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At a very macro level, ‘Investment Banking’ as term suggests, is concerned with the primary function of assisting the capital market in its function of capital intermediation, i.e., the movement of financial resources from those who have them (the Investors), to those who need to make use of them for generating GDP (the Issuers). Banking and financial institution on the one hand and the capital market on the other are the two broad platforms of institutional that investment for capital flows in economy. Therefore, it could be inferred that investment banks are those institutions that are counterparts of banks in the capital markets in the function of intermediation in the resource allocation. More commonly used today to characterize what was traditionally termed” investment banking” is “sells side." This is trading securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e. underwriting, research, etc.). The "buy side" constitutes the pension funds, mutual funds, hedge funds, and the investing public who consume the products and services of the sell-side in order to maximize their return on investment. Many firms have both buy and sell side components.
Investment banks also act as intermediaries in trading for clients. Investment banks differ from commercial banks, which take deposits and make commercial and retail loans. In recent years, however, the lines between the two types of structures have blurred, especially as commercial banks have offered more investment banking services.
OBJECTIVE OF THE STUDY
To Understand the purpose of Investment Banking
To understand the structure of an Investment Bank To understand the major role and principles play by Investment Banking
To understand detail study of Investment Banking To study Investment opportunity of Investment Banking.
SCOPE OF THE STUDY
Some of the respondents could not give their proper response due to lack of time and lot of work. There was a constraint with regard to time allocated for the research study. 4|Page .LIMITATION OF THE STUDY The major limitations of the project are: Detailed study of the topic was not possible due to the limited size of the project. They at times tend to get biased which may affect the reliability and relevance of the study.
1207 crores of advances with 37 branches spread across 11 districts of Maharashtra. Since then the bank has grown by leaps and bound. 3035 crores contributed by deposit of Rs. The dream of these persons came into existence by bearing a name i. of main branch cum central office. With a modest beginning in a small 500 sq. 1970.ft. 1828 crores and Rs.e. They had an aim that any person in genuine financial difficulty or in need of finance to fulfill his dreams whether personal or professional should have an institutional support and he should not be a prey of traditional moneylenders. it has now reached a business mix of Rs.COMPANY PROFILE Way back in 60’s Few enthusiastic persons gathered together with a common goal to make available the banking facility to the commonest of the common man. SERVICES Deposits: • Saving • Current • Recurring Loans: • Housing • Vehicle • Gold • Personal • Corporate Loan Other services: 5|Page . Dombivli Nagari Sahakari Bank Ltd. on 6th September. having deposit base of and total advances of in June 1971.
Over the decades. also called investment banker. Marshall and M. the term ‘investment banking’ can arguably be said to be of American origin. Investment banks may also differ from brokerages. ‘investment banking is what investment banks do’. Glass-Steagall was repealed by the Gramm-Leach-Bliley Act in 1999. bonds. In the US. initially created in the wake of the Stock Market Crash of 1929. Therefore. but at times.E. prohibited banks from both accepting deposits and underwriting securities. as that would confine investment banking to very narrow sphere of its activities in the modern world of high finance. Investment bankers have always enjoyed celebrity status. which in general assist in the purchase and sale of stocks. the Glass-Steagall Act. backed by evolution and also fuelled by recent technologies developments. Eills. banks do not accept deposits from and Nevertheless. it would be unfair to conclude so. an investment banking has transformed repeatedly to suit the needs of the finance community and thus become one of the most vibrant and exciting segment of financial services. This definition can be explained in the context of how investment banks have evolved in their functionality and how history and regulatory intervention have shaped such an evolution. Unlike traditional banks. Investment banks also have a large role in facilitating mergers and acquisitions. 6|Page . private equity placements and corporate restructuring. and mutual funds. they have paid the price for the price for excessive flamboyance as well. To continue from the above words of John F.• EFT • ECS INTRODUCTION An individual or institution which acts as an underwriter or agent for corporations and municipalities issuing securities. investment provide loans to individuals.
