Glossary II

Question 1

Debt capital markets (DCM)

Answer 1

Investment bank division responsible for issuance and pricing of debt securities (eg bonds).

Question 2

Derivatives

Answer 2

The group term for financial contracts between buyers and sellers of commodities or securities. Includes futures, options or swaps. Derivatives allow profit from the rise (or fall) of a commodity or security, without actually buying the underlying good.

Question 3

Equity

Answer 3

Otherwise referred to as shares. Shareholders own a percentage of the company, and have a share in profits, as well as control via voting rights.

Question 4

Equity capital markets (ECM)

Answer 4

Investment bank division responsible for structuring and pricing the issuance of equities, such as at IPO (Initial Public Offering – flotation of the company on the stock exchange).

Question 5

FTSE 100/250 index

Answer 5

The index of the 100/250 largest companies on the UK stock market.

Question 6

Futures

Answer 6

Contract between two parties to trade a commodity or security at a fixed price and a fixed future date.