Investment banker, Financial Management

Assignment Help:

The Role of Merchant Banker

The issuer appoints the Merchant Banker (or Investment Banker) to undertake the issue activity. A Merchant Banker performs multiple functions during the preliminary issue of security. He advises and advocates the issuing firm regarding the regulations for equity issue. He also decides the timing and pricing of the issue so that the issue gets fully subscribed.

The Investment Banker performs the underwriting function for an issue and is specifically called as Underwriter to the Issue. The Investment Banker guarantees a fixed amount to the issuer in exchange of its securities for which it pays an underwriting fee. The issue is underwritten depending on the reputation of the issuer and the environment for new issues in the market. In underwriting, the investment banker runs the risk of undersubscription of issue and has the obligation to purchase the unsubscribed portion as guaranteed in the underwriting issue. So he is careful in selecting the issuer for underwriting and sometimes underwrites the issue in a syndication of Investment Bankers to reduce the risk and also discourage firms with low public image.

The Merchant Banker also performs activities like drafting and design of Offer Documents, Prospectus, statutory advertisements and marketing campaigns, and the memorandum containing salient features of the Prospectus. He also ensures that the issuer complies with stipulated requirements and completes the prescribed formalities with the Stock Exchanges, Registrar of Companies, and the SEBI including finalization of Prospectus and filing. He also performs the activity of distributing the shares through marketing channels.

 


Related Discussions:- Investment banker

Define advantages and the disadvantages of a new stock issue, What are the ...

What are the advantages and the disadvantages of a new stock issue? A new stock issue increases funds and reduces the riskiness of the firm. It as well tends to send a negative

What is dividend decision, What is Dividend Decision Determination o...

What is Dividend Decision Determination of funds requirements and how much of itwould be generated from internal accruals and how much to be sourced from outsideis a crucial

Discounted pay back period (dpbp), Discounted Pay Back Period (DPBP) : ...

Discounted Pay Back Period (DPBP) : The discounted payback period is the number of periods taken in recovering the investment outlay on the present value basis.  Discounted pa

Calculate actual returns using the dividend discount model, You've just won...

You've just won a huge $100 million lottery.  You've decided to invest your winnings in the following way:  $30 million in real estate,  $30 million in  corporate bonds and $40 mil

Define how fx futures market be used for price discovery, How can the FX fu...

How can the FX futures market be used for price discovery? Answer:  To the amount that FX forward prices are an unbiased predictor of future spot exchange rates, the market antic

Currency, You have the following limited information upon which to base you...

You have the following limited information upon which to base your decision as to which is the better of two alternative funding arrangements: ? Alternative 1 is to arrange funding

Illustrate in brokered markets in trade intermediation, Illustrate the in b...

Illustrate the in brokered markets according to trade intermediation. In brokered markets: In brokered markets, brokers execute an active search function to match buyers and

What are agency problems, What are agency problems? and between what two st...

What are agency problems? and between what two stakeholders do agency problem typically occur?

Show objections against profit maximization, Q. Show objections against pro...

Q. Show objections against profit maximization? 1) Profit cannot be ascertained well in advance to express the. Probability of return as future is Uncertain. It is not at all p

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd