What does merchant banking primarily involve?

• A. Offering consumer loans at low-interest rates
• B. Providing capital in the form of equity or debt and specialized advice
• C. Issuing public stock offerings
• D. Managing personal savings accounts for individuals

Answer: (B)

Merchant banking primarily involves providing capital in the form of equity or debt and specialized advice. This form of banking focuses on serving corporations and other large entities rather than individual consumers. Merchant banks offer a range of services that include underwriting, loan syndication, and financial advisory services, helping businesses raise capital for expansion, acquisitions, or operational needs.

Unlike commercial banks, which may engage in consumer lending or manage personal accounts, merchant banks usually work directly with businesses, often dealing with more sophisticated financial instruments and investment strategies. This specialization in corporate finance and business consultancy differentiates merchant banking from other banking sectors.