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Financial Terms

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Using your own words (no quotations), write a series of short paragraphs describing the meaning, function, and importance of each of the following four terms:

investment banker
stock market
financial management
risk financing

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Solution Summary

The solution defines four financial terms. References are included.

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Investment Banker

Investment bankers are persons who represent financial institutions and help corporations and municipalities raise capital by issuing and selling securities in the primary market. Their main function is to support public and private corporations in raising their capital and providing them strategic advisory services in decision-making for mergers, acquisitions or other financial transaction types. They also help them raise funds in equity and debt in the capital markets. How do these bankers raise funds? The lend their expertise to the companies by determining and providing them advice on how to best raise their debt or equity capital and in cases where companies are not familiar with these things, they can help the company save time and money. They can prepare the documents in a way that they can accurately present themselves to show its value proposition for funding so that there is greater chance for success. They can also protect the company and investor for future misunderstandings by putting the documents in the best possible presentation, e.g., private placement memorandum - a legal document that protects both investor and company from making a bad investment. Investment bankers also ensure that the government regulations pertaining to the raising of the capital have been followed. They provide advice to the entrepreneurs on the SEC and NASD rules in which these business owners are not familiar with.

Stock Market

A stock is an instrument or document representing that the owner of the instrument has ownership position or equity in an organization. It also shows that the owner can claim its proportional share of the assets and profits of the corporation when the right time comes.

The Stock Market can be likened to a common market in its context but it is for the purpose of trading stocks of different companies and others that are related to it. The term 'market' specifically refers to apply to trading company stocks within one country. The mechanism that allows for the trading of stocks is abstract and the term 'stock ...

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