The investment banker is someone who buys large new issues of stocks and then sells them to the public after their price has risen.

Question

Quizplus · Accepted Answer

The investment banker acts as an intermediary between the company issuing the stocks and the public investors. They help the company determine the appropriate price for the new issue of stocks and underwrite the stocks by buying a large portion of those stocks. After that, they sell those stocks to institutional and retail investors, but their goal is not necessarily to sell them after the price rises. They earn their profit through underwriting fees and the difference between the price they paid for the stocks and the price they sold them for.

The Investment Banker Is Someone Who Buys Large New Issues