Financial Terms Jargon: Acronym and Terms to Know in the Financial Industry

Profitability is an important component in determining a company’s development and survival. This, in turn, is determined by how successfully the financial resources are employed. 

Financial analysts assist in determining this, as well as the company’s overall financial health and performance. They study and analyze the firms’ strengths and shortcomings on a regular basis, offering suggestions and recommending corrective actions based on comprehensive research and strong logic.

Financial analysts also anticipate the firm’s future financial operations in order to be better prepared. As a result, they are critical for both small and large enterprises, as well as across industries.

The desire of businesses for skilled experts to provide financial analysis for their organizations is increasing as a result of the recent expansion of business and financial markets. Financial analysts are anticipated to outnumber experts in numerous other sectors by 2026, according to Forbes. If you wish to pursue a career in finance, here is a brief list of the abbreviations for finance and accounting you should be familiar with as you begin your journey.

Common Acronym and Terms to know in the Financial Industry

Here’s a list of financial jargon to get you started: 

1. ACQUISITION: This particular financial jargon means the gaining of a controlling interest in a corporation by another.

2. ALTERNATIVE INVESTMENT: Investment vehicles such as hedge funds, private equity funds, managed futures, real estate, and so on.

3. ANALYST: A graduate’s entry-level position in the firm; in research, this can also refer to a senior employee in the research division.

4. ASSETS: The numerous resources that a person or organization possesses.

5. BEAR: An investor who believes that prices will decline.

6. BID/ASK: A price pair in which the “bid” is the price at which a trader is willing to purchase the security and the “ask” is the price at which the trader is willing to sell the security (notice that “ask” is often referred to as “offer”).

7. BLOCK TRADE: This finance jargon means a trade involving a significant number of stocks or a large number of bonds.

8. BOND: A loan in which a corporate, municipal, or government body (the borrower or “issuer”) promises to return a borrowed sum (“principal”) on a specific date (“maturity”) at an agreed-upon interest rate plus a fixed-coupon payment.

9. BULL: An investor who believes that prices will climb.

10. CAPITAL: Material wealth that is employed or has the potential to be used in the development of more riches.

11. CAPITAL MARKET: The market for buying and selling medium-term and long-term financial products such as bonds, notes, swaps, and shares.

12. CENTRAL BANK: A state entity that is usually separate from the government and is in charge of issuing money, establishing interest rates, and managing inflation.

13. CHINESE WALL: A fictitious barrier that restricts the flow of information between the public and private sides of a business (e.g. sales and trading, and investment banking).

14. COMMODITIES: Raw resources such as precious metals or cereals that are traded on commodities exchanges.

15. COMMON STOCK: A kind of stock, generally with voting rights, that confers residual ownership of a corporation’s assets after all liabilities have been fulfilled. In the United Kingdom, this is known as ordinary share capital.

16. CONTROLLERS: A firm’s department in charge of overseeing financial accounts and transactions.

17. CONVERTIBLE BONDS: Corporate assets (typically preferred shares or bonds) that may be exchanged for a predetermined number of another type (usually common shares) at a predetermined price.

18. COUPON: The interest that a borrower pledges to pay to a bondholder.

19. DERIVATIVES: A contract in which the value is determined by the performance of an underlying financial asset, index, or other instruments (i.e. options and futures on various securities or commodities).

20. DCM: An abbreviation for Debt Capital Markets, which is a subset of Global Capital Markets.

21. DCF: DCF analysis is an acronym for discounted cash flow analysis, a technique for assessing the value of a project, company, or financial asset.

22. DUE DILIGENCE: A study of financial records with the objective of limiting harm to both persons engaged in a transaction.

23. ECM: Equity Capital Markets is an abbreviation for Global Capital Markets.

24. ED: Executive Director, a mid-level manager at a company who reports to a Managing Director and supervises a staff of Analysts and Associates.

25. EQUITY: The monetary value of an investment’s ownership.

26. EQUITY RESEARCH: Analysts in Equity Research are responsible for studying the fundamentals of the economy, an industry, or a specific firm in order to aid the Firm’s clients in making informed investment decisions.

27. FCA: An abbreviation for the Financial Conduct Authority.

28. FIG: An acronym for Financial Institutions Group.

29. FIXED INCOME: Bonds, bills, and interest-bearing notes that pay a fixed rate of interest during the life of a loan.

30. FLOTATION: The process of issuing fresh shares or stocks.

31. FORWARD: A forward contract is a contract between two parties to acquire or sell an item at a fixed price on a certain date. Terms (such as delivery time and amount) may be more “customized” than in typical futures contracts.

32. FSG: Financial Sponsors Group (FSG) is an industry group under the Investment Banking Division.

33. FUTURES CONTRACT: This is a contract between two parties to acquire or sell an item at a certain price on a particular date.

