Finance Vocabulary: English Words for Finance Jobs

outperform verbC1

To deliver a higher return than a benchmark, peer group, or the market as a whole.

Few active managers outperform their index consistently after fees.

accretion nounC2

The gradual increase of a bond's book value toward par, or growth in value over time.

The discount bond was bought below face, and the accretion is booked as income each period until maturity.

accrual nounC1

An expense or revenue recognized when it is earned or incurred rather than when cash changes hands.

We booked an accrual for the unpaid December bonuses so the cost lands in the year it was earned.

amortization nounC1

The gradual writing off of an intangible asset or the spreading of a loan's repayment over its term.

Stripping out amortization of the acquired patents lifts the segment's reported margin by four points.

arbitrage nounC1

Profit made from price differences in different markets.

The fund booked millions on a brief currency arbitrage.

backstop nounC1

A commitment by a party to buy any securities left unsold in an offering.

Two anchor investors provided a backstop for the rights issue.

bust-up nounC1

An acquisition in which the buyer breaks up the target and sells off the pieces.

The raider financed a bust-up bid, betting the divisions were worth more sold separately.

condor nounC2

An options strategy using four strike prices that profits when the underlying stays within a range.

Expecting a quiet quarter, the trader sold an iron condor on the index.

contingent liability nounC1

A potential obligation that will crystallize only if some future event occurs.

The pending lawsuit is disclosed as a contingent liability rather than booked, since the outcome is still uncertain.

cornering nounC1

The act of acquiring enough of a commodity or security to control its price.

The brothers' attempted cornering of the silver market ended in ruin.

depository nounC1

A central entity that holds securities in electronic form and records their ownership.

Settlement finalised the moment the depository debited the seller's account and credited the buyer's.

domicile nounC2

The jurisdiction in which a fund or company is legally established and regulated.

The manager chose Luxembourg as the fund's domicile to ease distribution across Europe.

dunning nounC2

The process of persistently reminding a customer to pay an overdue debt.

After two months of dunning letters, the utility warned it would refer the account to a collection agency.

exuberance nounC1

Excessive optimism among investors that drives prices beyond reasonable value.

The chairman warned that market exuberance had outrun corporate earnings.

floater nounC1

A bond whose coupon resets periodically in line with a reference rate.

Investors piled into floaters as protection once they expected rates to keep climbing.

froth nounC1

Speculative excess in a market that pushes prices above sustainable levels.

The central bank warned of froth in the market for unprofitable tech listings.

gating nounC1

The restriction of investor withdrawals from a fund, usually during market stress.

Gating at several property funds left retail investors unable to access their savings for months.

layering nounC2

Stacking deceptive orders at several price levels to fabricate the appearance of depth.

The surveillance system flagged layering when hundreds of orders vanished the instant the real trade printed.

portability nounC1

The ability to transfer an investment or pension from one provider or employer to another.

Portability matters to younger staff who expect to change employers several times.

punter nounC1

An informal term for a small, often speculative, private investor.

Retail punters piled into the meme stock after it trended online.

ramping nounC2

The illegal practice of artificially driving up a share price through buying or misleading promotion.

The forum users were charged with ramping a tiny mining stock before selling out.

rebalancing nounC1

The periodic buying and selling of assets to restore a portfolio to its target allocation.

Quarter-end rebalancing by pension funds added selling pressure to equities.

receivable nounC1

Money owed to a business by its customers.

Late receivables strained the company's cash flow.

rho nounC2

The sensitivity of an option's price to a change in interest rates.

Rho matters little for short-dated equity options but becomes significant for long-dated contracts.

rout nounC1

A sudden, steep, and widespread fall in market prices.

The bond rout wiped billions off pension fund balance sheets in a single week.

shortfall nounC1

The amount by which actual returns or assets fall below what is needed or expected.

The trustees agreed a recovery plan to close the scheme's funding shortfall.

shorting nounC1

The practice of selling borrowed securities in the expectation of buying them back later at a lower price.

Regulators temporarily banned the shorting of bank shares during the crisis.

spoofing nounC2

Placing orders one intends to cancel in order to mislead others about supply and demand.

Regulators charged the trader with spoofing after finding he routinely posted large bids he never meant to fill.

stabilisation nounC1

Price-supporting purchases made by underwriters in the period immediately after a new issue.

The bookrunner announced that stabilisation had ended thirty days after the listing.

uptick nounC1

A small increase, especially a trade at a price higher than the previous one.

An uptick in redemptions forced the manager to sell some of its more liquid holdings.

weighting nounC1

The proportion of a portfolio or index allocated to a particular holding or sector.

Energy's weighting in the index has halved over the past decade.

actuarial adjectiveC2

Relating to the statistical calculation of risk, premiums and reserves in insurance and pensions.

An actuarial review revealed that the scheme's liabilities had been badly underestimated.

extrinsic adjectiveC2

Describing the part of an option's price beyond its intrinsic value, reflecting time and volatility.

As expiry approached, the option's extrinsic value bled away to nothing.

frothy adjectiveC1

Describing a market whose prices appear inflated by speculation rather than fundamentals.

Valuations in early-stage tech look frothy after a year of record funding rounds.

marketable adjectiveC1

Able to be readily bought or sold on an established market.

The treasury team keeps surplus cash in short-dated marketable securities.

redeemable adjectiveC1

Able to be bought back or paid off by the issuer before or at maturity.

The preference shares were redeemable at par after five years.

retractable adjectiveC1

Describing a bond that allows the holder to demand early repayment on set dates.

The retractable feature let investors exit if interest rates rose sharply.

subordinated adjectiveC1

Ranking below other claims for repayment if the borrower defaults.

Holders of the subordinated notes recovered pennies on the dollar once the senior lenders were made whole.

uncalled adjectiveC2

Describing capital committed by investors to a fund but not yet requested by the manager.

The firm still holds billions in uncalled commitments ready for new deals.

unlisted adjectiveC1

Not admitted to trading on a recognised stock exchange.

Pension schemes are being encouraged to invest more in unlisted growth companies.