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Chapter 5: Q1DQ (page 493)

In what way is an investment banker a risk taker?

Short Answer

Expert verified

An investment banker immediately acquires the securities and assumes all associated risk.

Step by step solution

01

Investment banker

Investment bankers are professionals who serve their clients in raising capital and assist them in the case of mergers and acquisitions.

02

Investment banker as a risk taker

When raising capital for a client, an investment banker immediately buys the securities such as bonds and stocks.

The riskof changing rates is there in such a scenario that occurs due to the time gap between buying and selling securities.

In such a way, an investment banker is a risk-taker.

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