34. FX: An abbreviation for Foreign Exchange.

35. GCM: An abbreviation for Global Capital Markets.

36. HEDGE FUND: A fund that focuses on absolute performance rather than relative performance. It is legal to short stocks (sell a stock before purchasing it) and to employ financial leverage.

37. IPO: An abbreviation for initial public offering, which is a company’s first issuing of stock or other securities for sale to the public.

38. ISSUE: Financial securities made accessible for purchase.

39. LAF: A shorthand for Leveraged Acquisition Finance, a component of Global Capital Markets.

40. LBO: An abbreviation for leveraged buy-out, a technique involving the acquisition of another firm with a considerable amount of money borrowed (bonds or loans) to cover the acquisition costs.

41. LIQUIDITY: An asset is considered liquid if it is reasonably straightforward to locate a buyer or seller for it.

42. MD: An abbreviation for Managing Director, a senior employee who supervises and directs a staff of junior employees.

43. M&A: Abbreviation for the Investment Banking Division’s Mergers & Acquisitions Department.

44. MERGER: A consolidation in which the net assets of two or more firms are consolidated to establish a new company.

45. OPTION: An investor’s right to buy or sell securities or commodities at a preset price on a certain date. If the investor does not exercise the options by the expiration date, the investment is forfeited.

46. PIB: The abbreviation for Public Information Book is PIB.

47. PLAIN VANILLA: A plain, uncomplicated financial product with no distinguishing features.

48. PRIVATE EQUITY: Equity money invested in a private enterprise (not a public limited company) that has demonstrated operational competence, strong long-term objectives, and appealing growth prospects.

49. PRIVATIZATION: The transformation of a public or government-owned firm into a privately owned and run entity.

50. PROPRIETARY TRADER: A trader who, rather than trading for a customer and charging a fee, produces direct profit and risk exposure for the bank by taking positions.

51. PWM: Private wealth management is abbreviated as PWM.

52. RECAPITALIZATION: A change in the capital structure of a corporation, such as swapping a part of the debt for equity. The most prevalent reason for recapitalization is bankruptcy.

53. SPOT MARKET: A commodity market in which things are sold for cash and delivered instantly.

54. STOCK: An investor’s possession of a piece of a business (expressed in “shares”).

55. SYNDICATE: A group of investment banks that pool their resources to share the risk of new issuance by jointly underwriting and marketing a new security offering.

56. SHAREHOLDER: A shareholder in an investment fund or firm.

57. FEES FOR SHAREHOLDERS: Other than the total yearly running expenditures, any fee is imposed against investment for acquisition and selling.

58. PAYMENT FOR A SINGLE PREMIUM/ PAYMENT FOR A SINGLE PURCHASE: A single premium annuity is a type of delayed annuity that allows you to deposit funds into your annuities account only once when you buy the product.

59. TMT: An abbreviation for technology, media, and telecommunications.

60. TOMBSTONE: A financial press print advertising announcing a securities offering.

61. TRADER: A professional who buys and sells stocks on behalf of traders, dealers, and his or her own accounts.

62. THE VALUE FUND: A fund that invests largely in equity is perceived to be undervalued in comparison to its true worth.

63. ANNUITY WITH VARIABLE PAYMENTS: A variable annuity is a long-term investment package with a variable rate of return depending on the success of the assets you choose. A variable annuity is an agreement between you and an insurance company that is marketed through a prospectus.  The prospectus explains the risks, fees, and fees that may be applicable to you.

64. VARIABLE ANNUITY FEES: Fees and expenses associated with variable annuities include mortality and expenditure, investment management and organizational fees, contract fees, and the expense of the underlying investment alternatives.

65. WITHDRAWAL: A withdrawal, also known as a distribution, is money taken from a financial account. Ordinary income tax is levied on all taxable distributions, regardless of age, and surrender costs may apply. Withdrawals may be subject to fees or penalties, depending on the kind of product and whether the bank account is qualified or non-qualified.

66. WRAP FEE: A charge or price added to or “wrapped around” an investment to cover one or more product features or services.

67. YIELD: The amount paid in interest or dividends on investment. The yield is frequently stated as a percentage of the cost of the investment.

While not a complete one, the above is a good list of acronyms and jargon in the finance industry in India and globally. These examples of financial jargon stated above are all crucial for furthering a career in finance getting the basics right and taking your first step in understanding them. 

Here at Hero Vired, we help students grasp financial terms and concepts with the Integrated Program in Financial and Financial Technologies. The program is designed to help you establish your expertise as a finance professional and to become the one who can forecast future trends.

This course provides you with the necessary foundation to become a game-changer in the field of finance and financial innovations.