Capital Market and Investment Banking Process Paper Research

Capital Market and Investment Banking Process - Research Paper Example You cannot as well borrow from friends or family members and to make matters even worse back loans are inaccessible. Thus, the end of this is that one is in need of money. At this same instance you might be having one of your friends who have established a rapport with rich persons. This makes the problem half solved since he/she can introduce you to such people. However, it is at a fee. At this point in time, this friend of yours who happens to sort you out is the investment banker. The traditional investment banking structure has major divisions. These consist of mergers and acquisitions, corporate finance, sales and trading, research and capital markets on the top of the other four. The largest of investment banks usually have highly diversified business undertakings. (Wise, 2006 pp6-8) Portfolio construction is that undertaking by an investor who portrays rationality where he/she maximizes upon returns emanating from their funds at a given risk rate or level. Any unique investment possesses a unique risk as well. The returns coming from these investments are in the way of income like dividends or interest or even capital gains. A portfolio construction follows the process presented as follows: - objectives setting, policy definition, using portfolio strategy, asset selection and assessment of performance. Objectives setting involve the determination of a given fund putting into account the underlying constraints. Policy definition follows after objectives setting and this is the process through which investors establish an investment policy. Using of portfolio strategy is the application of both the passive and active strategies. Active strategies is the prospecting of the future and variations expected. Passive strategies are the actions of purchasing securities such that they march the picked market index. Selection of assets is the decision by a fund manager regarding the specific assets to invest in. Lastly, assessment of performance is the