How Investment Banks Operate In The Corporate World

Investment banks are a completely different set of organizations from the banks the average person in the street is familiar with. They are able to place new stock issues into the market, so that new corporations can raise the finance they need to be in business, and so that an existing corporation can raise more money and have more leverage to use in their own business. These banks are also able to manage millions of dollars in investor client funds, including for corporate investors managing mutual funds.


The most important work which an investment bank carries out is that of bringing new issues to market. When corporations are being formed, or when existing corporations come to market to obtain more money, it is important that market conditions are analyzed as accurately as possible. The corporation wants to see all of their stock sell out but they also want to achieve the highest price which is possible. It is often difficult to know exactly how to price a new issue, but the knowledge and expertise of the most successful banks has produced a high level of success. This is one industry in which success breeds more success, as other corporations are attracted to the same bank.

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The other side of the operation of an investment bank is the buying side or more accurately the side which invests money on behalf of clients. These clients can be institutional investors, or individuals if they have enough money to be able to pay the minimum commissions. The investment funds are placed into the market according to signals which are generated by computer software, programs which have been programmed with thousands of past price movements and relevant data. No computer program so ever going to be foolproof, but these highly developed versions do have a high success rate.

Working in investment banks is one way to get yourself an income which is above average, and which will be consistent until you retire. This industry is not going to be going away any time during the lifetime of anyone working now, and it is unlikely that it will be severely affected by any economic changes. There are downsides, such as the extremely long hours you will have to work, but as long as you are prepared for these they should not be enough to dissuade you. You will need to obtain a college degree, either from a college campus or through an online study program.

When you have graduated, you will almost certainly need to start at the bottom level of the investment banking industry, by working as an analyst. This position will test your resolve to stay within the industry, as you will basically be doing the grunt work for other people higher up in the organization. There are no limits on how long you can stay as an analyst, but it rarely happens for more than a few years. Most analysts either get promoted to become associates, or move to another department of the same bank.

Some investment banks will take a proactive stance in trying to find good employees, and will actually seek people out while they are still in college. This is only likely to happen with people who are studying for a high level MBA, and even in that case few will be chosen. When this does happen, the student is offered the chance to move straight into a role as an associate. The reason for this is simple, if you think someone is good enough to hunt for a job, you are not going to want your opposition going in with a better offer. This is common to all investment banks.




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