PROSPECTUS 2012/13

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Welcome'from'the'President'
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Dear!student,!!
It!is!my!pleasure!to!welcome!you!to!the! Bristol!Banking!and!Investment!Society!(BIS)!
and! our! introductory! prospectus! for! 2012.! Congratulations! on! getting! a! place! at! the!
University!of!Bristol!and!for!failing!to!avoid!our!sales!pitch!at!the!Fresher!fair!!You!are!
now! part! of! one! of! the! largest,! fastest! growing! and! most! proGactive! societies! on!
campus.!!
BIS!is!a!society!focused!upon!the!world!of!finance,!investment!and!careers!in!the!city.!
Through! our! events,! website! and! this! prospectus! we! hope! to! help! you! take! the! first!
steps!towards!understanding!the!world!of!finance!and!considering!a!career!in!the!city.!!
First!a!word!on!our!history.!The!society!has!gone!through!a!rapid!period!of!growth!and!
change! in! recent! times.! Beginning! as! the! Bristol! Investment! Society! three! years! ago,!
we! had! several! hundred! members! and! a! handful! of! sponsors.! Since! then,! our!
membership! swelled! to! over! 1000! students,! in! true! M&A! style! we! have! completed! a!
merger!with!the!Banking!and!Finance!Society,!won!the!Best!New!Society!Award!2011!
and!were!nominated!as!the!Best!Student!Group!2012.!!
Now!under!the!name!of!Bristol!Banking!and!Investment!society!we!hope!to!continue!as!
the!best!society!on!campus.!For!the!forthcoming!year!we!have!over!30!events!lined!up,!
including!our!famous!Networking!Evening,!workshops,!seminars,!lectures!and!socials.!
Whether! you! are! interested! in! asset! management,! consulting,! professional! services,!
law,!banking!or!just!finding!out!what!the!FTSE!is,!we!have!it!covered.!!
At! events! throughout! the! year! you! will! get! to! meet! our! 12! corporate! sponsors! who!
have! some! excellent! opportunities! ranging! from! insight! days! and! internships! to!
graduate! jobs.! The! committee! will! be! also! be! on! hand! to! guide! you! through! the!
daunting! applications! process,! help! you! write! your! first! cover! letter! and/or! perfect!
your!interview!skills.!!
Come!along!its!completely!free,!see!what!you!think,!and!dont!be!afraid!to!reach!out!
to! any! of! the! committee! should! you! have! any! questions,! concerns! or! suggestions!
throughout!the!year.!!
I! hope! you! find! the! rest! of! this! guide! and! our! events! insightful! and! helpful.! We! look!
forward!to!seeing!you!soon!!
!
Steven!Hunter!
President!
Bristol!Banking!and!Investment!Society!!
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Contents'
1'Welcome'to'the'Society!!
1.1! Mission(Statement(
1.2! The(Committee(2012/2013(
1.3! Organisation(and(Activities(
1.4! Who(should(get(involved?(

4!
4!
5!
6!
6!

2'Introduction'to'Investing!
2.1! What(is(Investing?(
2.2! Investment(fantasy(portfolio(

7!
7!
8!

3'Different'Asset'Classes!
3.1! Commodities(
3.2! Currencies(
3.3! Debt(
3.4! Equity(
3.5! Financial(Derivatives(
3.6! Real(Estate(

9!
9!
9!
10!
11!
11!
13!

4'Career'Opportunities!
4.1! Investment(Banking((Corporate(Finance(
4.2! Investment(Banking((Securities((Trading)(
4.3! Risk(Management(
4.4! Technology(
4.5! Investment(Management(
4.6! Investment(Consultancy(
4.7! Audit(
4.8! Management(Consultancy(
4.9! Law(

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16!
18!
19!
21!
24!
25!
27!
29!
31!

5!Useful!Reading!
5.1! Books(about(Notable(Investors;(
5.2! Books(about(how(to(Invest;(
5.3! Books(about(Careers(in(Investment(Management;(

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33!
33!
33!

6!Glossary!

35!

7!Notes!
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41!

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1 Welcome'to'the'Society!'
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1.1

Mission'Statement'

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The! Bristol! Banking! and! Investment! Society! exists! to! provide! an! open,! positive! and!
supportive! environment! in! which! our! members! are! encouraged! to! develop! business!
analysis!skills!and!the!sharing!of!investment!ideas!and!knowledge.!!
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Our! other! central! aims! are! to! manage! a! profitable! fantasy! investment! portfolio! and!
also! to! establish! a! flourishing! alumni! network,! which! will! connect! current! students!
with! members! already! forging! their! own! careers! across! industry.! We! are! striving! to!
build! a! wellGknown! and! respected! society;! significantly! enhancing! our! members!
candidacy!in!graduate!opportunities.!
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Our!mission!statement!emphasises!everything!we!do!and!believe.!!It!is!the!reason!for!
our!society!being!free!to!join;!it!is!the!reason!we!encourage!our!members!to!challenge!
themselves.! It! is! the! reason! why! new! members! can! feel! confident! and! relaxed! when!
discussing!new!topics!with!others!whom!are!of!varying!experience.!!Quite!simply,!it!is!
the!reason!why!our!members!will!enjoy!their!involvement!within!the!society,!expand!
their!knowledge!of!the!financial!markets!and!meet!a!diverse!range!of!highly!motivated!
and!interesting!people.!
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1.2

The'Committee'2012/2013'

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Please! find! below! the! BIS! executive! committee! details! for! the! 2012! /! 2013! academic!
year.!Opportunities!for!students!to!gain!a!place!on!the!committee!for!the!2013!/!2014!
academic!year!will!arise!during!the!spring!term!of!2013.!!
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President:'Steven'Hunter!
Head'of'Technology:'Shyam'Balu!
3rd!Year!Law!LLB!!
3rd!Year!MSc!Computer!Science!and!
(2010)!Credit!Suisse:!Spring!Week!!
Electronics!!
(2011)!Deutsche!Bank:!Ambassador!!
(2012)!RBC:!Technology!Summer!
(2012)!J.P.!Morgan:!Leveraged!&!
Internship!
Acquisition!Finance!Summer!Internship!
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Sector'Head:'Ilya'Medvedev!
Vice'President:'Peter'Morse!
3rd!Year!Law!LLB!!
2nd!Year!Economics!&!Management!BA!!
(2011)!Grant!Thornton:!Corporate!Advisory!!
(2010)!IBM:!Placement!!
(2012)!Allen!&!Overy:!Vacation!Scheme!
(2012)!BNP!Paribas:!Spring!Week!!
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(2012)!Citi:!Spring!Week!
Sector'Head:'Bex'Evans!
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3rd!Year!Classics!BA!!
Treasurer:'Zihan'Julius!
(2010)!Deloitte:!Placement!!
3rd!Year!Economics!Bsc!!
(2011)!Goldman!Sachs:!Spring!Week!!
(2011)!PwC:!Advisory!!
(2012)!Goldman!Sachs:!Summer!Internship!
(2012)!PwC:!Management!Consultancy!
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Sector'Head:'Yudith'Karunaratne!
Head'of'Trading:'Tarek'EL'Shabrawy!
3rd!Year!Economics!and!Finance!Bsc!!
2nd!Year!PhD:!Numerical!Optimization!of! (2012)!PwC:!Summer!Internship!!
Trading!Algorithm!
(2012)!Deutsche!Bank:!Summer!Internship!
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Sector'Head:'Sean'Francos!
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3rd!Year!Mathematics!MSci!!
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(2011)!Goldman!Sachs:!Insight!Day!!
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(2012)!FDM!Group:!Insight!Day!
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(2012)!Towers!Watson:!Insight!Day!
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(2012)!PwC:!Insight!Academy!!
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Committee!members!can!be!contacted!by!email!(firstname.lastname@bristolbis.co.uk)!
or!at!one!of!our!events!
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1.3

Organisation'and'Activities'

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The! societys! primary! activities! revolve! around! regular! financial! seminars,! held! on! a!
weekly!basis.!!These!seminars!primarily!consist!of!presentations!by!guest!lecturers!and!
the! committee! on! various! topics! related! to! finance.! ! Presentations! are! followed! by!
opportunities!for!Q&A.!
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During!the!academic!year,!we!aim!to!provide!the!following!activities!for!our!members:!
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A!series!of!lectures!designed!to!teach!new!members!the!basics!in!the!analysis!
of!stocks,!and!understanding!of!the!financial!markets!
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Subsidised!trips!to!world!renowned!investment!conferences!in!London!
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Activity! events! with! our! corporate! sponsors,! including! more! practical!

sessions!allowing!members!to!gain!a!better!understanding!about!CV!writing!
and!applications!within!the!universe!of!finance.!
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Presentations!from!notable!speakers!
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An!interactive!fantasy!portfolio!activity!to!be!operated!by!our!4!sector!heads!
and!open!to!participation!from!all!members!!
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Networking! evenings! for! our! members! to! socialise! and! build! relationships!
amongst! themselves! and! with! representatives! from! our! sponsoring!
organisations.!!
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1.4

Who'should'get'involved?'

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Everybody!! ! Whether! you! are! interested! in! careers! in! finance,! law! or! consultancy,!
involvement!with!the!Bristol!Banking!and!Investment!Society!will:!
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Provide!members!with!a!commercial!awareness!extending!well!beyond!that!
gained!simply!from!reading!the!typical!business!and!financial!publications!
!

Help!to!develop!a!more!instinctive!and!sophisticated!understanding!of!how!
economic!policies!impact!different!types!of!businesses!
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Enable! a! critical! assessment! of! corporate! policies! and! business! decisions! in!
respect!to!the!implications!for!the!business!interests!
!

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2 Introduction'to'Investing'
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2.1

What'is'Investing?'