DEFINITION An individual or institution. Most also maintain broker/dealer operations. Unlike traditional banks. investment banks do not accept deposits from and provide loans to individuals also called investment banker. maintain markets for previously issued securities. which acts as an underwriter or agent for corporations and municipalities issuing securities. and offer advisory services to investors. 7|Page . Investment banks also have a large role in facilitating mergers and acquisitions. private equity placements and corporate restructuring.
Chapter 1 RESEARCH METHODOLOGY 8|Page .
Research is thus an original contribution to the existing stock of knowledge making for its advancement.RESEARCH METHODOLOGY Research methodology is the method or the entire procedure involved in carrying out a research for a specific purpose. Its purpose is to find answers to questions through the application of the scientific method. • It is a systematic and intensive study towards study a more complete knowledge of the studied. Research is a way to systematically solve the research problem. • • Research always starts with a question or a problem. Te purpose of research is to discover answer to questions application of scientific procedures. In it we study the various steps that are generally adopted by a research to know not only the research methods or techniques and they need to know the criteria by which they can decide technique and procedure will be applicable to certain problems and other will not. 9|Page .
Primary data: .. primary data and secondary data.The source of data for the Research Project is mainly secondary data which was collected from the websites. documents. With the help of angel back office risk management data could be accessed and analyzed accordingly. Through observe the employees who actually undertake the operations in surveillance team and dealing was able to analyze the system and the process. Being a firm in the financial industry data gathering here involved usage of both primary and secondary data. Secondary Data: . 10 | P a g e .Well. i. With the help of email and telephones was able to contact all the sub brokers to explain about the new services and the requirement which they have to follow in order to conduct it. pamphlets. There were personal interview questions through telephones regarding their opinion and view about the services offered by the employees and their feedback. reference books based on Financial Management. The whole team was co operative and provided meaning full data for project. which were in printed forms like annual reports.e.Collection and Sources of data: Market research requires two kinds of data.structured questionnaires were prepared for the clients.
It also helps individuals to invest their money in the market in the form of derivatives. investment banking play major role in that. They assist public and private corporations in raising funds in the capital markets (both equity and debt).RIVIEW OF LITERATURE Investment banks help companies and governments and their agencies to raise money by issuing and selling securities in the primary market. It is the way by which company get options to raise capital. 11 | P a g e . mutual fund. shares. as well as in providing strategic advisory services for mergers. etc. acquisitions and other types of financial transactions.
Chapter 1 STUDY OF INVESTMENT BANKING 12 | P a g e .
a valuable contact network. Most small to medium sized companies do not have a large in-house staff. A quality investment banking firm can provide the services required to initiate and execute a major transaction. public. and is vitally interested in seeing the transaction close. an investment bank provides objectivity. investors. and in a financial transaction may be at a disadvantage versus larger competitors. thereby empowering small to medium sized companies with financial and transaction experience without the addition of permanent overhead.WHO NEEDS AN INVESTMENT BANK? Any firm contemplating a significant transaction can benefit from the advice of an investment bank. allows for efficient use of client personnel. and is vitally interested in seeing the transaction close. etc. Although large corporations often have sophisticated finance and corporate development departments provide objectivity. In today’s situation everybody need Investing Banking. 13 | P a g e . government. E.g. allows for efficient use of client personnel. a valuable contact network. company.
with the expectation that their effort will be rewarded with a mandate when the client is ready to undertake a transaction. which may involve subscribing investors to a security issuance. The individual activities are described below: Front Office Investment Banking is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. Once mandated. Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance (often pronounced "corpfin"). Banks undertake risk through proprietary trading. Banks seek to maximize profitability for a given amount of risk on their balance sheet An investment bank is split into the so-called Front Office. an investment bank is responsible for preparing all materials necessary for the transaction as well as the execution of the deal. Investment bankers prepare idea pitches that they bring to meetings with their clients. or negotiating with a merger target. Middle Office and Back Office.ORGANIZATIONAL STRUCTURE OF AN INVESTMENT BANK The main activities and units The primary function of an investment bank is buying and selling products both on behalf of the bank's clients and also for the bank itself. risk undertaken by a trader after he or she buys or sells a product to a client and does not hedge his or her total exposure. coordinating with bidders. done by a special set of traders who do not interface with clients and through Principal Risk. 14 | P a g e .
