100 INVESTMENT

BANKING TERMS

EMPOWER YOUR FINANCIAL IQ

BY COMPOUNDING QUALITY
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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Pieter Slegers
Compounding Quality