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The!act!of!committing!money!or!capital!to!an!endeavour!with!the!expectation!
of!obtaining!an!additional!income!or!profit!
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It! is! by! no! means! complicated;! investing! means! putting! money! to! economically!
productive!uses.!!Essentially!it!is!a!different!way!to!think!about!how!to!make!money.!!
Growing!up,!most!of!us!were!taught!that!an!income!is!earned!by!working,!whether!for!
ourselves! or! for! others.! ! Indeed,! this! is! exactly! what! most! of! us! do.! ! The! obvious!
problem!is!that!we!are!limited!by!our!own!productive!capacity;!there!is!a!limit!to!how!
many! hours! one! can! work,! not! to! mention! the! difficulty! in! finding! the! free! time! or!
energy!to!enjoy!improved!wealth.!
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Given! that! we! cannot! duplicate! ourselves! to! increase! working! potential,! we! instead!
need! to! send! an! extension! of! ourselves;! money,! to! work.! ! In! this! way,! while! you! are!
putting! in! hours! for! your! employer! or! even! mowing! your! lawn,! sleeping,! reading! the!
paper! or! socialising,! one! can! also! be! earning! money! simultaneously.! ! Quite! simply,!
making!your!money!work!for!you!maximises!your!earning!potential!whether!or!not!you!
work!harder,!receive!a!payGraise!or!secure!a!betterGremunerated!job.!!
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There!are!many!different!ways!in!which!to!invest.!!These!might!include!putting!money!
into! shares,! bonds,! mutual! funds,! real! estate! or! starting! your! own! business.!!
Sometimes! people! refer! to! these! options! as! investment! vehicles,! which! is! simply!
jargon!for!a!way!to!invest.!!Each!of!these!vehicles!has!positives!and!negatives,!which!
will!be!discussed!below.!!The!point!is!that!it!does!not!matter!which!method!you!choose!
for!investing!capital,!the!goal!is!always!to!apply!your!money!effectively!in!order!to!earn!
an!additional!profit.!!!
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2.2

Investment'fantasy'portfolio'

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The!primary!aim!of!our!investment!fantasy!portfolio!is!to!manage!a!profitable!portfolio!
through! sharing! ideas! between! the! sector! heads! and! members,! as! well! as! educating!
members!on!how!to!form!a!credible!view!of!the!market!after!having!conducted!their!
own!effective!market!research.!This!is!not!only!beneficial!to!members!who!are!private!
investors! but! also! members! who! are! looking! for! potential! careers! in! finance,!
specifically! in! trading,! investment! management! and! alternative! investments.! By!
encouraging!members!to!invest!themselves,!whether!with!real!or!virtual!money!online,!
we! believe! that! this! will! not! only! increase! their! knowledge! and! familiarity! with!
movements!in!the!financial!markets,!but!it!will!also!give!them!a!strong!talking!point!at!
interviews;! conveying! to! an! interviewer! that! you! have! already! traded! your! own!
account! shows! practical! application! of! theoretical! knowledge! as! well! as! genuine!
practical!experience!as!opposed!to!just!regurgitating!finance!theory.!

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Using!our!trading!platform,!sector!heads!are!able!to!both!buy!and!sell!equities,!leaving!
more!opportunity!to!alter!positions!with!changes!in!the!markets;!this!will!enable!the!
sector!heads!to!vary!their!investment!strategies!ranging!from!short!to!long!term!and!
give!them!a!chance!to!hedge!their!risk!appropriately!with!long!and!short!positions.!This!
also! provides! us! with! the! ability! to! show! members! how! to! determine! the! most!
profitable!entry!and!exit!points!when!deciding!on!a!position.!This!will!help!us!promote!
the!importance!of!rigorous!risk!management!when!managing!an!open!position,!which!
has! become! even! more! of! a! necessity! in! the! current! volatile! trading! climate.! Aided!
with! a! better! understanding! of! the! mechanics! of! financial! markets,! we! also! want!
members!to!become!more!attuned!with!the!determinants!of!an!assets!value!and!how!
this!analysis!can!help!identify!opportunities!in!a!particular!stock.!
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Through!our!website,!members!can!track!the!progress!of!each!sector!heads!position!
as! well! as! have! access! to! a! list! of! the! online! resources! that! the! sector! heads! use! to!
research! about! their! respective! sector.! The! equities! included! in! the! fantasy! portfolio!
will!be!covered!in!more!depth!in!lectures!throughout!the!year,!where!members!will!be!
able! to! question! the! sector! heads! concerning! their! decisions! of! why! they! chose! a!
specific!equity.!In!this!way,!members!will!be!able!to!see!the!logic!behind!the!positions!
that! our! sector! heads! take! on! and! will! build! their! confidence! in! discussing! trading!
concepts!and!ideas.!We!hope!to!challenge!the!members!to!beat!the!market!returns!of!
the!sector!heads!!

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3 Different'Asset'Classes'
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Focusing! on! a! particular! type! of! asset! class! /! security! is! the! most! straightforward!
category! of! investment! style.! In! general,! portfolios! invest! in! either! equity! or! debt.!!
Some!funds!enable!portfolio!managers!to!invest!in!both!whereas!other!funds!focus!on!
other!types!of!securities!such!as!convertible!bonds.!!For!the!purpose!of!this!analysis!we!
will!focus!on!the!basic!asset!classes.!
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3.1

Commodities'
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A!commodity!is!traditionally!defined!as!a!physical!substance!which!is!interchangeable!
with!another!item!of!the!same!type,!i.e.!they!are!fungible!in!nature.!!Obvious!examples!
include!metals!such!as!steel!and!copper!or!foodstuffs!such!as!sugar!and!wheat.!!When!
investing!in!this!asset!class!the!interest!is!typically!in!the!form!of!a!futures!contract!for!
a!unit!of!the!commodity!e.g.!a!bushel!of!wheat!to!be!bought!at!an!agreed!price!at!the!
time! of! harvest.! ! Therefore,! an! investor! will! typically! want! to! invest! in! a! commodity!
when!the!future!price!is!set!to!exceed!the!present!cost,!for!example!due!to!shortages!
or! disruptions! in! supply.! ! Today,! futures! and! options! contracts! on! a! huge! array! of!
agricultural!products,!metals!and!energy!products!can!be!traded!on!exchanges!around!
the! world.! ! Many! investment! vehicles! exist! which! track! commodity! indices! which,! as!
demonstrated! by! the! Dow! JonesGAIG! Commodity! Index! between! 2001! and! 2006,! can!
significantly!outGperform!indices!tracking!top!companies.!
!

3.2

Currencies'

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This! asset! class! has! only! relatively! recently! become! available! to! the! private! investor!
due! to! advancements! in! technology,! having! previously! been! only! traded! by! large!
financial!institutions!due!to!its!high!barrier!to!market!entry.!!Casual!investigation!of!this!
asset!class!will!introduce!the!investor!to!the!term!FOREX!or!FX!which!is!simply!short!

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for! foreign! exchange.! ! Thus! trading! on! the! FOREX! market! simply! involves! trading!
foreign!currencies.!!Generally!there!are!four!currency!pairs!that!dominate!trades:!!
!

US!Dollar!vs.!Euro!

US!Dollar!vs.!Japanese!Yen!

US!Dollar!vs.!Swiss!Franc!

US!Dollar!vs.!GB!Pound!
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When! investing! in! currencies! the! goal! is! to! hold! a! currency! whilst! it! appreciates! in!
value!in!relation!to!the!other!currency.!!As!an!overly!simplistic!example,!if!you!bought!
50!GBPs!for!100!USDs,!held!the!GBPs!for!a!week!and!in!that!period!the!value!of!pounds!
increased! 20%! in! relation! to! USDs! you! could! then! convert! those! GBPs! back! into! 120!
USDs.!!FOREX!trading!is!arguably!one!of!the!more!complicated!assets!classes!to!master!
due!to!the!determinants!of!the!assets!value.!!The!market!is!in!fact!subtle!and!dynamic!
with!more!intelligent!interests!than!most!can!feasibly!quantify.!!Unlike!most!traditional!
investments,!currency!exchange!trades!are!usually!shortGterm!and!may!involve!a!fast!
turnaround.!
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According!to!the!Bank!for!International!Settlements,!as!of!2007,!average!daily!turnover!
in!global!foreign!exchange!is!estimated!at!~$4!trillion.!!
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3.3

Debt'

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Fixed!income!portfolios!invest!in!bonds,!a!different!type!of!security!than!stocks.!!Bonds!
can!be!thought!of!as!loans!issued!by!such!organisations!as!companies!or!municipalities;!
they! are! often! referred! to! as! debt.! ! Like! loans,! most! bonds! have! a! fixed! term! of!
existence!and!pay!a!fixed!rate!of!return.!!For!example,!a!company!may!issue!a!fiveGyear!
bond! that! pays! a! 7! %! annual! return.! ! This! company! is! then! under! a! contractual!
obligation! to! pay! this! interest! amount! to! bondholders,! as! well! as! returning! the!
principal!at!the!end!of!the!term.!!Although!bondholders!are!not!owners!of!the!bond!
issuer!in!the!same!way!that!equity!shareholders!are,!they!maintain!a!claim!on!its!assets!
as!priority!creditors.!!If!a!company!cannot!pay!its!bond!obligations,!bondholders!may!
take! control! of! its! assets! (in! the! same! way! that! a! bank! can! repossess! your! car! if! you!
dont!make!your!payments).!!Lenders!further!up!the!capital!structure!normally!find!it!
easier! to! redeem! assets! of! the! company.! ! Institutions! such! as! banks! will! normally! be!
reimbursed!before!individual!bondholders.!
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Although!bonds!have!fixed!rates!of!return,!their!actual!prices!fluctuate!in!the!securities!
market!just!as!stock!prices!do.!!Just!as!there!is!a!stock!market!where!investors!buy!and!
sell!stocks,!there!is!a!bond!market!where!investors!buy!and!sell!bonds.!!In!the!case!of!
bonds,!investors!are!willing!to!pay!more!or!less!for!debt!depending!on!how!likely!they!
think! it! is! that! the! bond! issuer! will! be! able! to! pay! its! obligations.! ! A! contemporary!
illustration! of! the! confidence! in! repayment! was! demonstrated! by! the! low! takeGup! of!
government!paper!in!Greece,!in!light!of!the!countrys!poor!public!finances.!

