Sell- side firms primarily provide investment products and services; they are typically investment banks, brokers, and dealers. Buy- side participants purchase these investment products and services from sell- side firms.

Investment management involves the analysis, selection and evaluation of investment projects, taking into account risk and return. The purpose of investment management is to choose the investment that would give the greatest benefit (income) and was accompanied with the least risk.

“Investment services” is a general term used to describe a whole range of activities related to investments in financial instruments. Typically, the most common forms of investment services are the following: The provision of portfolio management services (collective or discretionary).

Functions of Investment Banking

• #1 – IPOs.
• #2 – Merger and Acquisitions.
• #3 – Risk Management.
• #4 – Research.
• #5 – Structuring of Derivatives.
• #6 – Merchant Banking.
• # 7 – Investment management.

Broadly investment bankers (investment banking firms) perform three functions: Investigation, Analysis and Research (Origination), Underwriting (Public Cash offerings) and Distribution.

The primary goal of an investment bank is to advise businesses and governments on how to meet their financial challenges. Investment banks help their clients with financing, research, trading and sales, wealth management, asset management, IPOs, mergers, securitized products, hedging, and more.

In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. Investment plays a crucial role which differentiates the developed, developing and underdeveloped countries.

There are three main types of investments:

• Stocks.
• Bonds.
• Cash equivalent.

More commonly investors will be paid back in relation to their equity in the company, or the amount of the business that they own based on their investment. This can be repaid strictly based on the amount that they own, or it can be done by what is referred to as preferred payments.

It leads to increase in the levels of income and production by increasing the production and purchase of capital goods. Investment thus includes new plant and equipment, construction of public works like dams, roads, buildings, etc., net foreign investment, inventories and stocks and shares of new companies.

The two components of investment are fixed investment and inventory investment.

Thus investment is everything that remains of total expenditure after consumption, government spending, and net exports are subtracted (i.e. I = GDP − C − G − NX ). “Net investment” deducts depreciation from gross investment. Net fixed investment is the value of the net increase in the capital stock per year.

The overall level of investment depends on three factors: (i) the investment demand of firms, (ii) the funds available for market, and (iii) the volume of investment goods produced. Interest rates and the prices of investment goods move to balance the three factors.

Once you know that, you can start to build an investment strategy that will help you reach your objective with the least amount of risk possible. We find that most successful approaches include these four elements: effective diversification, active management of asset allocation, cost efficiency and tax efficiency.

9 types of investment risk

• Market risk. The risk of investments declining in value because of economic developments or other events that affect the entire market.
• Liquidity risk.
• Concentration risk.
• Credit risk.
• Reinvestment risk.
• Inflation risk.
• Horizon risk.
• Longevity risk.

Microeconomic theory

• Consumer demand theory.
• Production theory.
• Cost-of-production theory of value.
• Opportunity cost.
• Price Theory.
• Supply and demand.
• Perfect competition.
• Imperfect competition.

Microeconomics uses a set of fundamental principles to make predictions about how individuals behave in certain situations involving economic or financial transactions. These principles include the law of supply and demand, opportunity costs, and utility maximization. Microeconomics also applies to businesses.