In today’s economy, the United States financial systems are facing tough challenges. Corporate America is seeing changes that have not taken place since the early 1900s. For many, it is a tremendously scary place to be. The stock market continues to drop and now, more than ever, businesses have to be extremely careful of the choices they make. Investment bankers play a large role in helping businesses make wise decisions during times like these. These decisions affect the capital available to corporations.
Investment bankers wear many hats. They are the link between the corporation in need of funds and the investor; they are the middleman (Block-Hirt, 2004, p. 439). The investment banker serves as an underwriter buying securities and selling them to dealers and the public. He will also act as an agent for a corporation that wants to place its securities privately (Block-Hirt, 2004, p. 443). One of the most important roles is that of advisor. He will advise businesses about every detail of selling their securities, including the type, when, and how much.
The primary goal of any corporation is to make money. In order to do so, they must have capital. There are different sources of capital available and it is the investment banker’s job to help the company seek out the right source. There is short-term and long-term capital. Capital needed in the short-term can be found in money markets. Money markets are those dealing with securities with a life of less than one year. Examples include a commercial paper sold by businesses, treasury bills, and certificates of deposit.
The long-term markets are called capital markets and they have a life of more than one year. The most common securities in this category are bonds, common stock, preferred stock, and convertible securities (Block-Hirt, 2004, p. 417).
In today’s market, corporations are struggling to find sources of capital to keep their businesses afloat. The government has been forced to...