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3.4

Equity'

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Equity!portfolios!invest!in!public!limited!companies!(PLCs).!!This!means!that!investors!
are!purchasing!a!share!of!the!company,!which!is!generally!understood!as!meaning!that!
they! become! owners! of! a! portion! of! that! corporation! (although! this! is! technically! a!
legal!fallacy).!!
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!The! financial! instrument! is! the! share! itself,! which! is! readily! transferable! on! stock!
exchanges! such! as! the! London! Stock! Exchange.! ! Investors! will! benefit! from! the!
business!performance!if!the!share!price!rises,!thus!inflating!the!value!of!the!asset,!or!if!
a! dividend! is! paid! out! to! shareholders,! which! is! usually! the! suitable! option! if! the!
company! does! not! foresee! a! more! effective! use! for! the! cash! it! has! raised.! ! ! It! is!
important! to! distinguish! this! from! the! concept! of! shareholders! equity,! which! is! the!
positive!remainder!of!the!companys!assets!after!all!liabilities!have!been!accounted!for.!!
This!is!a!relatively!certain!value,!whereas!the!prices!of!shares!trading!on!an!exchange!
can!be,!and!are,!determined!quite!irrespective!of!underlying!business!assets.!!This!was!
most! famously! demonstrated! by! the! dot! com! boom! of! the! 1990s,! when! newly!
founded! internet! companies! had! market! capitalisations! ! i.e.! the! total! number! of!
shares!multiplied!by!the!price!simply!people!were!willing!to!pay!!far!in!excess!of!the!
financial!performance!of!the!underlying!businesses.!
!

!
!

3.5

Financial'Derivatives'

!
In! recent! years! derivatives! have! become! a! major! part! of! the! European! asset!
management!industry.!!Major!asset!management!firms!have!implemented!systems!to!
enable!the!widespread!use!of!derivatives!as!an!investment!and!risk!management!tool.!!
Simply! put,! a! derivative! is! any! financial! instrument! whose! payoff! is! derived! from! the!
value! of! an! underlying! variable! at! a! time! in! the! future!! hence! the! name.! ! Types! of!
derivatives!include!options,!warrants,!swaps!and!futures.!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11!
!

Options! give! the! holder! the! right! (but! not! the! obligation)! to! purchase! (call!
option)!or!sell!(put!option)!the!underlying!asset!at!a!preGdesignated!price!at!
the! exercise! date! (European! options)! or! at! any! time! before! the! exercise!
date!(American!options).!

Futures! give! the! holder! the! obligation! to! purchase! the! underlying! asset! at!
the!date!of!expiry.!

Swaps! are! agreements! between! parties! to! swap! cash! flow! streams! they!
either! pay! or! receive! for! a! preGdesignated! time! period.! Examples! include!
swapping!an!obligation!to!pay!interest!at!a!floating!rate!for!the!obligation!to!
pay!a!fixed!rate,!and!swapping!cash!flow!obligations!in!one!currency!for!an!
obligation! in! another! currency,! removing! the! risk! of! exchange! rate!
fluctuations.!

Warrants! are! call! options! attached! to! debt! issued! by! companies,! allowing!
debt!investors!to!purchase!shares!in!the!company!at!a!preGdesignated!price.!

!
Stock!and!index!options!are!widely!used!by!professional!investors!to!hedge!their!share!
portfolios.! Derivatives! are! also! an! attractive! means! of! increasing! exposure! to! price!
movements;! they! offer! leverage! in! the! sense! that! an! investor! can! achieve! similar!
exposure! to! price! movements,! but! for! an! initial! outlay! far! less! than! purchasing! the!
underlying! asset! itself.! In! the! case! of! futures,! traders! are! only! required! to! post! a!
relatively!small!initial!capital!outlay!to!a!margin!account!but!can!gain!or!lose!almost!
oneGforGone! with! price! movements.! Index! options! allow! investors! to! gain! wider!
exposure! to! the! market! rather! than! just! single! securities.! ! Derivatives! are! also! a! risk!
management!tool;!depending!on!how!they!are!used!and!how!leveraged!they!are,!they!
can!either!increase!or!reduce!the!risk!of!an!investment.!!
!
The!derivatives!market!received!much!attention!during!the!financial!collapse!of!2007,!
most! of! it! negative.! ! The! US! government! was! forced! to! spend! $85! billion! bailing! out!
global! insurance! giant! American! International! Group! (AIG),! which! was! crippled! by!
losses! on! credit! default! swaps! (CDSs),! a! type! of! derivative.! ! ! The! problem! with!
derivatives! is! that! they! can! become! highly! complicated! due! to! the! designated!
variables,! which! determine! their! underlying! value;! this! can! also! make! it! almost!
impossible!to!determine!their!true!value!or!risk!profile.!!!
!
This! concerned! Warren! Buffett! who! when! buying! General! Re,! a! company! providing!
reinsurance,!was!determined!to!end!its!existing!derivatives!operations,!but!was!unable!
to! do! this! quickly! due! to! the! complexity! of! the! products.! However,! properly!
implemented!and!regulated,!they!maintain!a!sound!intellectual!basis!and!can!play!an!
important!role!in!many!investment!portfolios.!
!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12!
!

3.6

Real'Estate'

!
This!is!a!very!common!asset!class,!given!that,!for!the!majority!of!people,!their!house!is!
their!most!significant!asset.!!!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
Very!few!buy!a!property!outright,!instead!giving!the!bank!a!form!of!security!over!the!
house,! known! as! a! mortgage,! in! return! for! a! loan! with! which! to! buy! the! property! !
hence! the! phrase! an! Englishmans! home! is! his! bank! managers! castle.! ! For! many!
years,! this! was! seen! as! a! sound! investment! because! land! values! increased!
considerably,! thus! leaving! the! homeowner! with! positive! equity! in! the! property! ! i.e.!
the! house! is! worth! more! than! the! sum! of! the! loan! repayments! and! interest! charges.!!
This!is!the!most!simplistic!form!of!real!estate!investment.!!!
!
One!can!also!invest!in!real!estate!by!buying!shares!in!companies,!which!focus!on!this!
investment! vehicle.! ! A! wellGknown! example! is! Land! Securities! PLC,! which! owns,!
develops! and! manages! commercial! property,! such! as! offices,! shopping! centres! and!
retail!parks!(Land!Securities!owns!Cabot!Circus).!!These!companies!are!generally!set!up!
as!Real!Estate!Investment!Trusts!(REITs),!which!are!granted!significant!tax!advantages!
for!the!business!in!return!for!specific!obligations,!such!as!the!requirement!to!disperse!
90%!of!their!income!to!investors.!!!
!
As! we! have! seen! with! the! recent! crash,! property! is! by! no! means! the! guaranteed!
winner!it!was!believed!to!be.!!The!availability!of!credit,!which!was!partly!the!result!of!
social! policies! to! expand! homeownership,! enabled! subprime! borrowers! to! purchase!
properties! they! could! not! sensibly! afford,! which! artificially! inflated! house! prices.!!
When! the! bubble! burst,! not! only! were! many! in! negative! equity,! but! the! institutions!
propping!up!this!bubble!suffered!huge!losses,!leading!to!increased!unemployment!and!
ultimately!demand!for!commercial!space.

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13!
!

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31/8/12 16:00:25

4 Career'Opportunities'
!
Please!find!below!an!overview!of!ways!to!gain!experience!within!industry,!followed!by!
a!list!of!possible!career!routes!for!students!interested!in!finance.!!
!
For!more!detailed!questions!please!take!the!time!to!visit!our!sponsors!web!pages!or!
feel!free!to!ask!any!of!our!committee!who!will!be!happy!to!help.!!
!

'
'
Gaining'experience'

!
There! are! a! few! key! routes,! or! entry! points! for! gaining! experience! in! the! financial! /!
consultancy!industries!as!outlined!below;!
!

Spring'weeks'
Spring! weeks! offer! an! invaluable! insight! into! the! workings! of! a! major! bank! or!
consultancy! over! a! 1! or! 2! week! period! during! the! Easter! holidays.! The! key! concept!
behind! a! spring! week! programme! is! to! capture! the! interest! of! potential! candidates!
early!and!assist!them!in!making!career!decisions!through!hands!on!experience!within!
the!firm.!!!
st
Spring!weeks!are!usually!only!available!to!those!students!currently!in!their!1 !year,!or!
nd
in! their! 2 ! year! of! a! 4Gyear! course.! Successful! candidates! who! perform! well! at! such!
placements!may!be!offered!a!fast!track!route!to!gaining!a!summer!internship!for!the!
st
nd
following!summer.!!For!those!BIS!members!lucky!enough!still!to!be!in!their!1 !(or!2 )!
year,! we! thoroughly! recommend! researching! spring! weeks! and! getting! in! where!
possible,!only!a!selection!of!firms!offer!them!however!so!be!warned!that!competition!
for!places!is!high.!
!
!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!14!
!

Summer'internships'
A! summer! internship! is! a! great! way! to! get! involved! with! industry! and! although! not!
essential,! will! greatly! increase! your! chances! of! gaining! a! graduate! place,! particularly!
within!a!top!tier!investment!bank!or!consultancy.!!!
Most!of!our!sponsors!offer!summer!internship!places,!on!either!an!8!or!10Gweek!basis,!
nd
rd
available! to! students! in! their! penultimate! year! of! study! (2 ! year,! or! 3 ! year! on! a! 4!
st
year! course),! with! applications! open! from! the! start! of! 1 ! term.! Unlike! spring! weeks,!
which! often! give! more! of! a! general! overview! of! business! in! the! firm,! summer!
internships!tend!to!be!more!specific!to!individual!departments,!so!be!sure!of!the!area!
in!which!you!want!to!work!before!applying!(see!career!opportunities!below).!
!
An!application!process!for!an!internship!is!usually!considered!as!comprehensive!as!that!
of! a! graduate! scheme,! often! with! online! tests,! interviews! and! assessment! centres.!
Please!see!below!for!interview!preparation.!
!
Application! times! vary! so! please! research! your! field! of! interest! to! avoid!
disappointment!as!some!top!tier!banks!or!consultancies!may!have!closing!dates!early!
in!first!term.!!
!
!
!

Graduate'places'
All!firms!offer!graduate!schemes!in!most!departments,!which!should!be!researched!to!
your! best! ability! before! applying,! please! see! the! below! introduction! to! career! routes!
for!a!selection!of!possible!careers.!!
As!for!an!internship,!a!series!of!online!tests,!multiple!stage!interviews!and!assessment!
centres! can! be! expected! for! a! graduate! role.! Proper! preparation! for! all! interviews! is!
key!for!success.!Be!sure!to!thoroughly!research!you!chosen!field!before!attending!an!
interview,!and!to!think!of!answers!for!all!possible!questions!such!as;!
!

What!has!happened!recently!in!this!industry?!

How!has!this!affected!this!firm?!

Has!this!firm!been!in!the!news!recently!and!if!so,!what!for?!

What! are! you! skills/experience! and! why/how! do! they! match! what! we! are!
looking!for?!

