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100 Investment Banking Terms

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1.

Mergers and Acquisitions (M&A):


The process of combining two companies through
either a merger (voluntary combination) or
acquisition (purchase of one company by another).

2. IPO (Initial Public Offering):


The first sale of a company's stock to the public,
making it publicly traded.

3. Equity Capital Markets (ECM):


A division of investment banking that deals with
equity financing, including IPOs and follow-on
offerings.

4. Debt Capital Markets (DCM):


A division of investment banking that handles debt
financing for clients, such as issuing bonds.

5. Private Equity (PE):


Investments in private companies, often involving
buyouts and later-stage funding.
6. Venture Capital (VC):
Investments in startups and early-stage companies
with high growth potential.

7. Underwriting:
The process of assessing risk and pricing securities
before offering them to investors.

8. Due Diligence:
Thorough research and analysis conducted before a
financial transaction to assess its risks and benefits.

9. Leveraged Buyout (LBO):


Acquisition of a company using a significant
amount of borrowed money, with the assets of the
acquired company often used as collateral.

10. Valuation:
Determining the fair market value of a company,
often using various financial models.

11. EBITDA (Earnings Before Interest, Taxes,


Depreciation, and Amortization):
A measure of a company's operating performance.
12. Enterprise Value (EV):
The total value of a company, including its equity,
debt, and other obligations.

13. Financial Modeling:


Creating mathematical representations of a
company's financial performance to make
projections and assess potential deals.

14. Pitch Book:


A presentation prepared for potential clients or
investors to outline investment opportunities or
advisory services.

15. Lender of Last Resort:


A central bank or institution that provides
emergency funding to financial institutions in
times of crisis.

16. Arbitrage:
Taking advantage of price differences in different
markets to make a profit.
17. Diversification:
Spreading investments across various assets or asset
classes to reduce risk.

18. Risk Management:


The process of identifying, assessing, and
mitigating risks associated with investment
decisions.

19. Asset Allocation:


Deciding how to distribute investments among
different asset classes (e.g., stocks, bonds, real
estate).

20. Hedge Fund:


An investment fund that uses various strategies to
generate returns, often with higher risk and return
potential.

21. Bull Market:


A period of rising stock prices and optimism in the
market.
22. Bear Market:
A period of declining stock prices and pessimism in
the market.

23. Initial Margin:


The minimum amount of collateral required to
enter into a futures or options contract.

24. Liquidity:
The ease with which an asset can be bought or sold
without affecting its price.

25. High-Frequency Trading (HFT):


A trading strategy that relies on computer
algorithms and high-speed data to execute orders
quickly.

26. Dividend Yield:


The annual dividend income of a stock as a
percentage of its current market price.

27. Bond Yield:


The annual return on a bond, taking into account
its interest payments and current market price.
28. Junk Bonds:
High-risk, high-yield bonds issued by companies
with lower credit ratings.

29. Credit Rating:


A rating assigned to a company or bond to assess its
creditworthiness.

30. Investment Grade:


Bonds with a high credit rating, indicating lower
risk.

31. Capital Adequacy Ratio:


A measure of a bank's financial health, comparing
its capital to its risk-weighted assets.

32. Net Asset Value (NAV):


The per-share value of a mutual fund or investment
trust.

33. 401(k):
A retirement savings plan in the United States,
often with employer contributions.
34. Volatility:
The degree of variation in the price of an asset over
time, indicating risk.

35. Capital Market:


A financial market where long-term securities are
bought and sold.

36. Primary Market:


The market where new securities are issued and
sold to initial investors.

37. Secondary Market:


The market where existing securities are bought
and sold among investors.

38. Investment Banking Analyst:


A junior-level role in investment banking,
responsible for financial modeling and research.

39. Investment Banking Associate:


A mid-level role in investment banking, involved
in deal execution and client relationships.
40. Investment Banking Vice President:
A senior-level role in investment banking,
responsible for managing client relationships and
deal teams.

41. Proprietary Trading:


Trading for a firm's own account to generate
profits.

42. Investment Thesis:


A statement outlining the rationale behind an
investment decision.

43. Mezzanine Financing:


A hybrid form of financing that combines debt and
equity.

44. Reverse Merger:


A process in which a private company goes public
by merging with a public shell company.

45. Letter of Intent (LOI):


A document outlining the key terms of a proposed
transaction.
46. Syndicate:
A group of underwriters responsible for
distributing and selling securities to investors.

47. Pitchbook:
A marketing document created by investment
bankers to pitch their services to potential clients.

48. Recapitalization:
The restructuring of a company's capital structure,
often involving changes in debt and equity.

49. Covenant:
A legally binding agreement in a loan or bond
contract that specifies certain conditions or
restrictions.

50. Fairness Opinion:


A professional assessment of the fairness of a
transaction's terms to all parties involved.

