Banking and Investment Sector Essentials
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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 entry-level career positions in many firms in the banking and investment industry.
B
Brokerage
Commodities
The payment a client makes to a broker.
Physical goods that are traded on a global scale, much like oil, petrol, rare metals, or grain.
Bull The opposite of a bear. A bull is an investor who buys, believing prices of the financial product they’re acquiring will rise.
C
Bear An investor who sells with the belief that the prices of the financial product they’re selling will fall. Bid price The price which a buyer is willing to pay for a financial product.
Capital market A financial marketplace for buying and selling medium- or long-term funding instruments such as bonds, debt and equity. Chinese walls
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.
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.
Broker
Clearing
Bonds
An intermediary between a buyer and a seller. Brokers will receive a commission if the trade closes successfully.
Finance Career Guide 2023
The process for making transactions happen – matching the buyer with the seller, and making sure the buyer actually has the cash, and that the seller actually holds the securities.
Credit crunch The term is 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. 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.
D Debit capital markets (DCM) An investment bank division responsible for refinancing or restructuring a client’s existing debt, or raising a client’s debt for acquisitions. The benefit of debt is that it grants a company a greater diversity of funding options, as opposed to relying solely on equity.
