Legal Definitions - investment bank

An investment bank is a financial institution that specializes in helping businesses acquire financing, particularly through the sale of securities. Unlike traditional banks, investment banks do not accept deposits or deal with the public at large. Their primary purpose is to assist businesses in raising capital by underwriting and selling securities such as stocks and bonds.

For example, if a company wants to raise money by issuing stocks, they may hire an investment bank to help them with the process. The investment bank will underwrite the stocks, meaning they will purchase them from the company and then sell them to investors. The investment bank may also provide advice on pricing and marketing the stocks to potential investors.

Another example is if a company wants to issue bonds to raise money. The investment bank will help the company structure the bond offering, determine the interest rate, and then underwrite and sell the bonds to investors.

Overall, investment banks play a crucial role in helping businesses raise capital and grow their operations.