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An investment bank is a financial institution that helps companies take new bond or stock issues to market, usually acting as the intermediary between the issuer and investors.
Investment banks may underwrite the securities by buying all the available shares at a set price and then reselling them to the public. Or the banks may act as agents for the issuer and take a commission on the securities they sell.
Investment banks are also responsible for preparing the company prospectus, which presents important data about the company to potential investors.
In addition, investment banks handle the sales of large blocks of previously issued securities, including sales to institutional investors, such as mutual fund companies.
Unlike a commercial bank or a savings and loan company, an investment bank doesn't usually provide retail banking services to individuals.