What!kind!of!work!will!you!be!doing!in!your!role?!

What!are!your!strengths/weaknesses!
!
Please!do!not!hesitate!to!contact!any!of!the!BIS!committee!for!advice!should!you!be!
preparing! for! an! interview! and! require! some! guidance.! Webpages! such! as! Wikijobs!
can!also!be!useful!for!hearing!about!previous!candidates!experiences.!!
!
!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!15!
!

Work'experience'
It! may! be! possible,! dependent! on! the! firm,! to! gain! shorterGterm! work! experience! /!
shadowing! work! within! industry! by! means! of! a! well! written! email! either! through! the!
careers!websites!or!directly!to!a!contact!within!a!company.!Be!warned!however!that!
some! firms! explicitly! do! not! offer! any! experience! outside! of! their! spring!
week/internship!programmes,!and!thus!will!ignore!any!emails!requesting!such.!!
!

Careers'
'
Please! find! below! an! overview! of! possible! career! routes! for! students! interested! in!
finance!as!written!by!the!Bristol!Banking!and!Investment!Society!committee!members!
based! on! their! own! experiences.! Note! that! not! all! possible! career! paths! are!
highlighted,!but!more!a!general!overview!of!opportunities!within!finance,!consultancy!
and!law.!
!
!

4.1

Investment'Banking''Corporate'Finance'

!
This!front!office!department!of!an!Investment!Bank!is!often!seen!as!one!of!the!more!
glamorous! career! paths! within! finance.! The! extremely! high! remuneration! that! many!
successful! bankers! have! commanded! in! recent! years! may! have! contributed! to! this!
image.!But,!what!does!an!Investment!Banker!actually!do?!
!
In! simple! terms,! working! within! Corporate! Finance! means! that! youll! be! providing!
intimate!guidance!to!a!companys!management!on!achieving!their!strategic!goals.!This!
may!be!to!acquire!a!competitor!within!the!same!industrial!space;!vertical!or!horizontal!
integration,!or!a!similar!company!operating!in!a!completely!differing!geographic!area.!
Apart!from!providing!advice!to!client!management!on!whether!a!transaction!would!be!
a!good!or!bad!deal!for!the!company,!the!bankers!would!also!provide!information!and!
availability!on!how!to!finance!such!a!deal.!If!the!company!were!unable!to!close!a!deal!
using!only!cash!in!their!bank!account!they!would!have!to!ask!banks!to!help!them!fund!
such!transactions.!Here!we!shall!introduce!the!two!different!Investment!Bank!business!
models:!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!16!
!

1.!Bulge!Brackets!are!the!global!Investment!Banks!(e.g.!Morgan!Stanley)!who!not!only!
provide! advice! as! to! whether! deals! would! be! good/bad! decisions,! but! also! provide!
financing!for!large!transactions!!the!capital!would!be!raised!through!the!markets!
!
2.!Boutiques!are!smaller!Investment!Banks!(e.g.!Greenhill)!which!only!provide!advice!
to!clients;!they!offer!no!financial!raising!capabilities!
!
Normally,! an! Investment! Bank! would! have! a! long! standing! relationship! with! the!
company,!therefore!when!a!company!wished!to!pursue!the!strategic!option!of!buying!a!
competitor!it!would!already!have!a!goGto!banker!to!ask!for!advice!as!to!how!it!should!
proceed! e.g.! How! to! best! go! about! putting! in! a! bid! to! the! target! companys!
management/shareholders,! how! much! they! should! pay! (premium)! and! how! they!
should!fund!the!transaction!(Equity/Debt).!Deals!can!be!very!small!(>10!million)!but!
can!also!be!very!large!(>100!billion)!e.g.!AOL!and!Time!Warner.!The!Investment!Bank!
would! usually! charge! an! advisory! fee! for! their! work! ! say! a! bank! advised! on! a! 10!
billion!deal!and!charged!a!2%!advisory!fee!on!the!closing!amount,!which!would!indicate!
200! million! in! fees! for! the! Investment! Bank.! Not! bad! considering! a! team! of! ~10!
people!worked!on!the!deal!for!~9!months.!This!same!team!would!also!have!worked!on!
other! deals! in! this! timeframe,! and! thus! been! able! to! make! money! from! them!
simultaneously.! The! bank! may! have! also! been! able! to! charge! for! funding! the!
transaction;!in!this!case!if!the!bank!provided!5!billion!in!debt!they!may!have!also!been!
able! to! make! an! additional! 1%! in! financing! fees! ! another! 50! million.! From! this!
introduction!you!can!start!to!see!why!Investment!Banking!and!in!particular!Mergers!&!
Acquisitions!can!be!very!lucrative.!
!
Getting'a'job'in'Corporate'Finance'
!
A!job!in!Corporate!Finance!is!highly!demanding,!but!also!highly!rewarding;!reflected!in!
the!fact!that!it!is!one!of!the!most,!if!not!the!most!competitive!areas!of!an!Investment!
Bank! in! which! to! work.! To! succeed! here! you! need! to! be! able! to! work! under! highG
pressure! for! extended! periods! of! time! and! usually! to! tight! deadlines/schedules.! The!
stamina! of! being! able! to! work! 90+! hours! a! week,! every! week! on! various! live! deals! is!
also! a! prerequisite.! However,! the! exposure! to! client! companies! senior! management!
and!responsibilities!you!shall!receive!are!almost!unparalleled!!including!your!financial!
compensation.! Strong! interpersonal! skills! and! having! a! keen! interest! in! finding! out!
about! how! businesses! operate! and! why! they! are! successful! are! good! attributes! to!
have.!The!opportunity!to!progress!up!the!career!ladder!is!very!structured,!as!previously!
stated! it! takes! many! years! to! build! intimate! relationships! with! companies! and! their!
management.!
!
An!early!interest!in!this!business!area!will!pay!dividends!later!on,!the!best!way!to!start!
a!career!in!Corporate!Finance!is!to!enter!a!Spring!Week!in!your!1st!year!of!University,!
or!complete!a!summer!internship!in!your!penultimate!year.!However,!throughout!your!
time!at!University!there!will!be!many!other!opportunities!to!partake!in;!some!of!these!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!17!
!

may! be! M&A! challenges,! which! are! also! a! great! way! to! learn! more! about! Corporate!
Finance!!
!

4.2

Investment'Banking''Securities'(Trading)'

!
Traders!trade!securities!on!the!secondary!market!such!as!the!London!Stock!Exchange!
(LSE)! or! the! New! York! Stock! Exchange! (NYSE).! ! Traders! are! split! up! into! proprietary!
traders! (traders! that! trade! the! banks! money)! and! market! makers.! Market! makers!
move! the! price! of! a! security! and! they! earn! the! bank! revenue! through! the! spread!
between! the! Bid! and! the! Offer! price.! Within! a! bulge! bracket! bank,! each! team! of!
traders! and! market! makers! will! focus! on! specific! securities:! bonds,! commodities,!
currencies,!equities,!futures,!forwards,!derivatives,!options!or!swaps.!Traders!typically!
start!work!early!(around!6.30!am)!as!they!need!to!read!up!on!the!latest!news!that!has!
occurred! since! the! previous! days! trading! session! close,! identify! the! major! economic!
headlines!that!are!to!take!place!and!analyse!the!charts!of!the!securities!that!they!trade!
before!the!market!opens!(7.50am).!It!is!the!traders!job!to!match!their!clients!requests!
to!prices!in!the!market.!Traders!have!to!be!fast!to!match!the!price!before!it!changes!
and!generally!earn!money!for!the!bank!through!commission!and!through!obtaining!the!
financial!instrument!at!a!slightly!better!price!than!that!which!is!passed!onto!the!client.!
A! trader! has! to! start! and! end! the! day! with! a! clean! book;! therefore! any! open! trades!
must!be!closed!before!the!day!is!out!
!
Getting'a'job'in'trading'
!
Trading!is!one!of,!if!not!the!most!competitive!job!title!in!a!bank.!To!get!a!job!in!trading!
you!not!only!need!to!have!a!keen!interest!in!financial!news,!but!also!in!the!markets.!
Being!able!to!link!together!how!different!securities!affect!each!other!and!which!ones!
have!positive!and!negative!correlation!is!an!advantage.!It!helps!if!you!trade!yourself,!
either! using! a! fantasy! portfolio! such! as! with! www.bullbearings.com! or! trading! your!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!18!
!

own! money! (this! is! at! your! own! risk)! with! a! proven! trading! record.! Seldom! do! banks!
employ! people! that! don't! have! a! foundational! understanding! of! BOTH! fundamental!
and!technical!analysis!in!trading!roles.!Strong!quantitative!and!numeracy!skills!are!also!
essential,!so!as!to!be!able!to!quickly!determine!how!many!shares!to!buy!and!at!what!
price! when! the! security! is! highly! volatile.! Trading! is! all! about! being! disciplined,! and!
focusing! on! the! charts! whilst! simultaneously! paying! attention! to! the! news! and!
economic! headlines! in! order! to! identify! entry! and! exit! points.! The! crucial! difference!
between!an!investor!and!a!trader!is!risk!management.!Traders!can!make!losses!much!
greater! than! the! original! amount! risked! on! a! trade! and! that! is! why! they! always! use!
stop! losses:! to! manage! their! risk.! A! risk:reward! ratio! of! 1:2! is! usually! the! rule! banks!
employ.!Interviewers!will!be!looking!for!someone!who!can!cope!under!pressure,!with!a!
strong,! confident! character! who! is! able! to! enjoy! themselves! in! social! situations! after!
hours,! as! well! as! get! the! job! done! in! what! is! sometimes! an! extremely! stressful!
environment.!
!
Internships! and! graduate! places! alike! are! available! within! trading,! and! many! of! our!
sponsors! have! trading! (securities)! divisions,! please! refer! to! their! careers! sites! for!
further!information.!!

