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Investment Banking

List characteristics of an investment bank

Explain how an investment bank differs from a commercial bank

Describe the functions performed by investment banks

List methods for raising capital Describe the evolution of investment

banking

Objectives

Key Vocabulary

Federal Securities Act of 1933

Financial Holding Company

Glass-Steagall Act Gramm-Leach-Bliley

Act Investment Bank Initial Public

Offering

Maturity Date Merger Panic of 1907 Securities and

Exchange commission

Subprime Mortgage crisis

Underwriting Venture Capital

A few years ago you received a Play Station 3 for your birthday. You have the Dual Shock 3 controllers, almost 20 video games, and a few Blu-ray movies to go along with it. Lately you’ve wanted to upgrade by purchasing the latest and greatest video game system; however, before you can do that, you’ll need to sell your own. You’re hoping to make at least a few hundred dollars from the sale, but you’re not quite sure how much to sell the package for. What approaches could you take to learn what it’s really worth?

Investment Banking Services

There are certain characteristics that can determine a system’s worth

What are those factors?

Investment banks are faced with similar challenges of determining values

One of the services that an investment bank provides is determining the worth or value of a company

Investment Banking Services

Variety of ways Analyzing data to review the worth of

comparable companies The current status of the company with

regard to products and services offered Long-range plans for the future to

ensure its survival

Investment Banking Services

Download: Reading- Introduction to Investment Banks and Their Services

Predict what they think one of the main functions of an investment bank will be

while they are reading they must accomplish the following tasks

Underline the characteristics of an investment bank (e.g., investment banks are financial institutions that cater to the needs of companies, organizations, and even the government)

Highlight specific services provided by investment banks (e.g., investment banks research and analyze a company’s worth)

Introduction to Investment Banks and Their Services

The function of investment banking involves:

Capital raising methods Mergers and acquisitions Investment banks Services are essential to maintain a

growing and healthy economy

Introduction to Investment Banks and Their Services

Term Category Characteristics

A commercial bank is a

Financial institution that usually

1. Offers a range of deposit accounts

2. Makes a loan to individuals and businesses

3. Safeguards documents, money, and other item of value

An investment bank is a

Financial institution that usually

1.2.3.

Investment Bank

What is an I.P.O.? Why would a company issue an I.P.O.? What does an investment bank have to do with an

I.P.O.? What is underwriting stock? How does a bank get money from being a part of

this I.P.O.? What determines if an I.P.O. is successful or not?

Group Work

At your table look up information about a recent I.P.O. filing. This will be first come first serve per company.

Determine what the company does to receive revenue What investment bank was involved? How many shares were issued and at what price?

What was the market value of the company then and now? Use end of the day numbers Market value=share price*#of shares outstanding

Was this a successful I.P.O.? How many times can a company have an I.P.O.?

1 minute presentation

Commercial banks are primarily concerned with an individual’s wealth

Investment banks handle the wealth of companies, organizations, extremely wealthy individuals, and even governments

Investment Bank

The line between what was an investment bank and a commercial bank is blurred

Banks in general are taking a broader approach to the services they offer

Investment Bank

Download- Graphic Organizer: Cause and Effect

Presentation

Evolution of the Investment Bank

What type of economic effects (both positive and negative) has the investment industry had on the economy?

The Influence of Investment Banking on Society

What type of social effects (both positive and negative) has the investment industry had on society?

The Influence of Investment Banking on Society

Characteristics of an investment bank Services of an investment bank Capital raising methods Underwriting Bulge bracket to boutique

Investment Banking

You will have the next 15 minutes to create one or two short-answer questions based on the list of key ideas provided

Investment Banking

Quiz: Overview of Investment Banking

Overview of Investment Banking

Think about your project topic and of the different ways they will be communicating information about the topic to the audience at the financial literacy fair

display board brochure, talking about the topic with visitors to

their booth

Culminating Project Work: Investment Banking

What have you learned in this lesson that can help you improve your culminating project products?

Identify and describe three ways in which the information you’ve learned in this lesson could improve your culminating project products.

List the places you’d like to make the edits. That is, identify which product or products should include the new information

Culminating Project Work: Investment Banking

Based upon your learning from the lesson, respond to the prompt written below.

Work in groups of four to share their predictions with one another.

Choose one prediction that they think is the most reasonable to share with the rest of the class.

In the next 10–20 years, the investment banking industry will be characterized by…

Enrichment

With the current turmoil surrounding the financial services industry, synthesize your knowledge of investment banks and create classic “wanted-style” posters based on the types of ethical standards that you would like investment banks to adopt.

Use a standard 8.5 x 11 paper and write “WANTED INVESTMENT BANK” at the top

Underneath the heading, create three ethical standards and/or regulations that you would like investment banks to abide by

Enrichment

Read the article “Wall street investment banks have a way of snookering commercial rivals” (http://www.telegraph.co.uk/finance/breakingviewscom/4324677/Wall-Street-investment-banks-have-a-way-of-snookering-commercial-rivals.html).

Investigate various examples of commercial banks acquiring investment banks.

Enrichment

Watch the short video clip found at http://www.labnol.org/internet/credit-crisis-explained-in-simple-english/7431/

Research how investment banks have contributed to the financial crisis of today and share your findings with the class

Enrichment

Have students write a personal essay in response to the following quote (found online at http://moneyover55.about.com/od/howtoinvest/a/bernsteinquotes.htm): “The Glass-Steagall Act separated

commercial and investment banking. This last statute has recently been repealed. Sooner or later, we will likely painfully relearn the reasons for its passage almost seven decades ago.”

Enrichment

Research various investments banks and other financial institutions that offer investment banking services. Have students choose an institution to write about and prepare a short essay that describes the history, the services provided, the main products offered, and the current financial situation.

Enrichment

Information Technology: Every year global leaders attend the World Economic Forum in Switzerland. During the 2009 meeting, the Davos Debates were launched and included responses from individuals around the world. In light of some of the major events that have shaped the investment banking industry, have students create their own podcasts or videos that respond to the 2009 Davos Debate question: “Should company executives have a code of ethics similar to doctors and lawyers?” Cross-Curricular

Integration