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What is an investment bank and how do they differ from commercial banks?

Investment banks manage large investments and funds in the stock market. They also often serve as middlemen and brokers between corporations. Commercial banks, on the other hand, function as loan providers and as places to safely deposit money.

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Investment banks and commercial banks serve different purposes within the sphere of banking. An investment bank typically works with corporations. It plays many roles, which include organizing an initial public offering (IPO) if a private firm is going public, brokering corporate mergers and acquisitions, and serving as a general financial guidance institution. They often manage large investments in the stock market such as pension funds, mutual funds, and hedge funds.

A commercial bank is what most people regularly deal with. People, companies, and organizations deposit money in...

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