'

!
!
4.3

Risk'Management'

!
When!the!Bank!generates!revenue!through!trading,!M&A!activity!or!lending,!there!is!
always! the! risk! that! the! return! wont! be! what! the! Bank! forecast.! The! role! of! Risk!
Management!is!to!mitigate!these!risks!using!a!multitude!of!methods;!whether!that!is!
through!monitoring!and!controlling!the!banks!overall!exposure!to!an!individual!client,!
placing! hedges! for! specific! trades! or! syndicating! loans.! A! Bank! considers! itself! to! be!
exposed!if!the!client!it!is!dealing!with!owes!the!Bank!money.!In!this!case!the!client!may!
default! before! paying! the! bank! the! money! it! is! owed,! and! thus! the! bank! will! lose!
money.!
!
There!are!several!scenarios!in!which!the!client!could!owe!the!Bank!money,!such!as!for!
a!trade!the!Bank!has!made!on!behalf!of!the!client!that!is!yet!to!settle,!a!term!loan!to!
the! client! for! an! acquisition! or! a! Rolling! Credit! Facility! to! help! the! client! with! their!
working! capital.! Risk! also! forms! part! of! the! deal! team! during! a! merger! or! acquisition!
where!their!role!is!to!ensure!that!any!loan!the!bank!is!offering!as!part!of!the!deal!is!not!
too!risky.!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!19!
!

There!are!three!main!areas!within!risk:!
!

Credit!Risk!

Market!Risk!

Reputational!Risk!
!
It!is!Credit!Risks!job!to!prevent!over!exposure,!set!credit!limits!and!hedge!or!syndicate!
loans!and!set!the!covenants!(terms)!of!the!loan!that!the!legal!team!then!write!into!a!
Credit! Support! Annex.! Credit! Risk! actively! monitors! clients! whom! the! Bank! has!
exposure!to,!by!means!such!as!their!current!performance!and!activities!to!ensure!that!
the!Bank!is!still!comfortable!with!its!level!of!risk.!
!
Market! Risk! works! on! the! trading! floor! with! the! traders! and! it! is! their! job! to! identify!
and! monitor! market! risks! using! analytical! techniques! to! assess! the! banks! portfolios.!
Market!risk!has!significant!influence!over!the!trading!decisions!of!senior!management,!
as!it!is!their!role!to!ensure!that!the!Bank!has!not!over!traded!in!any!particular!area.!
!
Reputational! risk! works! to! ensure! that! whatever! transaction! the! bank! undertakes,! it!
will!not!have!a!negative!impact!on!the!banks!reputation.!An!example!could!be!if!the!
bank! was! seen! to! be! lending! to! a! company! that! supplies! nuclear! weapons.!
Reputational!risk!is!usually!made!up!of!senior!members!of!the!bank!who!meet!once!a!
week!to!discuss!the!current!M&A!transactions.!
!
!
Getting'a'Job'in'Risk'
!
There! is! a! lot! of! competition! for! any! job! in! an! Investment! Bank! and! Risk! is! no!
exception.! There! are! usually! more! intern! and! graduate! places! in! Credit! Risk! than!
Market!Risk!as!it!is!a!larger!department!and!Market!Risk!generally!takes!on!exGtraders.!
To!work!in!Risk!you!dont!need!to!have!a!finance!related!degree,!rather!a!keen!interest!
in!finance.!People!who!work!in!risk!have!varied!backgrounds,!form!degrees!in!Maths!
and!Physics!to!English!language,!French!and!Engineering.!Market!Risk!and!some!of!the!
specialist! groups! within! Credit! Risk,! such! as! the! Credit! Portfolio! Management,! are!
more!mathematically!based!roles.!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!20!
!

The!best!way!to!get!into!Risk!is!to!apply!early,!and!if!possible!apply!for!a!Spring!Week!
position.!If!this!goes!well!then!you!may!be!fast!tracked!to!the!final!round!of!the!intern!
application! process.! Please! see! the! section! on! Spring! Weeks! above! for! more!
information.!
!
The!Risk!Management!role!varies!between!Banks;!at!some!it!is!seen!as!Front!Office!and!
is! given! a! controlling! responsibility! whereas! in! others! it! takes! a! Middle! Office! role!
monitoring!the!activities!of!the!Bank.!
!
Risk! is! becoming! more! important! in! Banks! following! the! 2008! crisis.! Banks! with! a!
strong! Risk! department! are! currently! performing! the! best! as! a! good! risk! department!
reduces! a! Banks! losses! even! in! turbulent! market! conditions.! Risk! departments! now!
regularly! report! to! regulators! such! as! the! FSA! to! prove! that! the! Bank! is! aware! of! its!
exposure!and!that!it!is!not!over!exposed.
!
!

'
4.4

Technology'

!
It!is!with!technology!that!we!are!able!to!participate!in!a!truly!global!market.!Buying!in!
New!York!and!selling!in!Hong!Kong,!all!without!leaving!your!office!chair.!It!has!enabled!
markets! to! continually! operate! 24/7! and! opened! up! participation! to! anyone! with! an!
Internet!connection.!!
!
Exchanges! were! once! filled! with! a! mass! of! people,! who! had! to! be! physically! present!
when! buying! or! selling! their! assets.! Exchanges! are! now! information! hubs,! where!
networks!plug!into!one!another.!These!networks!can!be!other!global!exchanges!such!
as!the!LSE,!COMEX!or!NASDAQ.!They!could!also!be!Banks!or!Brokers!connecting!to!the!
exchange!to!carry!out!their!activities!as!market!participants;!these!include!the!likes!of!
J.P.!Morgan!and!ICAP!respectively.!Or,!it!could!even!be!you!as!a!private!investor!who!
has!paid!to!be!connected!to!one!of!these!networks!!
!
Technology! within! Global! Finance! has! been! building! up! to! this! level! since! the! early!
1980s,! and! there! are! no! signs! of! it! stopping.! It! is! not! solely! limited! to! trading! and!
market! activities,! the! use! of! technology! has! permeated! throughout! all! of! finance.!
Retail!banking,!that!is,!where!our!personal!accounts!reside,!is!a!system!underpinned!by!
technology.!The!electronic!transfer!of!money,!millions!of!interconnected!global!ATMs,!
payments! made! by! debit! and! credit! cards! and! the! maintenance! of! your! Current!
Accounts.! With! all! the! withdrawals! and! deposits! you! make! from! your! account! on! a!
daily! basis,! these! systems! must! work! flawlessly.! After! all! how! would! you! feel! if! your!
mortgage!payment!went!missing?!

!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!21!
!

!
!
The!technology!infrastructure!is!one!thing,!servers,!fibre!optic!lines!and!data!centres.!
Now!we!have!technology!participating!in!the!markets!itself.!With!the!advent!of!trading!
algorithms,! which! are! able! to! automatically! execute! trades! based! on! a! set! of! rules!
defined!in!a!program;!these!trading!methods!are!free!of!the!stress!and!emotion!of!a!
human! trader! who! may! make! mistakes! in! the! heat! of! the! moment.! High! Frequency!
Trading! algorithms! (HFT! algos)! take! this! one! step! further,! by! finding! and! trading! on!
very!quick!changes!in!market!conditions.!The!game!of!HFT!is!all!about!speed;!you!need!
to!be!able!to!hit!the!market!at!the!exact!millisecond!so!as!not!to!miss!an!opportunity.!A!
substantial!amount!of!money!is!spent!in!obtaining!that!speed!advantage,!even!to!the!
extent!of!moving!server!racks!closer!to!each!other!to!cut!down!on!the!distance,!hence!
time,! the! electrical! signals! have! to! travel.! Some! hedge! funds! are! solely! HFT! houses,!
running!their!whole!operation!electronically.!
!
Technology!is!a!big!growth!sector!in!finance,!many!if!not!all!of!the!Banks!have!an!inG
house! technology! department,! as! do! many! of! the! major! Hedge! funds.! These!
technology!divisions!can!almost!operate!like!a!separate!software!company!within!their!
institutions.! With! massive! budgets! and! resources! at! their! disposal,! Banks! and! Hedge!
Funds!can!afford!to!always!be!running!the!latest!and!greatest!systems!in!their!search!
for!a!competitive!edge.!People!are!always!seeking!newer,!better!and!faster!equipment.!
Since!the!electrical!cost!to!run!these!operations!is!massive,!institutions!are!investing!in!
more! efficient! equipment,! and! in! turn! reducing! their! energy! bills! considerably! and!
adding!to!their!bottom!line!profits.!As!a!byGproduct!of!their!activities,!financial!markets!
can! be! an! innovation! driver! in! technology,! with! the! eventual! benefits! of! systems!
developed!for!them!filtering!down!to!regular!consumers.!
!
!
!
Getting'a'Job'in'Technology'
!
There! is! a! lot! of! technology! that! just! has! to! be! maintained! and! kept! running.! The!
alternative! is! when! there! are! new! ideas! or! expansion! into! other! areas,! here! there! is!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!22!
!

usually!a!lot!of!technology!and!infrastructure!that!needs!to!be!implemented!to!make!it!
happen.!There!is!a!very!stereotypical!view!of!a!person!working!in!Technology;!however!
you!will!be!surprised!at!the!variety!of!roles!within!the!area.!We!shall!break!it!down!to!
three!broad!roles!within!Tech:!Project!Manager,!Analyst,!and!Developer.!!
!
Project'Manager:'Here!you!are!responsible!for!the!day!to!day!running!of!a!project,!and!
you!will!have!a!team!of!people!working!on!the!project!whom!you!will!be!responsible!
for.! You! are! also! responsible! for! keeping! the! project! on! track,! monitoring! issues,!
solving!issues!and!reporting!to!people!both!up!and!down!the!hierarchy.!Usually!people!
dont!go!straight!into!a!PM!role!because!you!need!experience;!you!normally!spend!a!
while!in!the!roles!below!first.!
!
Analyst:!Analysts!work!within!the!project!teams!and!are!assigned!specific!deliverables!
of! the! project! from! the! PM,! which! they! are! responsible! for! delivering.! They! gather!
requirements!by!speaking!to!the!end!users;!and!can!be!managing!subGteams.!Analysts!
can! also! be! responsible! for! testing! the! systems,! so! they! develop! and! manage! the!
testing!too.!!
!
Developers:! These! are! people! you! would! consider! as! the! coders,! but! they! dont!
necessarily! have! to! write! code.! Developers! would! be! responsible! for! delivering! the!
technical! side! of! the! projects,! for! example! they! need! to! code! in! Java! to! make! a! new!
trading!program!or!they!need!to!implement!a!new!connection!to!a!major!exchange.!
!
Front' Office' Support:! You! are! responsible! for! running! mission! critical! systems! on! a!
daily! basis! and! providing! support! to! traders! or! any! users! of! the! systems! available! to!
front! office.! Often! you! are! required! to! fire! fight! problems! that! occur! as! quickly! as!
possible!ensuring!a!low!average!time!to!fix!level.!It!is!suited!to!individuals!who!thrive!
in!a!fast!paced!and!high!pressure!environment.!
!
Knowledge!of!a!software!language!is!not!mandatory!for!all!roles,!but!a!familiarity!with!
the! technology! involved! will! always! help.! Some! of! key! skills! required! would! be!
teamwork,! project! management,! time! management,! attention! to! detail! and!
communication.!The!usual!route!for!Graduates!into!this!industry!is!through!Graduate!
Schemes!which!are!run!by!the!majority!of!Investment!Banks.!Summer!internships!are!
also!widely!available!for!Technology.!
!
!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!23!
!

