We’re committed to help you reach your financial goals and it is of great importance that you understand the complicated jargon in the financial world.
Use the definitions below as a guide to some of those phrases you hear in the financial industry.
ACQUISITION: One company taking over the controlling interest in another company.
ACCRUED CHARGE / EXPENSE: An accrued expense is an accounting term that refers to an expense that is recognized on the books before it has been paid; the expense is recorded in the accounting period in which it is incurred. An accrued expense is only an estimate, and will likely differ from the supplier’s invoice that will arrive at a later date.
ALLOCATION RATE: An allocation rate is a percentage of an investor’s cash or capital outlay that goes toward a final investment. The allocation rate most often refers to the amount of capital invested in a product net of any fees that may be incurred through the investment transaction. An allocation rate may also be used when determining the percentage of income an investor plans to contribute to specified investments through an automatic investment plan.
ALTERNATIVE INVESTMENT: Investment vehicles that can be anything from hedge funds to private equity funds, managed futures, real estate, etc.
ANALYST: An entry-level point for graduates into the Firm; in Research, this can also refer to a senior employee in the Research Division.
ASSETS: The various resources that an individual or organization owns.
BEAR: An investor who expects prices to fall.
BID/ASK: A pair of prices, where “bid” is the price at which a trader is prepared to buy and “ask” is the price at which the trader is prepared to sell the security (note that “ask” is sometimes referred to as “offer”).
BLOCK TRADE: A trade that involves a large quantity of stock (i.e., 10,000 shares or more) or a large dollar amount of bonds (i.e., $200,000 or more).
BOND: A loan that entails a promise by a corporate, municipal, or government entity (the borrower, or “issuer”) to repay a borrowed amount (“principal”) on a particular date (“maturity”) at an agreed upon interest rate along with a fixed-coupon payment.
BULL: An investor who expects prices to rise.
CAPITAL: Material wealth used or available for use in the production of more wealth.
CAPITAL MARKET: The market for the purchase and sale of medium- and long-term financial instruments, including bonds, notes, swaps, and equities.
CENTRAL BANK: State institutions, typically independent of the government, which take care of issuing currency, setting interest rates, and controlling inflation.
COMMODITIES: Raw materials, such as precious metals or grains, for which contracts are bought and sold on commodities exchanges.
COMMON STOCK: A class of stock, usually having voting power, conferring residual ownership of assets of a corporation after all liabilities have been satisfied. Known as ordinary share capital in the UK.
CONTROLLERS: The department within a firm that oversees financial accounts and transactions.
CONVERTIBLE BONDS: Corporate securities (usually preferred shares or bonds) that are exchangeable for a set number of another form (usually common shares) at a fixed price.
COUPON: The interest that the borrower promises to pay the holder of a bond.
DERIVATIVES: A contract whose value is based on the performance of an underlying financial asset, index, or another instrument (i.e., options and futures on various securities or commodities).
DCF: Abbreviation for discounted cash flow analysis, a method used to value a project, company, or financial asset.
DCM: Abbreviation for Debt Capital Markets, a group within Global Capital Markets.
DUE DILIGENCE: An analysis that aims at preventing harm to both parties involved in a transaction by reviewing financial records.
ECM: Abbreviation for Equity Capital Markets, a group within Global Capital Markets.
EQUITY: The monetary value of the ownership of an investment.
EQUITY RESEARCH: Analysts in Equity Research focus on understanding the fundamentals of the economy, an industry, or an individual business to assist the Firm’s clients in making sound investment decisions.
ESTATE PLANNING: It is the act of preparing for the transfer of a person’s wealth and assets after his or her death. Assets, life insurance, pensions, real estate, cars, personal belongings, and debts are all part of one’s estate. Estate plans must be written, signed, and notarized by the person who owns the estate.
FCA: Abbreviation for Financial Conduct Authority.
FIG: Abbreviation for Financial Institutions Group.
FIXED INCOME: Bonds, bills, and interest‐bearing notes that pay a specific interest rate over the life of a loan.
FLOTATION: Issuing new shares or stocks.
FORWARD: This is an agreement between two parties to buy or sell an asset at a specified price on a given date. The terms (such as the delivery time and quantity) may be more “personalized” than is the case with standardized futures contracts.
FSG: Abbreviation for Financial Sponsors Group, an industry group within the Investment Banking Division.
FUTURE: A standardized contract traded on an exchange. This is an agreement between two parties to buy or sell an asset at a specified price on a given date.
FX: Abbreviation for foreign exchange.
GCM: Abbreviation for Global Capital Markets.
HEDGE FUND: A type of fund focused on absolute, rather than relative, performance. It is allowed to short stocks (sell stock before you own it) and can use financial leverage.
IPO: Abbreviation for initial public offering, the inaugural issuance of stock or other securities by a company for sale to the public.
ISSUE: Financial securities that are made available for sale.
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LAF: Abbreviation for Leveraged Acquisition Finance, a group within Global Capital Markets.
LBO: Abbreviation for leveraged buy-out, a strategy involving the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.
LIQUID: An asset is liquid if it is relatively easy to find a buyer or a seller for it.
MERGER: A consolidation where the combined net assets of two or more companies form a new company.
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OPTION: An investor’s right to purchase or sell a security or commodity on a specific date for a predetermined price. The investor forfeits the investment if they don’t exercise the options by the expiration date.
PIB: Abbreviation for Public Information Book.
PLAIN VANILLA: A simple, straightforward financial product without any unusual characteristics.
PRIVATE EQUITY: Equity capital invested in a private company (i.e., non-PLC) that has demonstrated operational excellence, sound long-term strategies and attractive growth potential.
PRIVATISATION: The process of converting a publicly or government-owned enterprise into a privately owned and operated entity.
PROPRIETARY TRADER: A trader that creates direct profit and risk exposure for the bank by taking positions, as opposed to trading for a client and charging commission.
PWM: Abbreviation for private wealth management.
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RECAPITALISATION: Alteration of a corporation’s capital structure, such as exchanging a proportion of debt for equity. Bankruptcy is a common reason for recapitalisation.
RESEARCH ANALYST: A senior member of Equity Research.
RISK: The always-present chance of losses or other negative consequences as a result of an investment.
SALESPERSON: In the financial world, a person whose job is to sell securities for brokers, dealers and corporations.
SALES TRADER: Facilitates the execution of the customer’s orders and acts as the liaison between the Firm’s traders and institutional traders. This role focuses on the short-term “story and flow” dealings.
SECURITIES: Typically, stocks and bonds.
SECURITISATION: The process of distributing risk by aggregating debt instruments in a pool and then issuing new securities backed by the pool.
SPOT MARKET: A commodities market where goods sell for cash and get immediately delivered.
STOCK: An investor’s ownership of a portion (denominated in “shares”) of a corporation.
SYNDICATE: A group of investment banks that spread the risk of a new issue by jointly underwriting and distributing a new security offering.
TMT: Abbreviation for technology, media and telecoms.
TOMBSTONE: A print advertisement in the financial press that announces a securities offering.
TRADER: A professional who purchases and sells securities for brokers, dealers, and his or her own accounts.
UNSECURE LOAN: A loan that isn’t tied to an asset for security. If repayments are missed the lender cannot repossess any assets, but they may take legal action, such as a County Court Judgement.
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YIELD: The return on a security expressed as a proportion of its price.
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