Financial jargon for the advanced

Speak like a finance professional with this guide to some of our industry’s more complex terms.

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.

  1. 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
  2. Crowded
    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
  3. Headwind
    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
  4. Margins
    What it means: Profit divided by revenue, expressed as a percentage
    When you’ll hear it: Listening to a CFO discuss company financial performance
  5. 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
  6. 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
  7. Tailwind
    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
  8. VIX
    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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