What is Investment Banking?

Investment banking refers to the business of helping companies and governments raise capital by underwriting and issuing securities, as well as providing financial advice on mergers, acquisitions, and other strategic transactions. Investment banks also often trade securities for their own account and engage in proprietary trading.

The investment banking industry is divided into two main areas:

1. Corporate finance: This area involves working with companies to raise capital through the sale of securities (such as stocks or bonds) to the public or to other companies. Investment bankers in corporate finance also advise companies on mergers, acquisitions, and other strategic transactions.

2. Sales and trading: This area involves buying and selling securities on behalf of clients or for the investment bank's own account. Investment bankers in sales and trading work to identify and capitalize on market opportunities and manage risks.

Investment banks typically generate revenue through a combination of underwriting fees (for helping companies issue securities), trading profits, and advisory fees (for providing financial advice on mergers and acquisitions). Investment banks are typically larger and more diversified financial institutions that offer a wide range of financial services, including commercial banking, asset management, and wealth management.