) or private investors (both directly via investment contracts and more commonly via collective investment schemes eg. with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities. responsible for the majority of revenue of most investment banks In the process of market making. • Research is the division which reviews companies and writes reports about their prospects. reducing its importance to the investment bank. Sales is the term for the investment banks sales force. In recent years the relationship between investment banking and research has become highly regulated. mutual funds) . • Structuring has been a relatively recent division as derivatives have come into play. corporations etc. and investment bankers by covering their clients. Another key Middle Office role is to 15 | P a g e . its resources are used to assist traders in trading. whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on caveat emptor basis) and take orders.g. pension funds. Sales desks then communicate their clients' orders to the appropriate trading desks. • Sales and Trading is often the most profitable area of an investment bank . to meet specified investment goals for the benefit of the investors. real estate). and setting limits on the amount of capital that they are able to trade in order to prevent 'bad' trades having a detrimental effect to a desk overall. often with "buy" or "sell" ratings. the sales force in suggesting ideas to customers. Investment management is the professional management of various securities (shares. bonds etc) and other assets (e. Financial Markets is split into four key divisions: Sales. or structure new products that fit a specific need. which can price and execute trades. traders will buy and sell financial products with the goal of making an incremental amount of money on each trade. Investors may be institutions (insurance companies. While the research division generates no revenue. Trading. Research and Structuring. Middle Office: Risk Management involves analyzing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades.
ensure that the above mentioned economic risks are captured accurately (as per agreement of commercial terms with the counterparty) correctly (as per standardised booking models in the most appropriate systems) and on time (typically within 30 minutes of trade execution). market and credit risk analysis can be unreliable and open to deliberate manipulation. In recent years the risk of errors has become known as "operational risk" and the assurance Middle Offices provide now include measures to address this risk. The staff in these areas are often highly qualified and need to understand in depth the deals and transactions that occur across all the divisions of the bank. ensuring that they are not erroneous. and transacting the required transfers. While it provides the greatest job security of the divisions within an investment bank. 16 | P a g e . When this assurance is not in place. it is a critical part of the bank that involves managing the financial information of the bank and ensures efficient capital markets through the financial reporting function. Back Office: • Operations involve data-checking trades that have been conducted.
5 crores. consultant. This was followed by Bank of India. Currently. no person can act as a merchant banker. adviser or consultant to an issue Category IV . The minimum net worth requirement for acting as merchant banker are Category I -Rs. Bank of Baroda and many more. 20 lakhs and Category IV –Nil. Category III -to act as underwriter.50 lakhs. underwriter. SBI Caps and IDBI Caps are two prime examples of merchant banks in India today. co-manager. portfolio manager Category II .to act as adviser. The categories for which merchant banking registration may be granted by SEBI: Category I . underwriter. manager. 17 | P a g e . Category II -Rs. Currently. without holding a certificate of registration granted by the Securities and Exchange Board of India. portfolio manager.to act only as adviser or consultant toan issue.to carry on the activity of issue management and to act as adviser.INVESTMENT BANKING IN INDIA SBI was the first Indian public sector bank to set up its merchant banking division in 1972. there are 136 merchant banks registered with SEBI. Central Bank of India. The capital requirement depends upon the category. consultant. Category III -Rs.
