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Common Investment Banker Terminology
Financial analysts examine the risk and reward of making certain investments. Those who are interested in making an investment will consult with an analyst and base their financial decisions based on his or her experience and recommendations. While some investors will trust these types of bankers with their money, others will want to be apprised of each transaction. Transactions may involve investing in commercial businesses or supplying new ventures with capital.
Equity - Equity is the stock that is owned by an individual and represents ownership.
Dividend - A dividend is the net profit from shares that is distributed to stockholders at an annual meeting.
Liquidity - Liquidity is a financial ratio that determines the volume of shares traded when compared to the total number of shares available.
Share - A share is a transferable security that represents a limited portion of a company. Share ownership is verified through a company's share registrar that is kept at a bank.
Option - An option is a contract that gives investment buyers the option to purchase or sell shares of a company at a fixed price and at a future date.
Yield - Yield is a term used to describe the return on someone's investment. The ratio used for yield is the last dividend paid and last share price.
Hedge Fund - Hedge funds are a type of fund that may use both a short and long position to leverage derivatives and invest in the market.
Capital - Capital is the amount of assets or cash that is given by shareholders and indicative of the profits earned.
Investment banking primarily involves the selling or trading of securities and managing mergers and acquisitions for corporations. These services are performed by brokers and dealers, or often broker-dealers, who are properly licensed. Raising money in the capital markets whether through bonds or equity is the main function of investment bankers. Various financial advice is provided for the clients such as credit strategy, transactions, foreign exchange merchants, commodity finances, governments, and more. Investment banking is known as a high stress job requiring constant vigilance. The company you hire to work with you, or the one you apply to work for, will expect a great deal and likely give you a great deal. High risk brings high reward. Whether you're looking to find a company to assist you or planning a career in investment banking, be sure you're up to speed on all the terms and services you'll need to be dealing with. The specifics regarding equity and security, government requirements, funds, particular risks, and, if you're looking for a job, the salaried income you'll be pulling in. The best way to begin your search for an investment banking firm is to start at the bottom. Once you have a basic knowledge of what your needs are start putting your feelers out there and look for a company offering you the security you want. There are many banking institutions willing and able to provide you with your investment banking needs. Form your questions, have your list, and put one foot in front of the other. You'll need to speak with them personally to get a proper feel for how well you fit together.