!
!

4.5

Investment'Management'

!
Investment! management,! also! known! as! Asset! Management,! is! essentially! what! it!
sounds!like:!a!client!gives!money!to!an!asset!manager,!who!then!invests!it!to!meet!the!
client's!objectives.!!In!other!words,!investment!management!seeks!to!grow!capital!and!
generate!income!for!individuals!and!institutional!investors!alike.!!The!potential!clients!
of! an! asset! manager! can! vary! widely.! ! Investment! managers! who! work! for! mutual!
funds,! for! example,! manage! money! for! retail! clients,! whilst! investment! managers! at!
investment! banks! often! invest! money! for! institutional! investors! like! companies! or!
municipalities!(often!for!pools!of!money!like!pension!funds).!!Investment!managers!can!
also! manage! hedge! funds,! which! combine! outside! capital! with! capital! contributed! by!
the! partners! of! the! fund! and! invest! the! money! using! complex! and! sometimes! risky!
techniques,! attempting! to! produce! high! absolute! returns.! ! Pension! funds! usually!
undertake!more!riskGaverse!and!passive!investment!strategies,!i.e.!indexGtracking,!than!
those!adopted!by!other!institutions.!!They!face!restrictions!on!their!ability!to!short!sell,!
as! well! as! guideline! limits! on! their! exposure! to! more! risky! asset! classes! due! to! the!
nature!of!the!capital!backing!their!activity!(individuals!retirement!savings).!!
!
Investment!managers!buy!their!stocks,!bonds!and!other!financial!products!working!on!
the!buy!side,!from!salespeople!at!investment!banks,!on!the!sellGside.!!Because!they!
make! commissions! on! every! trade! they! facilitate,! salespeople! provide! information!
(research,! ideas)! to! investment! managers! in! an! effort! to! get! the! asset! managers! to!
trade! through! them.! ! For! this! reason,! salespeople! often! shower! asset! managers! with!
perks!like!sports!tickets!and!dinners!at!expensive!restaurants.!!!
!
Some!key!areas!of!work!within!Investment!management!are!as!follows:!
!
! Researching!potential!financial!products,!strategies!and!techniques!
! Close!monitoring!of!product!performance!and!generation!of!client!reports!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!24!
!

! Client!relations,!rapport!building!and!new!business!generation!through!sales!
and!product!/!portfolio!pitching!
!
Getting'a'Job'in'Investment'Management'
!
Work!in!Investment!Management!can!be!interesting,!varied!and!highly!pressurised,!but!
is! often! regarded! as! a! little! less! intensive! that! perhaps! other! front! office! investment!
banking! jobs.! ! It! is! a! wellGpaid! career! route,! which! requires! people! of! an! analytical!
thinking!background,!with!a!strong!degree,!a!keen!interest!in!the!financial!markets!and!
excellent!interpersonal!skills.!!
!
New! graduates! within! investment! management! will! be! expected! to! take! on! further!
study!for!either!a!CFA!(charter!financial!analyst)!or!an!Actuarial!qualification.!These!are!
standard!within!industry!and!once!completed!allow!an!employee!to!progress!to!more!
managerial!positions!within!a!firm.!More!information!can!be!found!online!with!regards!
to!professional!qualifications.!!
!
Unfortunately! for! most,! at! a! graduate! level! Investment! Management! is! notoriously!
difficult,! though! not! impossible,! to! get! into! as! employers! often! require! a! strong!
knowledge!of!the!financial!markets!and!a!good!level!of!industry!experience!due!to!the!
nature!and!responsibility!associated!with!the!role.!!
!
A! great! first! route! for! looking! at! careers! related! in! asset! management! is! to! start!
investing! yourself,! whether! with! real! or! virtual! money! online.! This! will! not! only!
increase!your!knowledge!and!familiarity!with!movements!in!the!financial!markets,!but!
will!also!give!you!a!great!talking!point!at!interviews.!
!
Internships! and! graduate! opportunities! alike! are! available! within! Investment!
Management! through! IM! divisions! of! large! investment! banks! or! private! Asset!
Management!firms.!Many!of!our!sponsors!have!investment!management!branches!and!
are!well!worth!looking!into!for!anyone!that!is!interested.!!
!
!

!
4.6

Investment'Consultancy'

!
Investment! consultants! advise! the! trustees! of! funds! on! what! to! do! with! their! money!
and!operate!within!the!Investment!Management!industry.!!
!
Unlike! Investment! management! firms! however,! Investment! Consultants! rarely! deal!
with!the!specific!stock!selections!themselves,!but!rather!spend!their!time!and!expertise!
researching!overall!asset!classes,!and!manager!performance.!!
An!Investment!Consultant!will!usually!operate!on!behalf!of!a!trustee!for!a!fund!such!as!
a! university! endowment! fund! or! a! pension! fund.! In! most! cases,! an! investment!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!25!
!

consultant!is!used!instead!of!just!an!normal!asset!management!firm!due!to!the!nature!
of! the! fund,! for! example! a! pension! fund,! where! there! is! not! only! dynamic! funding!
levels!(money!coming!in)!but!also!dynamic!liabilities!(money!going!out).!!Such!a!fund!is!
much!harder!to!manage!than!just!a!static!pot!of!cash.!
!
In! these! cases! the! client! most! often! wishes! to! invest! in! many! different! asset! classes!
with!minimal!risk!and!high!investment!confidence.!!
!
An!Investment!Consultant!will!help!each!client!to!choose!particular!allocations!of!asset!
classes,!e.g.!30%!equities!(Stocks!and!shares)!,!50%!debt!(Bonds)!and!20%!real!estate,!!
and! will! help! to! choose! the! Asset! Managers! that! are! most! likely! to! meet! the! clients!
objectives.!Thus,!the!majority!of!the!work!of!an!investment!consultant!is!made!up!of!:!
!
! Researching!Manager!performance!!
! Choosing!of!correct!investments!for!clients!
! Communication!with!both!clients!and!Asset!Managers!
! Monitoring!of!client!portfolios!
!
The!work!of!an!Investment!Consultant!is!often!regarded!as!slightly!more!relaxed!that!
that! of! a! front! office! investment! banker,! or! even! an! asset! manager,! with! more! of! a!
work!life!balance!available!for!employees.!!
!
!

'
Getting'a'Job'in'Investment'Consultancy'
!
Being! of! the! same! industry,! many! of! the! attributes! required! are! very! similar! for! an!
Investment! Consultant! as! for! an! Investment! Manager! including! strong! analytical!
thinking! and! communication! skills.! Likewise! as! for! investment! management,! an!
investment! consultant! will! also! be! expected! to! take! on! further! professional!
qualifications!once!started!within!a!firm,!usually!a!CFA!or!Actuarial!qualification.!!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!26!
!

Applications!for!a!career!in!investment!consultancy!may!be!considered!marginally!less!
competitive!than!for!investment!banking!or!investment!management,!however!there!
are! fewer! large! firms! that! offer! graduate! places! and! a! comprehensive! application!
process!of!tests!and!multiple!stage!interviews!can!still!be!expected!for!both!intern!and!
graduate!level!jobs.!!
!
From!our!sponsors,!Mercer!is!one!of!the!largest!Investment!Consultancies!in!the!world,!
so!for!more!information!please!see!their!web!page.!
!
!

4.7

Audit'

!
Audit!is!reporting!to!the!shareholders!of!a!company!on!whether!the!annual!accounts!
show!a!true!and!unbiased!view!of!the!companys!financial!activity!and!position,!and!to!
ensure! that! the! accounts! comply! with! the! Companies! Act! 2006.! Ultimately,! Auditors!
ensure!the!fiscal!accuracy!and!responsibility!of!organisations.!
!
Audit!can!be!done!internally!(by!employees!within!the!organisation)!or!externally:!
!

Internal'Audit!is!defined!as!an!ongoing!appraisal!of!the!financial!health!of!a!
company's! operations! by! its! own! employees.! During! an! internal! audit,!
internal! auditors! will! evaluate! and! monitor! a! company's! risk! management,!
reporting,! and! control! practices! and! make! suggestions! for! improvement.!
Internal! auditing! covers! not! only! an! organisation's! finance! function,! but! all!
the! operations! and! systems! in! a! firm.! While! internal! auditors! are! typically!
accountants,!this!activity!can!also!be!carried!out!by!other!professionals!who!
are! wellGversed! with! a! company's! functions! and! the! relevant! regulatory!
requirements.! Regulations,! such! as! the! SarbanesGOxley! Act! of! 2002,! have!
increased! corporate! requirements! for! performing! internal! audits.! They! are!
important! components! of! a! company's! risk! management,! as! they! help!
companies!identify!issues!before!they!become!substantial!problems.!
!

External' Audit' is! when! an! independent! public! accounting! firm! engaged! by!
the! client! subject! to! the! audit,! expresses! an! opinion! on! whether! the!
company's!financial!statements!are!free!of!material!misstatements,!whether!
due!to!fraud!or!error.!For!publiclyGtraded!companies,!external!auditors!may!
also! be! required! to! express! an! opinion! over! the! effectiveness! of! internal!
controls! over! financial! reporting.! Most! importantly,! external! auditors,!
though! engaged! and! paid! by! the! company! being! audited,! are! regarded! as!
independent! auditors.! The! most! used! external! audit! standards! are! the! US!
GAAS!of!the!American!Institute!of!Certified!Public!Accountants;!and!the!ISA!!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!27!
!

