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Investment Banking
An investment bank refers to a financial institution which helps corporations, individuals, and governments in securing capital by acting as the agent during the issuance of securities. Unlike other banks, investment banks do not accept deposits.
744 Questions
What is NPV
NPV is an acronym that stands for Net Present Value.
Uses of NPV
In Capital budgeting or financial budgeting we are privy to use different metrics that inform us whether the investment is a profitable one or not. Most of these financial metrics use DCF or Discounted Cash Flows techniques in ascertaining our results.
An Example using NPV
Say someone offered you an opportunity to invest with an initial cost of $1000 and that person promised to pay four sums of money at the end of each of the next four years in the amounts of $500, $400, $300 and $100
Looking at the bare numbers we would think that the sum of $1300 provides us a surplus amount of $300 on our investment of $1000. Thus a naive person would jump to make that investment.
Here is what such a person overlooked. Something called Time Value of Money. The $500 at the end of next year is not worth $500 in today's money since money depreciates in value as time goes by.
This leads us to make sure that cash inflows in future are discounted at a rate (which for companies is the WACC or weighted average cost of capital and for you it may be the interest rate a bank offers to savings account holders if you were to invest the $1000 with them.) This interest rate or the discount rate is your opportunity cost, meaning what you will be willing to give up to gain more benefits.
Say now that the local branch of Chase Manhattan bank offers you 6% interest rate for a savings account. Now if you invested the $1000 in savings account, what would be your return on investment if you kept the money in bank for 4 years.
FV = R. (1+i)n
FV = 1000 (1+0.06)4
FV = 1000 (1.06)4
FV = 1000 (1.26247696)
FV = $1262.48
The savings account will earn you $262.48
Keeping the interest rate as our cost of capital or the discount rate, let us see how much is our initial investment worth if we invested in it instead of a savings account.
Discounted Cash Flows
$500/(1+0.06)1 = $500/1.06 = $471.70
$400/(1+0.06)2 = $400/1.1236 = $356.00
$300/(1+0.06)3 = $300/1.191016 = $251.89
$100/(1+0.06)4 = $100/1.26247696 = $79.21
Sum of DCF = $417.70 + $356 + $251.89 + $79.21
Sum of DCF = $1158.80
NPV = $1,158.80 - $1,000
NPV = $158.80
Our investment in the project will earn us $158.80 which seems less than what the bank will pay us on our savings which is $262.48. But then we would need to bring $262.48 in present value terms since $262.48 is to be realized in 4 years time
Here is how
$262.48/(1+0.06)4 = $262.48/1.26247696 = $207.91
We are still better off with investing in Savings account that will get us $207.91 instead of $158.80 with our sample project
Is chanel a public trade company?
The value of Chanel can only be estimated at $10.3 billion to $14.8 billion since they are not publically held, therefore their financials remain private.
What is Fidelity Investments DTC number?
Confirmed with Fidelity Rep this morning (5/10/2010 @11:07am). DTC is 0226.
Can a chartered accountant become an investment banker?
Yes they can, in fact it is well known that when companies look for investment bankers, chartered accountants are the types of people that they consider.
Difference between mutual funds and unit link plans?
Mutual funds are investment instruments for the common man who does not have the time or the expertise to deal directly with the stock market. An experienced investor pools in money from such customers and makes stock investments on their behalf and shares the profit/loss.
A unit linked plan is a combination of mutual funds and insurance. They also invest in the stock market but a significant portion of our investment is used up to provide the insurance coverage. ULIPs are hybrid products that provide the investor both investment in the stock markets and insurance.
Step by step process in using an Automated Teller Machine?
1. Insert card into the slot near the door to activate and open the door
2. Insert card into the slot in the ATM machine
3. Enter your secret PIN number
4. Choose your option - either withdrawal or deposit or any other service
5. Enter the amount you would like to transact and confirm it
6. Collect the receipt for transaction completion
7. Collect the card that gets returned from the machine
When will the value of the denar go up?
In 2009 the Macedonian Denar has appreciated from 48.50 Denar to 1 US Dollar to 41
(Non-interest operating Expenditure - Non-interest operating income ) / Average Total Assets
A bank with a low burden ratio is more better off. An increasing trend would show lack of burden bearing capacity
Denk een oplichter .Heb taxi bij ons gereden en niet betaald het bedrag is 1200,00 euro.Meneer laat niets van zich horen neem ook de telefoon niet op .Het is een tijd goed gegaan tot dat hij in de gevangenis terecht is gekomen .Om wat voor reden dan ook (denk dat hij ons leugens heb verteld)
En dan krijg je stank voor dank .Het bedrag staat al een jaar open.Misschien reageert hij nu op dit bericht.
Vriendelijke groet taxibedrijf First Choice.
Riek Biever
What is textual presentation data?
Textual presentation data refers to data presented in written, paragraph form. The alternative refers to graphs or other types of visual charts.
How do investment bank generate revenue?
Investment banks generate revenue for the financial services they provide to their customers by means of fee, commission, brokerage etc. for every service a customer gets out of an investment bank, he/she is charged a fee based on the type of service and the amount that is being transacted. So the more customers they have and more business they make, the more revenue they generate.
What is the average salary of an investment banker?
The average salary of an investment banker is between $75,000 and $150,000. Their actual salary varies based on their experience, the company they work for, and their success rate.
How much would you need to invest today at 8 percent compound quarterly to get 15600?
You didn't specify how long you wanted to pay in and what frequency so I made assumptions.
FV (Future Value) = $15,600
1 year = $185/month
What is the role of a sales department in a bank?
The sales department is responsible for reaching out to clients and expand the customer base of the bank. They come up with plans to attract new customers, convince them to make business with the bank, keep them happy and satisfied etc.
What are facts about investment banking?
Investment bankers advise their clients on high levels of issues of financial organization. They handle sellinga a company's stock to the public
What are different types of Indian government bonds?
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What would the monthly house payment be of 199000?
Depends on how you financed the payments, and what time period you were looking at to pay it off in.
Ball Park.. something like 30 year, somewhere between like $600-900 monthly
What are the disadvantages or scams dealing with a ICPO in finance?
ICPO's are often requested by legitmate suppliers to commit you to purchase a product and prove you have the funds. However, ICPOs can be used by scammers who do not have a product in their hand. They take your ICPO and if you're lucky will use it in a "fishing trip" trying to find your product from some other supplier. You are tied down with your bank, because you have commited that money to be spent with them. The validity of the ICPO should be as short as you can get away with, so that the scammers can't make use of it as some financial instrument to be negotiated on the money market.
