Tag Archives: Corporate Finance

What is involved in a career in investment banking ?

investment banking

After reading The Accidental Investment Banker by Jonathan Cree, I decided my first blog on investment banking and corporate finance was due.

From my understanding of investment banking, many people simply don’t understand it. Is it banking? Is it investing? Is it Gordon Gecko in the movie Wall Street or is he a trader? What is the difference between an investment banker and an equity trader? What do investments bankers actually do?

One finance degree short of an answer, it took me a fair while to truly come to grips with the concept of investment banking. However, now that I have, I feel the short summary below will give a very good indication to those considering a career in investment banking or those wishing to understand investment banking better.

What is investment banking and what do investment bankers do?

As companies grow, they need capital. In many cases, in order to raise capital and for other related advisory services, companies go to investment banks. Investment banks provide a range of services relating to the raising of capital and act as advisors to the world’s corporate leaders… Continue reading What is involved in a career in investment banking ?

Six different types of public and proprietary companies

Corporate law

Following on from my blog on company characteristics, I thought I would write a quick blog on the different types of companies that are common today.

Companies are classified according to liability, size and where they are listed. We will discuss the first two and the resulting 6 common types of companies we arrive at.

Classification according to member liability

1 – Companies limited by shares (known as ‘limited liability’ companies)

Typically, members are usually shareholders and their liability is limited to the nominal (nominal capital is defined as the capital with which the company was incorporated) value of their shares plus any unpaid amount on their shares.

As an example, say you buy BHP shares at $10 for 100 shares, then your liability is limited so that if BHP were to be sued, it is limited to the $10 paid. This is sometimes conducted differently when you don’t fully pay for shares when the company floats. If $5 was paid and $5 was then owed on the shares, then the remaining amount must be contributed should it be called upon.

As we probably know by now, the significance is that shareholders are not liable for the full amount. This is known as the share capital method of corporate finance. Another method is by debt – going to a bank and asking for money to be lent. This is a different contractual agreement. Continue reading Six different types of public and proprietary companies

9 types of financial markets for capital raising

wall street

I am currently making my way through the Five Minute MBA in Corporate Finance, which is likely to take about a month at the rate i am going (its 657 pages).

Anyway, Having found a particularly good summary of the different types of financial markets, i thought i would copy it across for those that are interested. I give full credit to the author but i have only been able to find a link to the book here. I also give credit to some definitions i found here.

Types of Markets

People and organizations who want to borrow money are brought together with those with surplus funds what are known as financial markets.

  • Each market deals with a somewhat different type of instrument in terms of the instrument’s maturity and the assets backing it.
  • Different markets serve different types of customers, or operate in different parts of the world.

Continue reading 9 types of financial markets for capital raising