Investment banking
Investment banking helps companies and governments raise capital and advises them on mergers, acquisitions, and other major financial transactions.
Initial public offering: The first sale of a company's shares to public investors on a stock exchange. Investment banks underwrite offerings, prepare disclosures, and coordinate the share sale.
Underwriting: The process by which a financial intermediary distributes securities and may assume the risk of unsold shares or bonds. It is the principal mechanism banks use to place new securities with investors.
Capital market: A market where businesses and governments obtain long-term funding by issuing securities to investors. Investment banking operates between capital seekers and capital providers in these markets.
Commercial banking: Banking services centered on deposits, loans, payments, and related services for households and businesses. Its deposit-and-lending model differs from investment banking's transaction and securities focus.
Corporate bond: A debt security issued by a company that promises interest payments and repayment of principal. Banks help companies structure, price, and sell bonds to investors.
Bookbuilding: A process for collecting investor indications of interest to help set the price and allocation of a securities offering. Banks gauge demand before fixing an offering's size, price, and investor allocations.
Corporate finance: The management of a company’s funding, investments, and financial decisions. Investment banking applies corporate-finance analysis to external transactions and financing.
Asset management: The professional management of investments on behalf of clients or pooled funds. Asset managers invest capital; investment banks advise issuers and arrange transactions.
Mergers and acquisitions: Transactions that combine companies or transfer ownership of a business or its assets. Advising buyers and sellers on these transactions is a central banking service.
Discounted cash flow: A valuation method that estimates an asset's value by discounting its expected future cash flows. Bankers use it to assess companies, projects, and proposed transaction prices.