Question

    Which of the following is a primary difference between

    investment banking and merchant banking ?
    A Investment banks deal exclusively with corporate financing, while merchant banks only focus on individual wealth management. Correct Answer Incorrect Answer
    B Investment banks focus on capital markets, while merchant banks focus on business advisory and fundraising for SMEs. Correct Answer Incorrect Answer
    C Merchant banks are restricted to international markets, while investment banks are focused only on domestic markets. Correct Answer Incorrect Answer
    D Investment banks handle M&A advisory for small companies, while merchant banks only focus on equity trading Correct Answer Incorrect Answer
    E There is no major difference between investment and merchant banks as they provide the same services. Correct Answer Incorrect Answer

    Solution

    The primary difference is that investment banks specialize in capital market activities such as underwriting securities , managing IPOs, and trading . Merchant banks , on the other hand, focus on advisory services for smaller businesses and help raise funds mainly through private placements .

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