What’s involved in corporate finance?
Corporate financiers help their clients grow by assisting them to raise money or helping them acquire or divest themselves of other businesses. As it is difficult to grow out of profits alone, companies that wish to expand need to raise money, and they can do this in one of two ways. First, they can issue shares (equity capital). Purchasers of the shares receive money from dividends and will benefit if the shares go up in price. Alternatively, companies can issue bonds (debt capital). Bonds are promises to pay both a fixed amount of interest for the life of the bond and to pay back the initial investment at the end. For this reason they are known as fixed income. Discovering the correct price for a bond or share issue is where a lot of an investment bank’s expertise lies. It is both complex and crucial, because investment banks are making money on the fees they charge, and because they underwrite the issues. If investors are not interested, the bank will lose money. In fact, the whole
