FINANCIAL SERVICES - Areas of Work
THE FINANCIAL SERVICES ALPHABET Impress employers and colleagues alike with your familiarity of financial services terminology from A to Z.
Arbitrage
The practice of making a profit from trading on two markets simultaneously. Such trades profit by exploiting price differences of similar financial instruments in different markets or in different forms. Example: If the price of wheat in Indonesia is lower than in Singapore, buying in Indonesia and simultaneously selling in Singapore will allow you to earn in the difference. In a financial context, if the stock of company X is traded at $10 on the Singapore Stock Exchange (SGE) while it is simultaneously trading on the Indonesian Stock Exchange (IDX) for $10.50, a trader could exploit this arbitrage by buying the stock on the SGE and immediately selling the same shares on the IDX.
Bear market
If you have heard of the banking term “bear”, you can most likely guess what a bear market is. A bear market is any market where securities prices exhibit a declining trend for a prolonged period of time. Since bears attack by clawing down, this term is associated with a falling market. Example: The recession following the great Wall Street stock market crash in 1929 can be referred to as a bearish market. With investors struggling to get out of the market by selling their stocks, the market incurred huge losses which led to a sustained decline in the economy, known as the Great Depression.
Coupon
No, it is not the coupon you redeem. Instead, this coupon refers to the annual interest rate due on a debt product, such as a bond or a loan. You would not be quite as happy to receive this kind of coupon! Example: A $1,000 bond with a coupon of five per cent pays $50 a year. Quite often, these interest payments are semi-annual, whereby the investor receives $25 twice a year. Deductible
The amount of money an insured individual pays before insurance kicks in. Example: Imagine your deductible is $500, but you incur medical expenses for $2,000. In this case, you will pay the $500, and your insurer will pick up the remaining $1,500. However, if your entire medical bill is $500 or less, you will pay the entire amount and your insurer will pay nothing. Elevator pitch
A brief speech or presentation that outlines an idea for a product, service or project, it is delivered in a short period of time – as short as an elevator ride, which is usually about 20 to 60 seconds. Example: If you are looking to market your product and present it as something worth investing in, you would want to use an elevator pitch to get straight to the point in order to capture the client’s attention.
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