Investment Banking

What is the difference between commercial and investment banking?

Commercial bank: accepts deposits from customers (retail depositors, commercial depositors etc. and makes consumer and commercial loans using these deposits. It may also offer anciliary services like credit cards Investment bank: acts as an intermediary between companies and investors. Does not accept deposits, but rather sells investments, advises on M&A, etc. Loans and debt/equity issues…...

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How much dividend should we declare? Is there an alternative?

Dividend should be declared based on future needs of the organisation. If the company has positive NPV projects available do not declare dividend, else do. Alternatives to distribution of dividend: Buy back of shares: This comes out with advantages such as a. When the growth potential is limited they use unused cash to buy back…...

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Difference between broad money and narrow money?

The term “narrow money” typically covers the most liquid forms of money, i.e. currency (banknotes and coins) as well as bank-account balances that can immediately be converted into currency or used for cashless payments (overnight deposits, checking accounts, etc). Broad Money is M3 M0 is the sum of Currency in Circulation, Bankers’ Deposits with RBI,…...

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What SLR, CRR, REPO, Reverse Repo and rates?

CRR is a reserve maintained by banks with the RBI. It is a percentage of the banks’ deposits maintained in cash form. SLR is an obligatory reserve that commercial banks must maintain themselves. It is a percentage of commercial banks’ net demand and time liabilities, maintained as approved securities. These are defined liquid securities. Repurchase…...

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IPO AND BOOK BUILDING PROCESS

An initial public offering (IPO) is the first time that the stock of a private company is offered to the public. (HDFC Standard life Insurance) (Biggest IPO – COAL INDIA – 15200cr) Book building is the process by which an underwriter attempts to determine at what price to offer an initial public offering (IPO) based…...

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