Continue from the 1st episode.

Level 4

Investment bank shows up, a middle man for equity investment, which is the investment in higher risk and higher reward.

Banks need to take risks themselves when investing money out, which means people can get their returns even the bank fails in investment.

But Investment banks don’t take risks, they only earn service fee.

Level 5

Your business is getting better and better, and you need more money, so you choose to IPO, which means people can buy your stocks to invest in you.

Nowadays

Nowadays, no matter what you want to get from the capital market, investment bank can help you, like share issuance, debt issuance, or IPO.

Summary

All financial services do 2 kinds of things:

  1. Allow people to invest in various projects with different risks, to get different level of returns.
  2. Projects with different risks have someway to get their needed money.

There are 3 kinds of roles in the financial world:

  1. Financiers, who need money, like entrepreneurs.
  2. Investors, who want to get more money from their money, like ordinary people and venture capital.
  3. Intermediaries, who connect different financiers with corresponding investors, like banks and investing banks.

Acknowledgement

Thanks for Lindsay’s video, which is the source of knowledge in this post.