INVESTMENT BANKS Domestic Players: • • • • • • SBI capital markets Kotak Mahindra Capital Company The Industrial Development Bank of India (IDBI) ICICI securities ltd Avendus Bajaj capital Foreign players: • • • • JP Morgan chase bank DSP Merrill Lynch Deutsche Bank City group 18 | P a g e .
which plan to go public in the near future. expand existing operations. and assistance in identifying. Raising Capital An investment bank can assist a firm in raising funds to achieve a variety of objectives. and private individuals. Although many people associate raising capital with public stock offerings. or firms. and performing general advisory services. structuring. Capital can include some combination of debt. and divestitures. and executing a merger or joint venture.INVESTMENT BANKS PROVIDES FOUR PRIMARY TYPES OF SERVICES: Raising capital. Mergers and Acquisitions Investment banks often represent firms in mergers. 19 | P a g e . the sale of a company or a subsidiary of the company. specialized investment funds. as well as a valuation range and recommended structure. a great deal of capital is actually raised through private placements with institutions. acquisitions. and hybrid securities such as convertible debt or debt with warrants. or for specific project financing. preferred equity. the investment bank should provide a thorough analysis of the entity bought or sold. placing new offerings. The investment bank will work with the client to structure the transaction to meet specific objectives while being attractive to investors. Example projects include the acquisition of a specific firm. reduce its debt load. advising in mergers and acquisitions. and publishing research reports. Sales and Trading These services are primarily relevant only to publicly traded firms. executing securities sales and trading. Smaller investment banks may specialize in two or three of these categories. such as to acquire another company. common equity. Specific functions include making a market in a stock. In each case. Most of the major Wall Street firms are active in each of these categories.
and make them explicit. • Current Situation: How healthy are you. but because an early start can make all the difference. In general. you might be headed in the wrong direction. Start Investing Now: We say this not just to discourage procrastination. every six years you wait doubles the required monthly savings to reach the same level of retirement income. financially? What's your net worth right now? What's your monthly income? What are your expenses (and where could they be reduced)? How much debt are you carrying? At what rate of interest? How much are you saving? How are you investing it? What are your returns? What are your expenses? • Goals: What are your financial goals? How much will you need to achieve them? Are you on the right track? • Risk Tolerance: How much risk are you willing and able to accept in pursuit of your objectives? The appropriate level of risk is determined by your personality. assisting in financial restructurings. Compounding is a beautiful thing. your future goals. If you don't take a close look at these. then contributed the same amount each month for the next 41 years. business valuations. Know Yourself: The right course of action depends on your current situation. you would have about the same amount. and your personality. and then nothing afterwards. Another motivational statistic: If you contributed some amount each month for the next nine years. PRINCIPLES OF INVESTING 1. and providing an opinion as to the fairness of a proposed transaction. or if you contributed nothing for the first nine years. 20 | P a g e . 2.General Advisory Services: Advisory services include assignments such as strategic planning.
4. Tracking your spending habits is the first step toward improving them. 21 | P a g e . amount of cash you have to cover emergencies. Develop a Long Term Plan: Now that you know your current situation. If you don't know where the money goes each month. never invest in anything you don't understand. houses. and keep this money in a very safe investment like a money market account. 3. job security. Don't try to time the market. but we do know what direction the next100% move will be. goals. college. If you don't know how much you save each month and how much you'll need to save to reach your goals. and personality. and retirement. It should also detail where the money will come from. And remember. so you're prepared in the event of an emergency. It should detail where the money will go: cars.age. you shouldn't be thinking about investing yet. you should have a pretty good idea of what your long-term plan should be. Hopefully the numbers will be about the same. If you've transitioned from a debt situation to paycheck-to-paycheck situation to a saving some money every month situation. net worth. Get in and stay in. it makes more sense to get started on them in the reverse order. there’s no way to know what investments are right for you. You should start by amassing enough to cover three to six months of expenses. Get Your Financial House In Order: Even though investing may be more fun than personal finance. health. you should unburden yourself before you begin investing. you’re ready to begin investing what you save. We don't know what direction the next 10% move will be. and the length of your investing horizon. If you're carrying debt at a high rate of interest (especially credit card debt).
