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Chapter 16: Problem 1

Define: a. investment bank b. dividend

Short Answer

Expert verified
a. An Investment bank is an intermediary institution that facilitates the issuance and distribution of securities. It also provides consultation services in the event of mergers and acquisitions. \n b. A Dividend is a portion of a company's earnings that is distributed to its shareholders in cash or additional shares.

Step by step solution

01

Definition of an Investment Bank

An investment bank is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities. Additionally, an investment bank may also assist companies involved in mergers and acquisitions (M&A), and provide ancillary services such as market making, trading of derivatives, and equity securities.
02

Definition of a Dividend

A dividend is a payment made by a corporation to its shareholders, usually in the form of cash dividends, or additional shares known as share dividends. It's essentially a portion of the company's earnings that is distributed to the shareholders. The amount of dividend is decided by the board of directors and it depends on various factors such as the company's profit, reserve capital, and dividend payout policy.

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