Investment banking jargon buster

Here's a quick guide to some of the most common terms you'll encounter in this sector

Amortise

Repaying a loan by making regular payments over a given period of time.

Analyst

The job title given to graduates when they join an investment bank. New joiners will usually be analysts for two to three years, until the end of their graduate scheme.

Asset

A general term for anything with monetary value.

Bandwidth/capacity

Your availability to take on more work before you malfunction.

Bear

A pessimist who expects the value of a product or market to fall.

Beauty contest

Not about the best-looking interns, but when several investment banks are competing for business. You'll put together pitchbooks for the client to win their affection.

Blue chip

A large, well-established company with a good earnings record. Blue chip companies are considered a safe bet by investors.

Blue-sky thinking

Management speak for creative thinking. Ideas are unbound by preconception and few things are considered ridiculous.

Bond

A piece of corporate debt, normally publicly traded on the financial markets.

Bulge-bracket

The big, integrated investment banks that have a global presence and handle a large volume of business. They tend to offer the most opportunities for graduates.

Bull

An optimist who expects the value of a product or market to rise.

Bullet

When a loan is paid off with one lump sum instead of in instalments.

Capital

Bills, bacon, dough... capital is a general term for cash.

Chinese wall/firewall

An imaginary barrier between some departments of an investment bank, such as corporate advisory and traders, to prevent conflicts of interest and potential insider trading.

Close of business/end of play

Management speak for either before the client leaves their office or before you go home.

Core competencies

The basic skills and abilities investment banks look for, such as teamwork, communication and organisation. Graduate recruiters love them.

Counterparty

The financial institution representing the opposite side in a financial deal.

Debt

Any finance raised through borrowing, usually from banks. The borrower must repay the full amount plus interest.

Derivative

A tradeable financial contract relating to an underlying asset that could be used to invest in that asset and make gains from it without having to own it directly, or by those who buy and sell the asset to protect themselves against price fluctuations.

Due diligence

Thorough background research into a client or a deal.

Equities

Shares in a listed company. Equity is finance raised from investors in exchange for a share in the business.

Externalities

Social consequences of financial transactions and economic activity that are either positive (benefits) or negative (costs).

Fire drill

An emergency situation where you need to finish work to a tight deadline for a client.

FTSE 100

The Financial Times Stock Exchange index of the listed companies with the biggest market value. The index is revised every three months.

Gearing

The ratio of a company's debt to its equity capital - "highly geared" means a large amount of debt. See also leverage.

Hedge

Not the greenery outside the bank but the practice of balancing your investments in order to limit your exposure to risk.

Investment grade

A rating that is assigned to a bond or loan that indicates there is a low risk of the borrower failing to repay lenders on time.

Leverage

Using debt to finance a transaction or deal. A highly leveraged company is one which has taken on a large amount of debt. See also gearing.

Liquidity

How easy it is to convert an asset into cash. For example, foreign currency is more liquid than property.

Proprietary deal

When a bank makes a deal with its own capital to make a profit.

Securities

Don't worry, you won't have to empty your pockets before being frisked by a bouncer. Securities is an umbrella term for financial products including bonds and shares.

Tombstone

An ornament awarded to celebrate the completion of a transaction or deal. When an investment banker's desk is covered with tombstones it's a good sign, not a bad one!

Value-add

An awkward way of saying something is beneficial or worthwhile.

Vanilla

The flavour of ice-cream served in the canteen, or a term used to describe the most basic financial products and transactions, compared with more complex "exotic" or "bells and whistles" ones.

Yield

The return for investors from an investment, rather than its market value. Usually expressed as a percentage.

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