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    Classic question:

    * Explain Investment banking to a 5 yr old

    How would you describe it?
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    Buy low and sell high?

    Edit: In "The Bonfire of the Vanities" (Tom Wolfe), the main character (a Wall Street trader) has to explain what he does to his young daughter. Can't really remember the details, but he used the analogy of making a big cake to give to someone, and then taking the crumbs that fell off during the process...
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    Imagine you go to the sweet shop and you see loads of pretty, delicious sweets to eat. You want to buy some sherbert and licorice which costs 10p but you only have 5p. An investment banker has lots of friends with rich parents, so he'll talk to his friends and help you get the 5p you need to buy the sweets now, and all you have to do is give him and his friend 1p each next week.
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    not really sure why buy low sell high got pos rep because it's a **** answer
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    An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities.

    Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (Glass–Steagall Act) until 1999 (Gramm–Leach–Bliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation.

    There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is the "sell side", while dealing with 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) constitutes the "buy side". Many firms have buy and sell side components.
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    (Original post by i_hate_teeth)
    An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities.

    Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (Glass–Steagall Act) until 1999 (Gramm–Leach–Bliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation.

    There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is the "sell side", while dealing with 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) constitutes the "buy side". Many firms have buy and sell side components.

    I understand completely!
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    (Original post by i_hate_teeth)
    An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities.

    Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (Glass–Steagall Act) until 1999 (Gramm–Leach–Bliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation.

    There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is the "sell side", while dealing with 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) constitutes the "buy side". Many firms have buy and sell side components.
    :facepalm2:
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    (Original post by i_hate_teeth)
    An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities.

    Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (Glass–Steagall Act) until 1999 (Gramm–Leach–Bliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation.

    There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is the "sell side", while dealing with 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) constitutes the "buy side". Many firms have buy and sell side components.

    lol. first part to answering a question is understanding it.......tut. To a 5 year old eh....

    Also lol, you just copied and pasted wikipedia!! hahahaha
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    (Original post by Teenage Pirate)
    not really sure why buy low sell high got pos rep because it's a **** answer
    Well you didn't come up with an answer did you? It's meant for a 5 yr old dickwad...and I was kinda joking too, hence the question mark.
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    (Original post by therealOG)
    Well you didn't come up with an answer did you? It's meant for a 5 yr old dickwad...and I was kinda joking too, hence the question mark.
    Your answer is like answering this question with "they sell bananas"

    Sometimes it's better to shut up than to give people the wrong impression.

    Zweihander's answer is pretty good
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    (Original post by Zweihander)
    Imagine you go to the sweet shop and you see loads of pretty, delicious sweets to eat. You want to buy some sherbert and licorice which costs 10p but you only have 5p. An investment banker has lots of friends with rich parents, so he'll talk to his friends and help you get the 5p you need to buy the sweets now, and all you have to do is give him and his friend 1p each next week.
    1p/5p? That's a pretty expensive i-bank you're shopping with, mate.
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    'It's as much of a catastrophe as your mothers mind.'
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    (Original post by Teenage Pirate)
    Your answer is like answering this question with "they sell bananas"

    Sometimes it's better to shut up than to give people the wrong impression.

    Zweihander's answer is pretty good
    "Buy low and sell high" actually does have something to do with investment banking - it introduces the profit incentive - how firms make money in very simple terms. Comparing this with "they sell bananas" just indicates how stupid you are.
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    You take lego bricks from one kid and give to another kid. When he/she is finished building a castle, you take most of it away and give it to the original lego bricks owner.
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    (Original post by therealOG)
    "Buy low and sell high" actually does have something to do with investment banking - it introduces the profit incentive - how firms make money in very simple terms. Comparing this with "they sell bananas" just indicates how stupid you are.
    IBs are intermediaries and advisers, not hedge funds. "Buy low sell high" could refer to the spread they charge, but it'd be a pretty dumb way to describe a pretty small part of their business model.
 
 
 
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