Capital Markets and Investment Banking Process Paper

Capital Markets and Investment Banking Process Paper

Jamila Lewis

University of Phoenix INVESTMENT FUNDAMENTALS AND PORTFOLIO MANAGEMENT, FIN 419

Instructor: STEVEN PETRIZZI March 22, 2010

Capital Markets and Investment Banking Process Paper

Introduction

Although a crucial element in the development of commerce over the last several years, the investment banking process can be, for those who are not continually involved in it, a rather mystifying ordeal. Analyzing a business's financial performance and operations is the start of the investment banking process, in addition, the external market conditions are also taken into account. It is obvious that the important outcome and final stages of this process is to invest funds and raise capital.

Investment banks help their clients through each step of the process, leading to corporate mergers and takeovers or simply trading on the stock market. The process helps to understand how to invest and be successful while investing.

English: Diagram of private equity co-investment s...

Gold Bar and Investment Jewelry

Investment

In this paper I will analyze the investment banking process by describing this process including portfolio construction, describing the factors to consider when selecting among asset classes for an investment portfolio, describing the capital market instruments used in investment portfolio construction and lastly I will make general recommendations for the composition of an investment portfolio.

Portfolio construction

A portfolio must meet the future needs of the investor for capital. A well-maintained portfolio is vital to the investor giving him or her peace of mind. An investor can construct a portfolio to align to the investment strategies and goals. "Among the weakest sectors in the literature of investing are the elements involved in the structuring of a portfolio and the methods of implementing portfolio strategy" (Block, 1969, para. 1).

Portfolio construction involve the following elements:

Return

Risk

Diversification

Volatility

Time horizon

The aforementioned terms...