How do investment banks primarily generate revenue?

Investment banks primarily generate revenue from advisory fees, underwriting fees, and trading commissions due to the nature of their services in capital markets and financial transactions.

Advisory fees are collected when investment banks provide strategic advice for mergers and acquisitions, helping companies navigate complex financial transactions. Underwriting fees arise when investment banks assist companies in raising capital by issuing stocks or bonds, taking on the risk of buying the securities and reselling them to the public or institutional investors. Trading commissions come from executing buy and sell orders for clients in various financial markets, where the bank acts as an intermediary.

This multifaceted revenue approach highlights how investment banks play a critical role in facilitating financial markets and corporate finance, which are foundational to their business model. In contrast, the other options do not accurately reflect the comprehensive ways investment banks earn their income.