Careers in Finance

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As the question stumbles over every aspiring MBA’s mind as to what he/she would try to venture into having pursued a specialisation in Finance, I have made an attempt to find an answer. Having brain stormed with friends, seniors, some colleagues and professors, I have come up with some possible job positions we could look for in Finance and the nuances in them. The list isnt exhaustive, and may not cover several dimensions that I am unaware of also! It is an attempt tht I made to know about my interests and wanted to share it with all. Hope it helps!

Investment Banking/Corporate Finance

When a Firms needs money to fund its projects of expansion, etc. it employs brokerage firms or in other words Investment Banking firms. The duty of an Investment banker is to get funds for the firm who is his/her client. Those funds he gets from the Investors like High networth Individuals (HNI) or Individual (Retail) Investors.

Actually between the terms Investment Banking and Corporate Finance there is a very thin line of difference. They are actually two different career related areas for us. Corporate finance is that area where you deal with the finances of the firm in which you work. You take care of the Investment, Financing, Dividend decisions on behalf of the firm.

Usually what happens is that the Corp Fin ppl work closely with the Investment Bankers in the projects that Brokerage firms do for the Clients (here the Firm). Hence, with time those two areas got merged. Corp fin managers are paid less than the Investment bankers since the latter are the consultants. (As you know, consultants are paid higher for doing nothing )

Again the Brokerage Firms there are two types of ppl. One type of ppl work with the firms (as mentioned in the above paragraph). The other type of ppl work at the Investors side. It is their duty to ensure assured returns to the investors. It is their headache where they want to invest those money (Capital Mkt, bonds, etc.)

One more thing that Investment bankers do is in the Mergers and Acquisitions area. In this case also they work closely with the Corp fin managers within the firm that wants to acquire or merge with another firm XYZ.

As a part of MnA activity they (Investment Bankers) do the following stuff:

• Making a Pitch Book
• Due-Diligence

-    Takeover Strategy

-    Acquire

-    Integration Strategy

They also advise the firm on how to finance the money required for the acquisition…i.e whether to go for debts or equity or both and they also advise them regd the proportion of both debt and equity to go for.

As you might be reading in the papers daily, there are a lot of mergers and acquisitions going on across various sectors.. so that means that the investment bankers are more in demand.

Few examples of the brokerage firms (also sometimes called as Investment Banking firms) are : JPMorgan, UBS, Lehmann Bros, etc..

Areas in Capital Market

A country’s capital market is the backbone for its economy. The performance of the capital market explains many things like the Savings, Investments, growth of the companies, growth of the economy, etc.

There are two types of firms:

Buy Firms:  These firms purchase stocks/bonds for the investors using the money that has been pumped into the system by the investors (both Institutional and Individual). The finance managers sitting in the Buy Firms analyse the sectoral reports (published by the brokerage firms like UBS, Citigroup, Morgan Stanley, etc) and stock related reports and make decision regarding which stocks to purchase for the maximum returns to the investors.

 Sell Firms:  These are nothing but the brokerage firms that publish the sectoral reports and stock related reports and lure the managers sitting in the buy firms or other investors for purchasing the stocks. The duties of the Financial Managers sitting in the Sell firms is to analyse the sectors, impacts of various activities on the sectors, analyse the stocks and generating reports, Equity Research, etc.

 Other areas in Capital Markets:

 Investment Management / Asset Management: In this area, the managers manage the funds collected from the investors by assuring some returns to them. They are popularly called as Fund Managers.

Areas in Banks

•    Relationship Managers
• Corporate Banking
• Retail Banking
• Treasury Management
• Portfolio Management
• Credit Analyst

 Few more areas include:

 Financial Risk Management

MicroFinance

 Useful Websites:

www.vault.com

www.domain-b.com

www.investopedia.com

 Useful Certifications:

•  CFA
• PRIMA
• GARP
• NSE Certifications

Knowledge is Power, you become more powerful by sharing it! Lets make this blog the best learning resource!

Venkat Krishna

Class of 2008

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