International! Standards! on! Auditing! developed! by! the! International! Auditing! and!
Assurance! Standards! Board! of! the! International! Federation! of! Accountants.! External!
auditors!must!be!a!member!of!one!of!the!recognised!professional!accountancy!bodies.!
!
Auditors! may! ascertain! a! company's! inventoryGmanagement! system! as! well! as! its!
current! inventory! count.! Obsolete! inventory! (which! is! essentially! worthless)! may! still!
be! on! the! books! as! regular! finishedGgoods! inventory,! which! overstates! a! company's!
assets! on! the! balance! sheet! and! provides! a! misleading! picture! for! management! and!
investors.!Auditors!will!need!to!understand!the!root!causes!for!the!overstatement,!and!
recommend!periodic!inventory!accounts!and/or!security!measures!(depending!on!the!
cause)!to!management!by!way!of!an!audit!report.!
!

!
!
Getting'a'Job'in'Audit!
'
Auditing! is! a! growing! field,! thanks! to! stricter! government! regulations,! and! offers! a!
surprising!variety!of!job!responsibilities!for!those!inclined!to!deal!with!the!details!of!a!
company's! operations.! If! liaising! with! company! management! and! regulating! a! variety!
of!business!and!financial!processes!appeal!to!you,!it!may!be!suitable!to!consider!an!inG
demand!career!as!an!auditor.!
!
The! first! stage! of! your! career! will! focus! on! learning! the! fundamentals! of! audit! and!
developing!key!skills!as!well!as!studying!for!the!ACA!professional!qualification!with!the!
Institute! of! Chartered! Accountants,! England! and! Wales! (ICAEW)! or! the! Institute! of!
Chartered! Accountants! of! Scotland! (ICAS).! Studying! for! these! qualifications! is! tough!
however!some!firms!offer!full!financial!support!and!access!to!firstGclass!tuition!and!also!
once! you! are! qualified,! you! will! enjoy! a! real! career! head! start! with! a! number! of!
opportunities.! Larger! accounting! firms! and! internal! audit! departments! will! typically!
want!their!auditors!to!possess!certifications!such!as!Certified!Public!Accountant!(CPA).!
After! your! initial! training,! you'll! have! the! chance! to! broaden! your! experience.! You!
might!decide!to!investigate!other!areas!of!Assurance,!different!clients,!project!work!or!
even!another!part!of!the!firm.!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!28!
!

!
The! Big! Four! of! Deloitte,! PWC,! KPMG! and! Ernst! &! Young! are! the! four! largest!
international! accountancy! and! professional! services! firms,! which! handle! the! vast!
majority! of! audits! for! publicly! traded! companies! as! well! as! many! private! companies.!
The! summer! internship! scheme! is! the! most! common! form! of! entrance! into! this!
vocation.! This! is! for! penultimate! year! students,! where! the! firms! offer! a! ten! week!
programme!of!training!and!working.!If!you!manage!to!impress,!you!will!get!offered!a!
position!on!the!graduate!scheme!for!the!following!summer.!!
!
!
!

4.8

Management'Consultancy'

!
Management!Consultancies!help!their!clients!meet!their!business!objectives,!or!solve!
their! business! problems.! The! value! of! Consultants! is! that! they! have! a! wide! range! of!
experiences! in! different! businesses! having! worked! for! clients! in! many! industries.! All!
this!expertise!can!be!drawn!upon!to!suggest!effective!new!ideas!or!strategies!for!a!new!
client.!!
!
To!work!for!a!client!successfully!you!must!spend!a!large!proportion!of!your!time!with!
that! client! and! at! their! place! of! business! and! hence! there! can! be! a! lot! of! travelling!
involved.! If! you! work! for! one! of! the! larger! Management! Consultancy! Firms!
international!travel!is!also!commonplace.!Work!is!carried!out!in!teams!which!are!made!
up!of!a!mixture!of!people!from!the!consultancy,!both!experienced!consultants!and!new!
graduates! will! all! be! in! the! same! team.! You! are! embedded! within! the! client!
organisation!trying!to!understand!their!needs,!problems!and!figuring!out!solutions.!In!
order! to! understand! your! clients! business! you! will! need! to! speak! to,! and! interview!
employees! within! the! company.! This! also! includes! board! level! employees! too,! CEOs!
and!CFOs.!
!
The!type!of!problems!consultants!are!brought!into!solve!include:!
!
Business' Strategy:! This! involves! taking! a! high! level! view! of! what! the! business! is!
currently! doing! and! how! processes! can! be! improved! to! increase! effectiveness.! E.g.!
How!can!a!company!meet!its!growth!targets!within!5!years?!
!
Outsourcing:! This! is! looking! at! moving! a! function! away! from! one! that! is! directly!
managed!by!the!business,!to!an!externally!managed!service!which!the!company!pays!
for.! This! can! be! done! for! cost! saving! reasons,! or! to! streamline! the! business! core!
functions.!
!
Supply'chain'and'logistics:!How!can!the!supply!chain!of!a!manufacturer!be!improved!
to! save! costs! or! increase! productivity?! By! analysing! and! finding! efficiencies! within!
current!systems!this!can!be!achieved.!!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!29!
!

!
Management' and' Organisational:! To! bring! about! improvements! in! the! company! by!
looking! at! the! organisational! structure! of! the! company.! Can! duplicated! roles! and!
functions!be!removed?!
!
Technology:! A! prominent! example! is! the! introduction! of! the! Congestion! Charge! in!
London.!TFL!(Transport!for!London)!is!not!a!technology!company,!so!consultants!were!
brought! in! to! advise! on! and! implement! the! project.! There! are! some! firms! that! are!
purely!Technology!Consulting.!!!
!
'
Getting'a'job'in'Management'Consultancy'
!
Management!consultancy!firms!are!looking!for!top!performers!in!all!areas.!You!have!to!
be! a! well! rounded! individual,! academic,! sociable,! hard! working! and! focused.!
Involvement!in!outside!activities!has!pretty!much!become!a!necessity!now.!You!need!
to!demonstrate!that!you!are!an!active!participant;!this!shows!drive,!commitment!and!
passion.! Other! essential! qualities! are! communication,! teamwork! and! attention! to!
detail.!!
!
The!application!process!for!management!consultancy!can!have!many!stages!and!
include!a!lot!of!assessments.!EGtray!exercises,!group!work,!presentations,!numerical,!
verbal!and!logical!tests!can!all!be!utilised!during!the!application!process.!Multiple!
interviews!are!also!common,!so!preparation!is!key,!management!consultancies!
probably!have!the!most!comprehensive!assessment!processes.!
!

'

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!30!
!

4.9

Law'

!
With!the!addition!of!our!Law!sponsors!Allen!&!Overy!and!DLA!Piper,!we!hope!both!to!
increase! our! law! student! membership! and! raise! our! existing! members! awareness!of!
the!careers!available!in!law.!!
!
Behind!every!investment!there!is!a!legal!framework!to!follow,!a!regulation!to!adhere!to!
or!a!contract!to!draft.!Lawyers!play!an!essential!role!within!the!city,!whether!that!is!at!
a! magic! circle! law! firm! acting! for! a! client! or! in! the! internal! compliance! division! of! an!
Investment!Bank.!!
!
Law!is!an!incredibly!diverse!subject,!within!a!commercial!law!firm!there!are!numerous!
divisions,!litigation,!arbitration,!employment!and!corporate!to!name!but!a!few.!!
!
!
Getting'a'job'in'Law'
!
Increased!rules!and!regulations!within!Finance!have!also!led!to!an!increased!demand!
for! good! legal! advice.! Nonetheless! however! competition! for! legal! jobs! is! as! fierce! as!
ever.!Many!law!firms!offer!oneGday!insights!for!1st!year!students!and!vacation!schemes!
for!2nd!years.!!
!
NonGlaw! students! also! have! the! opportunity! to! pursue! a! legal! career.! Indeed! around!
50%! of! those! working! at! city! law! firms! did! not! study! law! at! University.! A! oneGyear!
conversion!course!(called!the!GDL)!is!all!that!you!need!in!order!to!catchGup!with!those!
who!graduated!with!an!LLB!in!Law.!Many!nonGlaw!placements!are!also!offered!in!the!
city!for!those!who!think!becoming!a!solicitor!is!the!right!career!choice!for!them.!!
!
Becoming!a!solicitor!is!not!the!only!legal!career!path!for!those!interested!in!the!law.!
Those! who! see! themselves! becoming! Barristers! or! advocates! can! also! avail! of! the!
numerous! miniGpupillage! (1! week! placement! shadowing! a! Barrister)! opportunities!
available.!Again,!however!these!are!fiercely!competitive.!!
!
After!completing!a!degree!in!law,!or!a!conversion!course,!the!path!to!the!various!legal!
vocations!splits.!If!you!wish!to!become!a!solicitor!you!must!take!the!LPC!(Legal!Practice!
Course).!The!BPTC!(Bar!Professional!Training!Course)!is!the!equivalent!should!you!wish!
to!become!a!barrister.!!
!
Summer'Vacation'schemes'
!
Those!who!are!in!the!2nd!year!of!their!legal!studies!may!apply!for!a!vacation!scheme!
with! a! law! firm! whether! at! a! London! firm! or! regionally.! If! successful! you! will! get! to!
spend! anywhere! between! 2G4! weeks! interning! at! the! firms! offices.! This! is! the! best!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!31!
!

opportunity!to!get!a!training!contract!before!undertaking!your!final!year!of!studies.!If!
made!a!training!contract!offer,!you!may!also!have!your!LPC!fees!paid!for!you.!!
!
!
The'Final'Step:'Becoming'a'Solicitor'
!
After!completing!the!LPC,!you!normally!undertake!a!2!year!training!contract!with!a!law!
firm.!This!varies!in!content!but!can!either!be!6!x!4!month!seats!(a!seat!is!the!time!you!
spend!in!one!division!of!the!firm)!or!4!x!6!month!seats.!After!this!you!will!qualify!as!a!
solicitor!and!you!may!be!made!a!full!time!offer.!!
!
The'Final'Step:'Becoming'a'Barrister'
!
After!you!complete!the!BPTC,!you!need!to!obtain!a!pupillage,!usually!a!12!month!long!
paid!job.!After!this!time!the!chambers!you!complete!your!pupillage!at!may!choose!to!
make!you!a!full!time!offer.!!
!
The'Final'Step:'Alternative'legal'careers'
!
Solicitors! can! also! apply! postGqualification! for! a! role! within! compliance! at! a! city! firm,!
such! as! an! investment! bank.! Compliance! departments! do! not! normally! recruit!
undergraduates.!!
!
!
!
!

