Investor Profile

Essay by swampgrlUniversity, Bachelor's September 2008

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Investment BankMany organizations such as Wal-Mart use investment banks for a multitude of reason. A few reasons for using investment banks are mergers, acquisitions, and selling securities to investors. One of Wal-Mart’s investment banks is investment banking giant Goldman Sachs. In August of 2007, Wal-Mart worked with Goldman Sachs to invest $ 1 billion in Global Hyatt Corporation. This is just one example of how corporate organizations use investment banking. Investment banks also own many of the stock broking firms. Merrill Lynch is an example of an investment bank that owns a stock broking firm. Investment banks are use for many purposes when large amounts of money are involved and are trusted by the world’s largest organizations.

Intermediaries RoleWhen a company wishes to enter a financial market it can do so directly or through intermediaries. Financial intermediaries have an added benefit over trading directly and are known to have a lower risk factor because the intermediary can diversify its funds into financial products like mortgage, insurance or investments.

The most important benefit to an intermediary is the ability to invest, loan, or save but still having the ability to maintain liquidity. If Wal-Mart was to loan money directly to an individual or business the lent money is now an illiquid loan because the loan on a building or house is illiquid. In a pinch the company could pull funds out of intermediaries to pay for short term debt. Intermediaries allow the company to save, invest and earn returns on the money invested but does not have the drawback of having to freeze assets for an extended time.

Security RegulatorsIn so much as Wal-Mart is a publicly owned corporation, meaning that said company is listed stock exchange with shares for purchase, the government agency that is responsible for overseeing the securities,