What Exactly Is an Investment Banker?

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Table of Contents

Introduction
Main body
Conclusion
References

Introduction

Investment bankers are considered dynamic professionals. These individuals thrive in environments that are susceptible to changes. The most important role that an investment banker plays is providing a high level of advice to various clients (Casparie, 2007). The job involves massive financial analysis; therefore, a strong foundation in finance and economics is necessary. Investment bankers are also known as a strategist and have the modicum capacity to produce future events. In addition, investment bankers do planning especially in allocating investment for various investment portfolios. Unlike other professionals, an investment banker is unique and covers different markets which are exclusive to the financial world.

Main body

It is common for investment bankers to cover a wide array of tasks. Specifically, investment bankers act as underwriters and agents for corporations and municipalities that issue securities. Moreover, investment bankers maintain both broker and dealer responsibilities. As mentioned earlier, investment bankers provide in-depth analysis of economic and market events and issue valuable advisory reports. Investment bankers perform as a facilitator during corporate events such as mergers, acquisitions, and buyouts. Further, investment bankers aid companies in doing financial restructuring and provide different options to maintain robust operations.

Constant learning is vital to individuals who plan to be involved with investment banking. The entry-level position serves as an orientation that will allow investment bankers to be merged with processes. Investment bankers normally start as analysts or at times associates. Analysts are required to provide financial proposals and familiarize the financial markets. Some companies provide options to analysts to acquire post-graduate education usually in the field of finance and management.

Investment banking provides a wide range of opportunities for its employees. One of the segments that investment bankers can work on is corporate finance. It allows investment bankers to help firms in raising their capital for projects and operations. Investment bankers are tasked to determine the capital requirement of companies. Capital necessities are usually sourced out through stocks, bonds, and retained earnings. Another job option that investment bankers can venture into is facilitating mergers and acquisitions. The role of investment bankers in these situations stretches to the normal advisory service (Beatty and Ritter, 1986). Investment bankers are asked to participate in biddings and negotiations and until the deal is finalized.

It is also possible for investment bankers to work in project finance. This segment is considered the most promising part of investment banking. Project finance involves the pooling of funds from companies and governments to pursue long-term capital projects such as oil exploration. Investment bankers check the viability of projects and the capacity of involved parties to make financial commitments. Structured finance is also another area that expands the career options of investment bankers. Investment bankers do this form of financing to boost the cash flow to investors. It is imperative for investment bankers to create financing vehicles to facilitate cash flow.

Among the job options for investment bankers, it is trading that is mostly preferred. Trading involves the selling of securities and can translate to better earnings for investment bankers. The process of trading necessitates knowledge of financial markets and forecasting abilities (Beatty and Ritter, 1986). Aside from stocks and bonds, there are other financial instruments that can be traded in the market. Foreign exchange trading is a common job as well as derivatives and warrants.

Some investment bankers function mainly as equity researchers. In some investment banks, this is a higher form of responsibility. Equity researchers are adept in the technical side of financial markets. These individuals provide the buy, sell, or hold recommendations to clients. Investment bankers who perform equity research base their decisions on market trends and company fundamentals (Beatty and Ritter, 1986). Because of the growing markets overseas, investment bankers are provided with the opportunity to make international sales. This expansion is evident among investment banks that have established operations in various financial points abroad. Investment bankers have to be skillful in handling language barriers and cultural differences.

Investment bankers with information technology capabilities have opportunities to improve on their craft. At present, financial markets rely on technology to make transactions fast. Because of these several investment bakers with knowledge of computers have learned to design trading software. Such a product is already popular among investors can further improve the careers of investment bankers. Finally, investment bankers can also act as rating analysts. Although it has to be noted that such a line of work provides low revenues for investment bankers. But it is a good start because investment bankers will a good feel at the events that affect financial markets.

Conclusion

The ultimate goal of an investment banker is to be a pillar of financial markets. It is important for investment bankers to shape the economy (Beatty and Ritter, 1986). Contrary to popular belief, being an investment banker is not a limited profession. Financial markets continuously expand and this means that investment bankers will be highly demanded. There are several requirements for an investment banker to be successful. But the most important aspects involve learning and flexibility.

References

Beatty, R.P. and Ritter, J.R., (1986), Journal of Financial Economics, “Investment banking, reputation, and the underpricing of initial public offerings”

Casparie, Jim, (2007), Entrepreneur.com, “What exactly is an investment banker?” Web.

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What Exactly Is an Investment Banker?

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