Investment Banker Question?
Is being an Investment Banker a popular prospective for kids these days?
What is the salary for an Investment banker? (please give a figure)
What do investment bankers do?
Is it very challenging to be an Investment banker? I don’t mean long hours, more on the lines of the difficulty of work and the road to becoming an Investment banker.
Investment Banking is sought after because you can be a 22 year old college grad earning $150,000 per year. Kids see that, and want the money. You need top grades in a respected university, a winning track record, and the right personality to stand a chance of getting an offer, as the field is extremely competitive. As an undergrad, you can only stay an Analyst for two years, three if you’re amazing, after which you will be expected to get your MBA.
Your base pay as an Analyst is usually as low as $50,000, but your bonus can be four times your base. After MBA, you can become an Investment Banking Associate, earning up to $300,000 with bonus. After a few years as an associate, you can become a Vice President, then a Managing Director. Your pay depends on the firm you work for, and your bonus generally grows every year, and with every level. Bonus is determined by how much money the firm made, and how well you performed.
Beyond the pay, the life of a banker is very tough, and the job itself will suck for at least the first two levels and five years of your career. As an Associate, you can expect some weeks where you put in up to 20 hours per day, 3/4 of it staring at Excel spreadsheets or PowerPoint slides.
As for the work itself, the nature of the work changes through the ranks. When a corporation is looking to raise money, to sell itself to a bigger company, to buy a smaller company, or to do any other number of things needing big money, capital markets, and complex finance, they call the bankers. The reason they call one bank over another is because the MDs job is to create and maintain relationships with corporate leaders for the purpose of generating future business.
Once the MDs bring in business, VPs rally the troops and tell the Associates what’s needed. The Associates then get the Analysts to do the most mundane, tedious, and boring work while they proofread, and assemble the materials. VPs often lead presentations to clients, and keep the pressure on the lower ranks to keep to deadlines. The work in the lower ranks is not extremely hard, but it does require supreme knowledge of Excel, good math skills, good finance skills, and general smarts.
The hardest part about banking in the lower levels is keeping yourself motivated. You have no life outside of work, with the exception of getting drunk with your coworkers on occasion, and whatever you can squeeze into the few free hours you have every week. It’s extremely tough to maintain relationships, especially with people who don’t really understand what you do, or why a job would keep you occupied 6-7 days a week for long hours. This field is for certain A-type personalities, and very driven, and efficient people.
what are green investment?
some green investment projects. benefits or advantages of green investments. why green investment?
Green investment projects include setting up power plants that use renewable resources such as solar, wind, and hydro power. It also includes developing new technologies for energy production that do not include fossil fuels. These include bio-fuels, tidal power, and fusion power. The advantages of green investments are many. The first is that you can get an unlimited return on your investment. For example, once you buy solar panels, you need very little upkeep to generate electricity. Another benefit is that the energies from green technologies are created from renewable sources which are self-sustaining. With coal for example, you need to keep putting coal into your generator. Eventually, our supply of coal will run out. Finally, green technologies produce no pollution. That is better for our environment and better for ourselves. People should make green investments as a strategy for long term monetary returns in the energy sector. Eventually fossil fuels are going to run out. Green energy will be the future.
Edit: Elizabeth. Nuclear fusion is green. I think you are thinking of nuclear fission. They are two completely different things.
Edit: Elizabeth. Nuclear fusion does not use uranium. It uses hydrogen. It involves “fusing” two hydrogens together to form helium similar to the way that stars do.
What yearly profit share or ownership percentage should a 20K investment in a restaurant yeild?
It’s more a matter of what return would entice an investor to invest $20k. You have to view the investment from the investor’s viewpoint.
Typically one would deem it reasonable to at least be able to meet the return of the US 10 year treasury bond with little or no risk hence that rate is often used as a proxy for the Risk Free Rate and is currently 3.158%. If you assume that the investment was to be held for three years and could then be liquidated for the same value that you invested in the first place then it would be similar to a bond with a face and market value that were the same hence the rate of return would be that of the annual cash flows. However a restaurant is not without risk, Business Week says that contrary to the many statements people make about how probable a restaurant failure is, it’s 1 in 4 in the first year and 3 in 5 over three years (see link for reference). This means that there is a 1/4 chance of not receiving any money back, a ( 3/4 * 1/4 ) chance of receiving only the first year’s cash flow and nothing else, a ( (3/4)^2 * 1/4 ) chance of receiving the first two year’s worth of cash flows and nothing else and a (3/4)^3 chance of receiving all three year’s worth of cash flow plus the salvage value of $20k. Of course there are some basic assumptions here such as that unless you default, you will get a set amount from the profits not a percentage of a variable amount but this is just to illustrate how to value the investment from the investor’s perspective. It’s basically an IRR valuation but with a Fermat expected value calculated from the probabilities of the various scenarios. From such a calculation, the rate of return would be such that the following equation would be satisified:
20k = (3/4) * (1/4) * R * 20k / (1.03158 ) + (3/4)^2 * (1/4) * R * 20k * ( 1/(1.03158) + 1/(1.03158)^2 ) + 3/4^3 * ( R * 20 k / (1.03158) + R * 20k / (1.03158)^2 + (1 + R )* 20k / (1.03158)^3 )
Through iterative numerical methods, the rate turns out to be 37.54% so the investor would want to receive about $7,508 in income per year plus receive his $20,000 back after three years in order for the investment to be competitive with a 3.158% per annum investment opportunity given the much higher risks of investing in the restaurant business.
The number crunching is a little complicated to generalize to a hold forever analysis but it is possible to do so as it becomes the summation of a geometric sequence. It’s also possible to generalize the equations for an arbitrary hold period, for arbitrary salvage values etc. The most realistic analysis is if earnings forecasts are available, but even this back of the napkin analysis shows that due to the high risk of failure, a very high risk premium should be associated with restaurant investments.
what is an Investment Advisor?
Pls i have an interview 2moro, and i don’t know about the question they will ask me regarding Investment Advisor, i need help on this. thanks
Investment Advisor is somewhat of a generic term. But usually an investment Advisor is a person who gives advice on what to invest in, for a fee. Some get paid by commission on the investments they recommend. Or they get paid just for their advice, either by the hour or by how much money they manage. Investment advisors, unlike stock brokers, have a fiduciary responsibility to their clients to act in their best interests.
What is an investment bank?
What is an investment bank?
Do they finance for a project?
Investment bank is sort of a super bank. They are the bank the commercial (regular) bank uses. Investment banks underwrite bonds, stocks. In the last few years, Investment banks would buy mortgages from commercial banks, bailed them and sold them as mortgage bonds.
Lets say you your company wants to build a plant for 1 billion dollars. The investment bank will underwrite a bond issue to finance the project, while collecting lots and lots of fees.
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