Can some one explain to me what an investment bank is in simple terms?

[Shweta]

And what kind of jobs can you get in an investment bank


Thank you!

[GOD]

an investment bank is different than a bank that you deposit money in. Some well known investment banks are Goldman Sachs, JP Morgan, and others.

An investment bank doesn't serve people, they serve other companies. Their main job is to help coordinate IPOs for companies that want to go from being private companies to public companies.

Facebook had an IPO last May. That was a pretty big news item so you probably heard about it. When FB when public, they hired 5 different investment banks to help coordinate the IPO. They made a deal with the investment banks that they would get a set fee for helping to coordinate it, and that would be paid with the proceeds of issuing stock.

These 5 investment banks created millions of shares of facebook stock and sold them on the stock market for about 42 dollars a share. This created a large amount of money that belongs to facebook. The investment banks took their fee out of that pool of money and gave the rest to facebook.

There are more details about this event that aren't relevant to your question but if you are interested i'll tell you.

The 5 investment banks sold the shares of facebook for $42 a share, except the market wasn't willing to pay that much for facebook. The banks artificially inflated the price to keep it above $35 even though the market was supposed to go down. The various banks were sued, and so was the exchange they were sold on because of all the problems associated with it. The banks blocked sales of stock so the price could stay high. It cost investors lots of money. It was a big scam and a few days later facebook tanked to about $20 a share.

Facebook isn't a very good company, they actually should be worth about $10 a share, but the general public is too excited about social media to allow it to go down.