Chapter 10

Understanding Stocks and Focusing on Past Transactions

In This Chapter

arrow Understanding what stock is and what types of stock are available

arrow Seeing how stocks are priced by the markets and how that affects investment banking

arrow Examining past financial transactions for clues about pricing

arrow Examining marketplaces for companies that haven't yet filed to sell shares to the public

arrow Analyzing past transactions to get a grasp on what the market will bear

Much of what investment bankers do is based on complex mathematical formulas, ratio analysis, and forecasting. In other words, investment bankers are pros at making educated guesses about all things financial, ranging from what companies are worth to how much an asset should sell for.

The ability to formulate reasonable hypotheses is a key aspect of investment banking. After all, investment bankers are often in the situation of having to sell investment products that have never been sold before and, thus, are difficult to value based ...

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