If you don't have time for all this work consider mutual funds. research. 5. but it increases returns. understand before you invest. The more you know.Review your plan periodically. they're the winners: In this century. stocks beat bonds 8 out of 9 decades. Investigate Before You Invest: Always do your homework. learn as much as you can about the companies you’re considering. especially index funds. Understand how each of your investments fits in with the rest of your portfolio and with your overall strategy. In the long run. objective information. and pay attention to events that might affect you. a third opinion. etc. 6. 22 | P a g e . Understand the risks associated with each investment. Gather unbiased. This approach reduces the entire universe of investment vehicles to two choices: stocks and stock mutual funds. If you are not confident that your plan makes sense. and whenever your needs or circumstances change. and they're well in the lead again. Buy Stocks: Now that you've got a long term view. talk to an investment advisor or someone you trust. This requires patience and discipline. you can more safely invest in 'riskier' investments. Get a second opinion. Understand personal finance matters that could affect you (for example. If you're going to invest in stocks. Be cautious when evaluating the advice of anyone with a vested interest. Read books. the better off you are. which the market rewards (in general). proposed tax changes). This requires that you keep learning.
Understand that you will make mistakes and take losses. you shouldn't even be watching the day-to-day performance. • It is generally a good idea to avoid making financial decisions based on emotional factors. even the best investors do. don't ever feel like it's now or never. • The following personality traits will hurt your chances of financial success: Fear: If you are unwilling to take any risk. Develop the Right Attitude: The following personality traits will help you achieve financial success: Discipline: Develop a plan. make your decisions for you. you'll go for the big scores. As you continue to learn. unless you like to. you’ll become more confident that you're on the right track.7. Re-evaluate your strategy from time to time. • Greed: As an investment class. 23 | P a g e . not your emotions. and stick with it. but don't second-guess it. • Patience: Don't let your emotions be ruled by today's performance. Don't be pressured into an investment you don’t yet understand or feel comfortable with. you will be stuck with investments that barely beat inflation. 'get rich quick' schemes have the worst returns. • Confidence: Let your intelligence. Also. If your expectations are unrealistically high. not because of some short-term market fluctuation. Alter your asset allocation based on changes in your personal situation. In most cases. which usually don’t work.
If you want others to handle your financial affairs for you. 24 | P a g e . or you're afraid to try it at all. or you just don't have the time or desire. Get Help If You Need It: The do-it-yourself approach isn't for everyone. there's nothing wrong with seeking professional assistance. you will nevertheless want to remain involved to some degree.8. If you try it and it's not working. to make sure your money is being spent wisely.
Chapter 1 MAJOR ROLE PLAYING INVESTMENT BANKING 25 | P a g e .
REASON FOR AN IPO When a privately held corporation needs to raise additional capital. when the market is cold. The most common reason is that capital raised through an IPO does not have to be repaid. If the corporation chooses to sell ownership to the public. they flop. By the time the general public can trade the stock. it engages in an IPO. However. it can either take on debt or sell partial ownership. since in most cases only institutional investors have access to the stock at the offering price. Sometimes IPOs are associated with huge first-day gains. a savvy and informed investor should still watch the IPO market. 26 | P a g e . Corporations choose to "go public" instead of issuing debt securities for several reasons. most of its first-day gains have already been made. A large drawback to going public is that the current owners of the privately held corporation lose a part of their ownership.INITIAL PUBLIC OFFERINGS Initial Public Offerings (IPOs) are the first time a company sells its stock to the public. Despite this apparent benefit. It's often difficult for an individual investor to realize the huge gains. Corporations weigh the costs and benefits of an IPO carefully before performing an IPO. whereas debt securities such as bonds must be repaid with interest. other times. there are also many drawbacks to an IPO. because this is the first opportunity to buy these stocks.
The process of determining the price at which an Initial Public Offering will be offered. The company will 'discover' its price Earlier.BOOK BUILDING Book building is the process of price discovery. the company issuing the shares comes up with a price band. the issue price is determined by an underwriter by analyzing these values. and when the book is closed. Instead. The book is filled with the prices that investors indicate they are willing to pay per share. The actual price is then discovered based on these bids. That means there is no fixed price for the shares. The lowest price is referred to as the floor and the highest. The issue was marketed to the general public through advertisements and a media campaign. the company determined a fixed price for the stock issue. Each investor states how many shares s/he wants and what s/he is willing to pay for those shares (depending on the price band). 27 | P a g e .Let me explain why this happens and how the IPO game works. the cap. Bids are then invited for the shares.
