From the course: Finance Foundations
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Investment banks
- We are all familiar with traditional banks, we go to them all the time. What about an investment bank? Well an investment is not really a bank at all. An investment bank is just a different kind of financial institution. Investment banks have two primary functions. First, investment banks help companies do big deals. For example, let's say I am a company, and I want to go out and find new investors. I want to go public. I want to issue new shares of stock. Well this is my first company. I don't know how to go public. I need an expert to walk me through that process. It's called underwriting. So investment banks help walk companies, new companies, through the process of making themselves public companies through issuing public shares. Also when one company wants to buy another. Both the buying company and the target company typically hire an investment bank to walk them through the process. Let's say I want to buy another company for $22 billion. Note, I choose this number because…
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