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

Sales managers view on exchange risk, The sales manager considers that ther...

The sales manager considers that there will be substantial foreign exchange risk in trading with Werland. Payment is unpaid in Werland francs in three months time. The current ster

Capital Asset Pricing Model , What is Capital Asset Pricing Model? Please ...

What is Capital Asset Pricing Model? Please provide me report on Capital Asset Pricing Model. It is about 2000 words count report on topic Capital Asset Pricing Model.

Agency theory, AGENCY THEORY An agency relationship may be defined as a...

AGENCY THEORY An agency relationship may be defined as a contract under which one or more people (the principals) hire another person (the agent) to perform some services on th

Calculate the expected return and risk, QUESTION The Stock of Max Ltd ...

QUESTION The Stock of Max Ltd performs relatively well compared to other stocks during recessionary periods. The stock of Bax Ltd, on the other hand, does well during growth p

Manage Budget and Financial Report, Complete the financial reporting for ea...

Complete the financial reporting for each period and develop recommendations using the templates provided. Procedure 1. Read the case study. 2. Complete the financial reports

Compare the ifrs and gaap revenue recognition policies, SUPERVALU INC . ...

SUPERVALU INC . , a large US retail grocer, had $36.1 billion in sales for its fiscal year ended February 25, 2011. SUPERVALU currently reports using US GAAP. The controller of

Explain the definition of arbitrage, Give a full definition of arbitrage. ...

Give a full definition of arbitrage. Answer:  Arbitrage can be illustrated as the act of concurrently buying and selling the same or equivalent assets or commodities for the aim

What is allocation registers, Q. What is Allocation Registers? The obje...

Q. What is Allocation Registers? The object of allocation register is keep the heads of department of divisions districts and regions informed of the progress of expenditure by

Opposite project - net present value, A company has the opportunity to sell...

A company has the opportunity to sell an old machine. The machine is fully depreciated to a zero book value but could be sold for $5,000. If the company did not sell the machine, i

Describe the money market products, Question 1 Under a hire purchase de...

Question 1 Under a hire purchase deal structured by X Finance Ltd. for Y Corporation, the finance company has offered to finance the purchase of equipment that costs Rs. 200 la

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