Book Description

  • Get started in investment banking
  • Ace your investment bank course
  • Navigate bull and bear markets

Excel in the world of investment banking

One of the most lucrative fields in business, investment banking frequently perplexes even banking professionals working within its complex laws. Investment Banking For Dummies remedies common misconceptions with a straightforward assessment of banking fundamentals. This book tracks to typical university courses on the subject and helps students and professionals understand the fundamentals of investment banking. With new and updated content, this edition addresses the major financial changes that have occurred in recent years.


  • Key investment banking operations
  • Strategies for risk management
  • Advice on cryptocurrencies
  • Updated IPO coverage
  • Discounted cash flow analysis
  • Mergers and acquisitions
  • Structuring a leveraged buyout
  • Resources for investment bankers

Table of Contents

  1. Cover
  2. Introduction
    1. About This Book
    2. Foolish Assumptions
    3. Icons Used in This Book
    4. Beyond the Book
    5. Where to Go from Here
  3. Part 1: Getting Started with Investment Banking
    1. Chapter 1: Introducing Investment Banking
      1. What Investment Banking Is
      2. How Investment Banking Is Done
      3. Turning Into an Investment Banking Pro
      4. Putting Investment Banking to Work
    2. Chapter 2: The Purpose of Investment Banking: What Investment Bankers Do
      1. Putting the For-Sale Sign on Corporate America
      2. Helping Investors Decide Whether to Buy or Sell
      3. Digging Into the Role of the Trading Desk
    3. Chapter 3: How Investment Bankers Sell Companies
      1. Getting Companies Ready for Sale on Public Markets
      2. Seeing What Sell-Side Analysts Do
      3. Examining a Sample Research Report
    4. Chapter 4: How Investment Banking Is Used in Mergers and Acquisitions
      1. Come Here Often? The Basics of Mergers and Acquisitions
      2. Tools Used to Analyze the M&A Deal
      3. Why Many M&A Deals Go Wrong
    5. Chapter 5: How Investment Banking Is Used in Leveraged Buyouts
      1. In This Corner: Introducing the Players
      2. Aiming for the Right Targets in a Leveraged Buyout
      3. Finding the Exit
  4. Part 2: Digging In: Performing Investment Banking
    1. Chapter 6: Finding the Data: Documents and Reports
      1. Finding What You Need on the Securities and Exchange Commission’s Website
      2. Getting Data in a Format You Can Work With
      3. Paying Attention to the Non-Financial Information
    2. Chapter 7: Making Sense of Financial Statements
      1. Income Statements
      2. Balance Sheets
      3. Statement of Cash Flows
      4. Proxy Statements
    3. Chapter 8: Perfecting the Financial Ratios for Investment Banking
      1. Valuation Multiples: Assessing How Much the Company Is Worth
      2. Liquidity Multiples: Checking Companies’ Staying Power
      3. Profitability Ratios: Seeing How a Company’s Bottom Line Measures Up
      4. Efficiency Ratios: Knowing How Well the Company Is Using Investors’ Money
    4. Chapter 9: Sizing Up the Industry
      1. Performing an Industry Analysis
      2. Unearthing Company Trends and Common sizing the Financial Statements
      3. How a Company Stacks Up: Comparing the Key Ratios
    5. Chapter 10: Understanding Stocks and Focusing on Past Transactions
      1. Introducing Stock
      2. Finding Past Transactions
      3. Analyzing Past Transactions
    6. Chapter 11: Applying Investment Banking to Fixed Income
      1. Introducing Bonds
      2. Identifying the Various Types of Bonds
      3. Knowing Their Place: The Position of Bondholders
      4. Understanding Bond Pricing
      5. Tracking the Bond Market
      6. Debt or Equity: How a Company Chooses
  5. Part 3: Taking Investment Banking to the Next Level
    1. Chapter 12: Doing a Discounted Free Cash Flow Analysis
      1. Gearing Up for Discounted Free Cash Flow
      2. Calculating the Weighted Average Cost of Capital
      3. Going for Terminal Value
      4. Valuing a Share of Stock
    2. Chapter 13: Structuring a Leveraged Buyout
      1. Seeing How Leveraged Buyouts Are Structured
      2. Building a Leveraged Buyout Model
    3. Chapter 14: Determining the Strength of a Company’s Return on Equity
      1. Understanding the Importance of Return on Equity
      2. Using a DuPont Analysis
      3. Interpreting the Results
  6. Part 4: Applying Investment Banking
    1. Chapter 15: Knowing the Rules
      1. The History of Regulation of Investment Banking
      2. The Ins and Outs of Modern Investment Banking Rules
      3. The Rules on Analysts
      4. Why Simply Making Rules Isn’t Enough
    2. Chapter 16: How Some Companies Lie, Cheat, and Steal Their Way to the Top
      1. Did You Really Sell That? When Companies Aggressively Report Revenue
      2. Lucy, You Got Some ’Splainin’ to Do: When Companies Understate Their Expenses
      3. Missed It by That Much: When Companies Overstate Their Financial Position
      4. Keeping Investors Off-Balance
      5. What Should an Investment Banker Do?
    3. Chapter 17: Understanding Alternative Investments and Asset Management
      1. Knowing Your Alternatives
      2. Digging Into Asset Management
      3. Managing Potential Conflicts with Clients
    4. Chapter 18: Trying Your Hand at Investment Banking with a Case Study
      1. Setting the Scene
      2. Considering the Options
      3. Creating the Analysis
      4. Structuring a Deal
      5. Success or Failure
  7. Part 5: The Part of Tens
    1. Chapter 19: Ten of the Biggest Debacles in Investment Banking History
      1. The Dot-Com Boom and Bust
      2. Tainted Research Scandals
      3. Enron and the Accounting Scams
      4. The Mortgage Debacle and Collapse of Lehman
      5. The Flash Crash
      6. The London Whale at JPMorgan Chase and Barings Bank
      7. Long-Term Capital Management
      8. Bankruptcy in Jefferson County, Alabama
      9. IPO Allocations with CSFB
      10. Bad Mergers and Acquisitions Like AOL Time Warner
    2. Chapter 20: Ten Ways to Improve a Discounted Cash Flow Analysis
      1. Financial Analysis Isn’t Physics
      2. Show Your Sensitive Side
      3. Monte Carlo Isn’t Just for High Rollers
      4. What Can Go Wrong Will Go Wrong
      5. It’s Tough to Make Predictions, Especially about the Future
      6. The Investor of Today Doesn’t Profit from Yesterday’s Growth
      7. Garbage In, Garbage Out
      8. Rates Are Falling — It’s a Better Deal!
      9. Read Your Putt from Several Angles
      10. The Weighting Is the Hardest Part
    3. Chapter 21: Ten (Or So) of the Best Online Resources for Investment Bankers
      1. Bloomberg
      2. Reuters
      3. Standard & Poor’s
      4. Renaissance Capital and IPOScoop.com
      5. The Securities and Exchange Commission
      6. Moody’s
      7. MarketSmith
      8. Index Fund Advisors
      9. Morningstar
      10. Bureau of Labor Statistics
      11. Department of Commerce
      12. Federal Reserve
      13. Trefis
  8. Appendix: Where Investment Banking Came From
    1. The Roots of Investment Banking
    2. Banking Catches On in the United States
  9. Index
  10. About the Authors
  11. Advertisement Page
  12. Connect with Dummies
  13. End User License Agreement