Global Education and Career Development Center ♦ 12-170 ♦ (617) 253-4733 ♦ http://careers.mit.edu Overview Investment banking includes a wide variety of activities, including underwriting, selling, and trading securities, providing financial advisory services, and managing assets. Investment banks cater to a diverse group of stakeholders – companies, governments, non-profit institutions, and individuals – and help them raise funds on the capital market. They perform the following major functions for their customers: • • • • • • Serve as trading intermediaries for clients Lend and invest banks’ assets Provide advice on mergers, acquisitions, and other financial transactions Research and develop opinions on securities, markets, and economies Issue, buy, sell, and trade stocks and bonds Manage investment portfolios
Investment banks once contrasted sharply with commercial banks, where people mainly deposited their money and sought commercial and retail loans. In recent years, though, the two types of structures have become increasingly similar; commercial banks now offer more investment banking services as they attempt to corner the market by presenting themselves as one-stop shops. Investment banks do differ from brokerages and broker-dealers, though, even though those three entities are often thought of as one and the same. A brokerage firm takes a commission for assisting in the purchase and sale of stocks, bonds, and mutual funds. A broker-dealer executes similar functions, but it also trades for its own account; for instance, when you buy a stock, you can buy it through an exchange or the dealer’s own account (and you’ll pay the current market price no matter what the dealer paid for it). An investment bank actually is a broker-dealer that provides corporations with financial services, such as assistance with initial public offerings, merger and acquisitions advice, and strategic planning. If you’re interested in an investment banking...
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