Venture capital can also include managerial and technical expertise. This is a very important source of funding for startups that do not have access to capital markets. Therefore. What these venture capitals do are to facilitate and enable the start up phase. through venture capital involvement. Most venture capital comes from a group of wealthy investors. but it has the potential for above-average returns. • When there is an owner relation between the venture capital providers and receivers. NEED OF VENTURE CAPITAL • There are entrepreneurs and many other people who come up with bright ideas but lack the capital for the investment. • Venture capitalists have invested in similar firms and projects before and. which cannot raise funds by issuing debt. in addition to a portion of the equity. This form of raising capital is popular among new companies or ventures with limited operating history. a portfolio 28 | P a g e . have more knowledge and experience. and how it works. so they know what works and what does not. their mutual interest for returns will increase the firms motivation to increase profits. It typically entails high risk for the investor. investment banks and other financial institutions that pool such investments or partnerships. therefore. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions.VENTURE CAPITAL Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This knowledge and experience are the outcomes of the experiments through the successes and failures from previous ventures.
While there is no legal definition of mutual fund. the term is most commonly applied only to those collective investment schemes that are regulated. A professional investment manager oversees the portfolio. MUTUAL FUND A mutual fund is a type of professionally-managed collective investment scheme that pools money from many investors to purchase securities.firm can initiate growth. Investors who no longer wish to invest in the fund cannot sell their shares back to the fund (as they can with an open-end fund). Most open-end funds also sell shares to the public every business day. available to the general public and open-ended in nature. share redemptions and fluctuation in market valuation. Their shares are then listed for trading on a stock exchange. Instead. when they are created through an initial public offering. these shares are also priced at net asset value. TYPES OF MUTUAL FUND Open-end funds: Open-end mutual funds must be willing to buy back their shares from their investors at the end of every business day at the net asset value computed that day. identify problems. buying and selling securities as appropriate. Closed-end funds: Closed-end funds generally issue shares to the public only once. The total investment in the fund will vary based on share purchases. There is no legal limit on the number of shares that can be issued. and find recipes to overcome them. they must sell their shares to another investor in the market. the price they receive may be significantly different from 29 | P a g e . Hedge funds are not considered a type of mutual fund.
at a "discount" to net asset value (meaning that it is lower than net asset value). more commonly. Like closed-end funds. It may be at a "premium" to net asset value (meaning that it is higher than net asset value) or. Unit investment trusts: Unit investment trusts or UITs issue shares to the public only once. established at creation. Investors can redeem shares directly with the fund (as with an open-end fund) or they may also be able to sell their shares in the market. partnerships. when they are created. ETFs are traded throughout the day on a stock exchange at a price determined by the market. At the end of 2010. ETFs issue and redeem large blocks of their shares with institutional investors. To keep the market price close to net asset value. buying and selling securities as appropriate. the exchange-traded fund or ETF is often structured as an open-end investment company. UITs generally have a limited life span. A professional investment manager oversees the portfolio. Unit investment trusts do not have a professional investment manager. ETFs combine characteristics of both closed-end funds and open-end funds. there were 624 closed-end funds in the United States with combined assets of $241 billion.net asset value. Exchange-traded funds: A relatively recent innovation. grantor trusts or bonds (as an exchange-traded note). though ETFs may also be structured as unit investment trusts. Their portfolio of securities is established at the creation of the UIT and does not change. However. Closed-end funds have been declining in popularity. as with open-end funds. investors normally receive a price that is close to net asset value. investments trust. 30 | P a g e .
