《金融市场与机构 Jeff Madura》ch25.pptVIP

25 Securities Operations Chapter Objectives Review and evaluate the key functions of investment banking firms Describe the services provided by investment banking firms when they assist in issuing new stock issues Analyze the risks of securities firms Evaluate the key functions of brokerage firms Evaluate the key factors impacting the value of securities firms Investment Banking Services Investment banking firms IBFs assist in raising capital for corporations and state and municipal governments IBF’s serve both financing entities and investors: Serve as an intermediary buying securities promise to pay from issuing companies and selling them securities to investors Generate fees for services rather than interest income Sell investing services to institutional and other investors Advise companies on mergers and acquisitions Value companies for sale or purchase In recent years, loaned funds for mergers and acquisitions Investment Banking Services How IBFs Facilitate New Stock Issues Origination Company wishes to issue additional stock or issue stock for the first time contacts IBF Gets advice on the amount to issue Helps determine stock price for first-time issues IBF assists with SEC filings Registration statement Prospectus—summary of registration statement given to prospective investors How IBFs Facilitate New Stock Issues Underwriting stock Issuer and investment bank negotiate the underwriting spread The difference between the net price given the company and the selling price to investors Incentive to under-price IPO’s The lead investment bank usually forms an underwriting syndicate Other IBFs underwrite a part of the security offering Helps spread the underwriting risk among IBFs How IBFs Facilitate New Stock Issues Distribution of stock Full underwriting vs. best efforts IBFs in the syndicate have retail brokerage operations Other IBF added as part of selling group Corporation incurs flotation costs Underwriting spread Direct issuance costs—accountin