Explain at least three circumstances in which investment banking firms must commit their own capital.

14. In its 2013 Form 10-K report filed with the SEC, the Goldman Sachs Group made the following statements about its business activities:

Investment Banking serves corporate and government clients around the world. We provide financial advisory services and help companies raise capital to strengthen and grow their businesses.

What investment banking services does it provides in a financial advisory capacity?

17. On May 7, 1999, the investment banking firm Goldman Sachs converted from a partnership to a corporation and completed an IPO in which it sold 51 million shares of common stock.

a. Why do you think Goldman Sachs converted to a corporation?

b. Why was the sale of its common stock referred to as an IPO?

18. Fortis Private Equity is an international provider of banking and insurance services to personal, business, and institutional customers. Its website stated the following: Is your organization family-owned and in need of support to resolve succession issues? A privately-held company looking for funds to finance expansion? A management team requiring capital to fund a buyout? Fortis Private Equity provides finance and support to the management teams of profitable small and medium-sized enterprises in diverse sectors that have a focused strategy, a strong market position and a growth potential.

What type of investment banking service is Fortis referring to, and what are the risks in this activity for Fortis?