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3 years ago

How is an investment bank different from a commercial bank

Mathematics

2 answers:

NemiM [27]3 years ago

8 0

My answer -
Commercial banks borrow and lend money that they hold on their balance sheets.
They hold depositors' money in instruments such as savings accounts and CDs.They earn profits based on the difference in the interest rate at which they charge borrowers and the interest rate at which they give depositors.
Investment banks match institutions who want to borrow money to institutions who want to lend money. However, unlike commercial banks, investment banks simply intermediate these transactions and don't hold much capital themselves.
These transactions can be in the form of debt or equity, whereas commercial banks generally only deal with debt.Investment banks are compensated on a transaction-basis rather than an interest spread.

P.S

Happy to help you have an AWESOME!!! day ^-^

ArbitrLikvidat [17]3 years ago

6 0

An investment bank different from a commercial bank because investment banking includes activities like underwriting security issued by the company and providing advisory services on acquisitions and mergers while commercial banking is engaged in activities like taking deposits and granting loans.

Further Explanation:

Difference between an investment bank and a commercial bank:

Investment bank:

• It includes activities like underwriting security issued by the company and providing advisory services on acquisitions and mergers. They also provide portfolio management services.

• It caters to the need of the common person.

• It is less exposed to risk.

• It is related to the secondary market.

• The account cannot be opened by everyone in investment bank.

Commercial bank:

• It is engaged in activities like taking deposits and granting loans. The charge interest on loans and pay interest on deposits. It also provides ancillary services like locker facility and traveller check.

• It caters to the need of the corporate firms.

• It is more exposed to risk.

• It is related to the primary market.

• Everyone can open an account in the commercial bank.

Learn more:

1. Learn more about the low liquidity bank accounts

brainly.com/question/2953973

2. Learn more about the traditional saving account

brainly.com/question/2652429

3. Learn more about the role of money

brainly.com/question/12984919

Answer details:

Grade: High School

Subject: Business Studies

Chapter: Money and Banking

Keywords: An investment bank, a commercial bank, different from, activities like taking deposits and granting loans, underwriting security issued by the company, the company and providing advisory services.

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