PORTFOLIO MANAGEMENT SERVICES A list of all those services and facilities that are provided by a portfolio manager to its clients. is referred to as ‘portfolio management services’. ‘Portfolio Manager’ means any person who pursuant to contract or arrangements with a clients. Portfolio Manager: According to SEBI. which are less than perfectly positively correlated. The term ‘portfolio’ means the total holdings of securities belonging to any person. relating to the management and administration of portfolio of securities or the funds of clients. advices or directs or undertakes on behalf of the clients the management or administration of a portfolio of securities or the funds of client. Diversification achieved in different industries is an effective way of diversifying the risk in an investment. Risk Diversification An essential function of portfolio management is spread risk akin to investment of assets. Simple diversification reduces risk within categories of stocks that all have the same quality rating. as the case may be FUNCTIONS The objective of portfolio management is to develop a portfolio that has maximum return at whatever level of risk the investor deems appropriate. The portfolio managers could as well adopt the ‘Markowitz model’ whereby portfolio risk are sought to be reduced through combining assets. Efficient Portfolio: 31 | P a g e . Diversification could take place across different securities and across different industries.
It deals with attaining proportion of investments from categories. The objective of portfolio management is to analyze different individual assets and delineate efficient portfolios. Portfolio managers basically aim at stock-bond mix. The efficient set of portfolio comprises efficient frontier. Rebalancing Portfolios: Rebalancing of portfolio involves the process of periodically adjusting the portfolios to maintain the original conditions of portfolio. An efficient portfolio consists of combination of assets that maximizes return and maximizes the risk level of expected return. Beta Estimation Another important function of a portfolio manger is to make an estimate of beta coefficient. adjustments are made in such a way as to maintain the relative weighting in portfolio components according to the change in prices. It measures and ranks the systematic risk of different assets. A group of portfolio of efficient portfolios is called ‘efficient set of portfolios’.A portfolio manager aims at building ‘dominant investment’ called ‘efficient portfolio’. For this purpose equally weighted categories of assets are used. Beta coefficient is an index of the systematic risk. In constant proportion portfolio. This is useful in making ultimate selection of securities for investment by portfolio manager. 32 | P a g e . Asset allocation An important function of portfolio management is asset allocation. The adjustments may be made either by way of ‘constant proportion portfolio’ or by way of ‘constant beta portfolio’.
Indexing Another strategy employed by portfolio managers is ‘ indexing’. Securities that are held in best-known bond indexes are basically high-grade issues. This way a portfolio manager aims at distributing the funds throughout the yield curve. Barbell Portfolio Under this portfolio strategy. the portfolio manager builds a portfolio of stock. Indexing involves an attempt to replicate the investment characteristics of a popular measure of the bond market. Laddered Portfolio Under the laddered portfolio.STRATEGIES A Portfolio manager may adopt any of the following strategies as part of an efficient management: Buy and Hold Strategy Under the ‘buy and hold’ strategy. This practice is common in case of perpetual securities such as common stock. 33 | P a g e . which is not disturbed at all for a long period of time. less investment of funds is made in middle maturities. bonds are selected in such a way that their maturities are spread uniformly over a long period of time.
From the project main finding is the amounts of revenue are getting from investment banking services are equal to commercial banking revenues. Suggestions: Investment bankers have to concentrate on the advertisements. 34 | P a g e . And also they have to offer more products equal to their competitors.FINDINGS AND SUGGESTIONS Findings: Investors has to face risk for gaining profit. They have to give effective services to the clients. Investment bankers have more competition from foreign banks. Foreign banks are playing more roles in mergers and acquisition deals.
If they concentrate more on advertisement and effective services to the clients they will get more success. advisory services. 35 | P a g e . the future looks bright for the industry as a whole in India.CONCLUSION Investment banking in India. In India present scenario investment banks are playing more roles in financial markets on behalf of their clients in the form of raising funds. trading securities. But investment banks have more competition from foreign banks.
com http://en.John F Marshall and M.google.org Investment banking and brokerage.wikipedia. E.BIBILOGRAPHY • • • • www.in www. Ellis.dnsbank. probus publishing 36 | P a g e .
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