51. Exchange-Traded Fund (ETF):


A fund that tracks an index and trades like a stock
on an exchange.
52. Initial Margin:
The amount of money an investor must deposit to
open a futures or options position.

53. Securities and Exchange Commission (SEC):


The U.S. government agency responsible for
regulating securities markets.

54. Due Diligence:


Thorough research and analysis conducted before a
financial transaction to assess its risks and benefits.

55. Fixed-Income Securities:


Securities that pay a fixed interest or dividend, such
as bonds.

56. Risk-Adjusted Return:


A measure of investment return that takes into
account the level of risk involved.

57. Corporate Finance:


The division of investment banking that advises
companies on capital raising and financial
strategies.
58. Leveraged Finance:
A subfield of corporate finance dealing with high-
yield debt and leveraged buyouts.

59. Collateralized Debt Obligation (CDO):


A complex financial product backed by a pool of
debt assets.

60. Credit Default Swap (CDS):


A derivative contract that provides insurance
against the default of a bond or loan.

61. Private Placement:


The sale of securities directly to a small group of
investors, bypassing public markets.

62. Capital Structure:


The mix of debt and equity used to finance a
company's operations.

63. Discounted Cash Flow (DCF) Analysis:


A valuation method that calculates the present
value of future cash flows.
64. Earnings Per Share (EPS):
A company's profit divided by its outstanding
shares of common stock.

65. Investment Horizon:


The length of time an investor plans to hold an
investment.

66. Market Capitalization (Market Cap):


The total market value of a company's outstanding
shares of stock.

67. Financial Statement Analysis:


Evaluating a company's financial health using its
income statement, balance sheet, and cash flow
statement.

68. Capital Markets Advisory:


Providing strategic advice to clients on capital
raising and financial transactions.

69. Private Placement Memorandum (PPM):


A document provided to potential investors in a
private placement, containing information about
the investment opportunity.
70. Merchant Banking:
Providing financial services, including investment
banking, to businesses.

71. Shareholder Value:


Maximizing returns for shareholders through
strategic decisions and management.

72. Blue Chip Stocks:


Stocks of large, well-established, and financially
stable companies.

73. PIPE (Private Investment in Public Equity):


A type of financing where private investors buy
stock in a public company at a discounted price.

74. Greenfield Investment:


Starting a new business or project from scratch in
a foreign market.

75. Divestiture:
The sale or disposal of assets or business units by a
company.
76. Cross-Border Transaction:
A financial deal involving parties from different
countries.

77. Strategic Buyer:


A buyer who acquires another company for its
strategic value, such as synergies.

78. Distressed Asset:


An asset that is under financial distress and may be
sold at a discount.

79. Golden Parachute:


Compensation packages for executives in the event
of a change in control of the company.

80. Holding Company:


A company that owns a controlling interest in
other companies.

81. Minority Interest:


Ownership stake in a subsidiary that is not
controlled by the parent company.
82. Poison Pill:
A strategy used by a company to make itself less
attractive to hostile takeovers.

83. Roll-Up Strategy:


A growth strategy involving the acquisition of
multiple smaller companies in the same industry.

84. Private Banking:


Providing specialized financial services to high-
net-worth individuals.

85. Regulatory Compliance:


Ensuring that a company adheres to all relevant
laws and regulations.

86. Real Estate Investment Trust (REIT):


A company that owns and manages income-
producing real estate.

87. Non-Disclosure Agreement (NDA):


A legal contract that restricts the sharing of
confidential information.
88. Net Present Value (NPV):
The value of future cash flows discounted to their
present value.

89. Term Sheet:


A document outlining the key terms and
conditions of a proposed investment or financing
deal.

90. Asset Management:


Managing investment portfolios on behalf of
clients or institutions.

91. Capital Gain:


The profit made from the sale of an asset that has
appreciated in value.

92. Initial Margin:


The amount of money an investor must deposit to
open a futures or options position.

93. Realized Gain/Loss:


The actual profit or loss from selling an
investment.
94. Asset-Backed Securities (ABS):
Securities backed by a pool of assets, such as
mortgages or auto loans.

95. Investment Committee:


A group responsible for making investment
decisions within an organization.

96. Economic Capital:


The amount of capital a financial institution needs
to cover potential losses.

97. Exit Strategy:


A plan for how and when an investor or
entrepreneur will sell or exit an investment.

98. Yield Curve:


A graph showing the relationship between interest
rates and the maturity of debt securities.
99. Initial Public Offering (IPO):
The first sale of a company's stock to the public,
making it publicly traded.

100. Share Buyback:


A company's repurchase of its own shares from the
open market.
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