BANKING AND INVESTMENT - Areas of Work
A GRADUATE’S GUIDE TO BANKING AND INVESTMENT JOB-SPEAK Bulls, hedging, stagflation...did you just wander into a farmers’ convention? Here are some common key banking and investment terms that you can use to sound informed at job interviews.
A Analyst
A person who studies a market or industry sector and makes recommendations to either “buy”, “hold”, or “sell”. Less glamorously, it also refers to an entrylevel career position in many firms in the banking and investment industry.
B
Bear
An investor who sells with the belief that the prices of the financial product they are selling will fall. Bid price
The price which a buyer is willing to pay for a financial product. Bonds
Governments or companies can raise capital by issuing and selling bonds. Bondholders investments’ will be repaid with interest, also known as a “coupon”, once the bond reaches maturity. The difference between bonds and loans is that bonds can be further traded between investors, while loans cannot. Broker
An intermediary between a buyer and a seller. Brokers will receive a commission if the trade closes successfully. Brokerage
The payment a client makes to a broker.
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Bull
Credit crunch
The opposite of a bear. A bull is an investor who buys, believing prices of the financial product they are acquiring will rise.
The term commonly used to refer to a severe shortage of money or credit within a market. The start of the “Global Credit Crunch” can be dated to August 2007, when default rates on sub-prime loans in the United States’ housing market rose to record levels.
C
Capital markets
A financial marketplace for buying and selling medium- or long-term funding instruments, such as bonds, debt and equity. Chinese walls
A term referring to information barriers within investment banks. Such barriers exist to minimise potential compliance or conflict of interest issues. For instance, merger and acquisitions teams and analysts are forbidden from communicating to ensure that potential takeovers will not be affected by analysts advising their clients to buy or sell shares in the acquired company. Clearing
The process for making transactions happen – matching the buyer with the seller, and making sure the buyer has the cash and that the seller holds the securities. Commodities
Physical goods that are traded on a global scale, much like oil, petrol, rare metals, or grain.
Credit default swap
An insurance-like contract for transferring credit risk. The buyer of the swap makes payment to the seller in exchange for protection in the event of a default. Banks and other financial institutions typically use credit default swaps to cover the risk of mortgage holders defaulting.
