Know your bid price from your ask price? Your long from your short? Your tick and tie from your tombstone? Good stuff. You’re ready to start decoding some of the more complex terms that are used in the industry. And once you’ve mastered these, you’ll feel like an industry insider.
- Capital Structure
What it means: How a firm finances its business in reference to the amount of debt and equity used
When you’ll hear it: While discussing an acquisition
What it means: Many investors have already purchased a particular security, thereby limiting price movements due to low availability
When you’ll hear it: When a stock hovers at its 52-week high price
What it means: Macro industry trends that will likely affect price movements of a security in a negative direction
When you’ll hear it: When discussing a research report
What it means: Profit divided by revenue, expressed as a percentage
When you’ll hear it: Listening to a CFO discuss company financial performance
- Market cap
What it means: Market capitalization, which is the total dollar value of a company’s shares outstanding
When you’ll hear it: When evaluating a stock
- Reservation Price
What it means: Price under which a seller won’t complete a deal
Where you’ll hear it: On the phone with a PM
What it means: Macro industry trends that will likely affect price movements of a security in a positive direction
When you’ll hear it: Reviewing a research report with a client
What it means: The Chicago Board Options Exchange Volatility Index, used to measure the market’s anxiety level
Where you’ll hear it: In market update conversations between salespeople and clients
There’s a lot more industry lingo used in investment banks –that’s why we’ll be putting together more articles like this one over the coming months. Sign up now to be among the first to hear about them. In the meantime, refresh your knowledge of the other terms we’ve already covered by checking out this article and this one.
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