Investment Banking Essentials

Course Overview

This course will provide the student with the essentials of investment banking and the financial industry. It will heavily rely on mathematics and quantitative analytical skills as they are relevant to financial banking. The course will cover the role of the investment banker and financial analyst. Issuers, the Underwriting/Intermediation, Syndication and Distribution functions, the Investors, the Regulators, Derivatives, Foreign Exchange, the major Exchanges and Secondary trading/market liquidity for both the Equity and Fixed Income Markets.

Who are the major users of international capital markets? What is the role of an investment bank and the investment banker? The answers to these questions are the foundations of our study. The objective is to learn the functions and objectives of the investment bank and the different departments theirein. This involves raising capital for clients among other things. We will look at capital markets and how they function. We will also discuss Mergers and Acquisitions transactions and how the investment banker consults his or her client regarding them.

What are the essentials of the Equity/Stock markets? We will look at the new issue market and IPOs, publicly traded markets, corporate effects on stock pricing, external and economic effects on stock market pricing and values, the fundamentals of stock market technical analysis, and private equity/venture capital/direct investment.

The trends in investment banking as well as the differences in markets across the US, Europe and Asia. We will look at different business models in the different markets by examining case studies. We will examine the fundamentals of foreign exchange markets: how the spot and forward foreign exchange markets work, cross border funding and hedging, and the risks of cross border markets.

How are new securities issues structures, underwritten and distributed? How is the application of derivatives to the capital markets including structured financial instruments, the securities exchanges, the roles and functions of investors such as individuals, pension funds, insurance companies, mutual funds, hedge funds and the regulators?

We will review the Equity Securities Market, and included in this review will be Equity shareholding and convertible securities, the major stock exchanges and secondary market liquidity, the major stock market indices, investors, analysts, regulation, understanding market differences between Europe, Asia and the US, Legalities/Illegalities and Ethics.

We will also review the fixed income securities market including the fixed income bond markets, the convertible bond and asset backed securities market, floating rate notes, ratings and the rating agencies, structured financial instruments, foreign exchange, regulation, understanding market differences and again Legalities/Illegalities and ethics.

Decision-making skills in any discipline are important and Investment Banking is not exception. For top bankers, their decisions run the risk of worldwide impact in various markets. We will discuss sources of funding and investment decision making, credit borrowing vs. issuing equity, and we will engage in an analysis of funding options including bank borrowing, cross currency, private placements, private equity, public stock/bond market, high yield market, floating rate vs. fixed rate borrowing, equity vs. convertible securities.

Mergers and Acquisitions will also be covered by the following topics: Due Diligence, Financial analytic tools, purchasers/sellers, and comparative market tools. Other aspects of research and the strategies of the buy side and sell side, stock price research including the theory and practice of how researches value stock. Also how are companies or individuals valuated? Is the process different? What is the work of a corporate finance team in executing a deal? Who is involved? What techniques are used by an investment bank in order to valuate a company?

What is the strategy of an investment bank? How does a boutique consulting firm compete with a global bank? Also, what is investment bank management? The differences between different clients, either corporation vs. high net worth individuals can be many and anyone preparing to enter the investment-banking world should be ready. A major task of this course will be in determining the different players and their various roles in the wide variety of sub disciplines involved under the banner of “Investment Banking.” We also must pay attention to understanding invesment banking in its increasingly global context. There are differences in how markets work across the world, but since there are international mergers taking place across the world, and cross border trades happening everywhere, we must learn to implement our analysis techniques in these contexts.

Topics Covered

  • Fundamentals of the investment Bank
  • Ranks and positions at a global bank vs. boutique and their roles
  • Different Markets
  • Equity
  • Issues of Legality and Ethics
  • Financial Modeling
  • Technical tools
  • Introduction to Electronic Trading
  • Financial research and analysis
  • Banking Strategies
  • Different Customers or Users of an Investment Bank