzes, Papers & Books of Management of Financial Institutions
Investing in international mutual funds has two faces:
A word of caution before investing even in best international mutual funds - Unlike domestic mutual funds investment, international investments entail additional risk factors such as economic and political in addition to risk of FOREX value (simply put: foreign currency exchange value) fluctuations.
The number of funds in international investing is on the rise. We can cite a few reasons for this.
Investing in international mutual funds is gaining popularity for various reasons. Rising
political stability merging or opening of borders and currencies are some of the reasons.
Vibrant and upcoming economies and non US corporations becoming financially stronger
by the day are some of the reasons. In addition you get true diversification, balance and
opportunities.
Read more: MGT604 - Management of Financial Institutions - Lecture Handout 27