!
!
!
!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!32!
!

NAVIGATOR

LEADER

MENTOR
RECORD
BREAKER
For more details visit our website
www.morganstanley.com/careers

Morgan Stanley is an equal opportunity employer committed to workforce diversity. (M/F/D/V) 2012 Morgan Stanley

5 Useful Reading
!
!

5.1

Books'about'Notable'Investors;'

Bolton,! A.! ! (2009)! ! Investing! Against! the! Tide:! Lessons! from! a! Life! Running!
Money!!
*An! interesting! insight! into! fund! management! from! one! of! Fidelitys! most!
renowned!investment!stars*!

Morris,! C.! ! (2009)! ! The! Sages:! Warren! Buffett,! George! Soros,! Paul! Volcker!
and!the!Maelstrom!of!Markets!!!
*A!very!readable!introduction!to!and!comparison!between!the!perspectives!
of!three!of!the!worlds!most!prominent!financial!players*!

Janjigian,!V.!!(2008)!!Even!Buffett!Isnt!Perfect:!What!You!Can!&!Cant!Learn!
from!the!Worlds!Greatest!Investor!
*Offers!a!slightly!more!critical!assessment!than!other!books!on!Buffett*!

!
!
!

5.2

Books'about'how'to'Invest;'

Dorsey,! P.! ! (2004)! ! The! Five! Rules! for! Successful! Stock! Investing:!
Morningstars!Guide!to!Building!Wealth!and!Winning!in!the!Market!
*An!very!digestible!book!for!furthering!your!valuation!skills!and!knowledge*!

Graham,!B.!!(1949)!!The!Intelligent!Investor!
*The!original!classic!on!investing,!essential!reading!for!any!serious!investor*!

!
!
!

5.3

Books'about'Careers'in'Investment'Management;'

Vault.!!(2010)!!Vault!Career!Guide!to!Investment!Management.!
*The!laymans!introductory!book!to!finance,!but!beware!the!typos!and!minor!
errors*!!
!

Stoakes,!C.!!(2009)!!All!You!Need!to!Know!About!the!City.!
*A!comprehensive!introduction!to!finance,!a!very!useful!reference!book*!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!33!
!

Pearl,! J.,! Rosenbaum,! J.! ! (2009)! ! Investment! Banking:! Valuation,! Leveraged!

Buyouts!and!Mergers!&!Acquisitions!
*An! excellent! valuation! book! for! those! serious! students! with! IB/IM!
interviews/internships*!

!
And!finally,!some!books!which!are!just!fantastic!reads;!
!

Burrough,!B.!(2004)!Barbarians!at!the!Gate:!The!Fall!of!RJR!Nabisco!
*The!gripping!story!of!the!largest!corporate!takeGover!in!history,!an!amazing!
book!offering!insight!into!the!secretive!world!of!LBOs!and!Private!Equity*!

Rothbard,!M.!(2005)!What!Has!Government!Done!to!Our!Money?!
!And!The!Case!for!the!100!Percent!Gold!Dollar!!
*A!brilliant!insight!into!the!Austrian!School!of!Economics!thoughts!and!
why!fiat!money!will!always!fail*!

!
!
!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!34!
!

stays with you

Stephanie at a fashion retailer

Assurance
Actuarial
Consulting
Financial Advisory
Tax
Technology
All degree disciplines,
2:1 or above.
300+ UCAS tariff
or equivalent.
Voted employer of
choice by students
in The Times Top 100
Graduate Employers
Survey for nine
years running.

Opportunities with the UKs number one

graduate employer
Join Spring, Summer or Autumn
Your career is just that, yours. You choose it. You live it. You make
it happen. To get the best from it, you need the best opportunities.
Thats why opportunity is at the heart of a career with us.
Opportunities to grow as an individual, to build lasting relationships
and make an impact in a place where people, quality and value
mean everything. For Stephanie, this means working with a leading
online fashion retailer. And having spent lots of time working at
understands how their business revolves around the seasons, not
reach your full potential.

Its the opportunity of a lifetime.

2012 PricewaterhouseCoopers LLP. All rights reserved.

Diverse people make us stronger

6 Glossary
!
We!have!put!together!a!list!of!some!key!financial!definitions!below!that!we!hope!you!
will!find!useful:!
!
AIM'
Alternative!Investment!Market;!a!junior!market!in!the!UK!designed!for!companies!who!
do!not!meet!the!minimum!requirements!necessary!to!list!on!the!LSE!(they!may!have!
insufficient!trading!history!or!revenue).!
!
Arbitrage''
'
Earning! a! riskless! profit! by! exploiting! market! price! discrepancies! between! two! assets!
when!they!are!not!equal!to!discrepancies!in!their!intrinsic!value.!!A!simple!example!is!if!
there!were!two!companies!identical!in!everything!except!name,!but!shares!in!one!were!
trading!at!a!market!price!higher!than!the!other.!!An!arbitrage!opportunity!exists!and!
can!be!exploited!by!selling!shares!in!the!more!expensive!company!and!buying!shares!in!
the! cheaper! one.! As! the! two! are! identical,! over! time! we! would! expect! their! market!
prices!to!converge,!and!a!riskGfree!profit!will!have!been!earned.!
!
Asset'
'
Financial! assets! include! stocks,! bonds! and! bank! deposits! among! other! things.! ! They!
derive!value!because!of!a!contractual!claim!(to!interest!in!the!case!of!bonds,!to!voting!
rights!in!companies!in!the!case!of!equity).!
!
Asset'Management'
'
The! act! of! investing! in! the! financial! markets! on! behalf! of! clients! in! order! to! achieve!
their!desired!objectives.!
!
Bank'
'
An!institution!that!is!licensed!to!conduct!banking!activities;!these!can!be!commercial!or!
investment! banks.! Commercial! banks! take! deposits! and! make! ordinary! loans;!
investment!banks!provide!a!wide!range!of!advisory,!underwriting!and!market!making!
services.!
'
Basis'Points!
!
Hundredths!of!a!percent!(0.01%).!Quoted!when!referring!to!interest!rates,!abbreviated!
as!bps.!
!
Bear'
'
Term!used!when!referring!to!a!market!in!which!prices!are!falling,!an!investor!is!said!to!
be!bearish!if!they!believe!market!prices!are!likely!to!fall.!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!35!
!

Bid/Offer''
'
The! bid! price! is! the! price! quoted! at! which! brokers! are! willing! to! purchase! securities.!!
The!offer!price!is!the!price!at!which!the!broker!is!willing!to!sell.!
!
Blue'Chip''
'
A! wellGestablished! company! with! a! good! record! of! earnings! over! a! long! time! period.!
These!companies!are!generally!perceived!as!relatively!secure.!
!
Bond'
'
A! contractual! claim! to! a! stream! of! cash! flows! paid! by! the! bonds! issuer! (usually! a!
company)!over!time.!Bonds!are!debt!instruments!and!can!be!thought!of!as!corporate!
I.O.Us.!
!
Broker'
Intermediaries! who! buy! or! sell! financial! assets! on! behalf! of! their! clients! (individuals,!
firms! and! other! parties).! ! They! charge! a! fee! for! doing! this! in! terms! of! the! difference!
between!their!bid!and!ask!prices!(the!bidGask!spread).!
!
Bull'
'
Term!used!when!referring!to!a!market!in!which!prices!are!rising.!!An!investor!is!said!to!
be!bullish!if!they!believe!prices!are!likely!to!rise.!
!
Buy'Side' '
Institutional! investors! and! others! who! compose! the! part! of! the! market! which!
purchases!securities.!
!
Capital' '
In!a!loose!sense:!money!that!has!been!invested!/!used!to!generate!income.!!Companies!
raise!capital!in!the!capital!markets!(debt!and!equity!markets).!
!
CDO'
'
Collateralized! Debt! Obligation;! basically! a! derivative! based! on! an! underlying! pool! of!
debt! instruments! such! as! bonds! (or! mortgages! in! the! case! of! a! CMO).! ! ! These! have!
gained!widespread!notoriety!throughout!the!financial!crisis!as!in!many!cases!the!risk!of!
default!on!the!underlying!mortgages!was!incorrectly!estimated,!leading!to!large!losses!
for!many!institutional!investors.!
!
Commodities'
'
Physical!items!such!as!gold,!oil,!corn,!soya,!coffee,!which!are!traded!on!exchanges.!
!
Coupon' '
The!periodical!interest!payments!from!a!bond.!Usually!defined!as!a!percentage!of!the!
bonds!principal!(the!final!payment!at!the!bonds!expiration)!called!the!coupon!rate.!
!
!

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!36!
!

Debt'
'
A!form!of!financing!in!which!the!borrower!agrees!to!repay!the!lender!at!some!date!in!
the!future,!usually!paying!an!interest!on!a!periodical!basis!until!this!date.!
!
Default' '
Failure!to!repay!the!principal!amount!or!an!interest!payment!under!a!debt!contract.!
!
Derivatives'
'
These! are! financial! instruments,! which! derive! their! value! from! an! underlying! asset.!!
These! are! mostly! traded! overGtheGcounter! however! exchanges! also! exist,! such! as! the!
Chicago!Mercantile!Exchange!(worlds!largest).!
!
Dividend'
A!payment!made!out!of!a!companys!profits!for!the!period!to!its!shareholders.!
!
Equity' '
A! form! of! financing! in! which! investors! commit! capital! to! a! company! in! exchange! for!
voting!rights,!as!well!as!the!prospect!of!dividends!and!of!capital!growth!(growth!in!the!
value!of!their!shares).!
!
Forex' '
Abbreviation!for!Foreign!Exchange.!
!
FTSE'
'
Financial! Times! Stock! Exchange! index! of! leading! stock! prices.! The! FTSE! 100! is!
compromised! of! the! top! 100! companies! in! the! UK! by! market! capitalisation;! the! FTSE!
250!is!composed!of!the!next!250!companies.!
!
Future' '
A!contract!where!the!holder!agrees!to!purchase!an!underlying!asset!at!a!certain!date!in!
the!future!for!a!predetermined!price.!
!
Gearing'/'Leverage''
The!ratio!of!a!companys!debt!to!its!equity!capital.!
!
'
'
'

!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!37!
!

Hedge' '
The!act!of!taking!a!position!(usually!using!derivatives)!to!protect!an!investment!from!
movements!in!market!prices.!A!simple!example!is!if!you!believed!a!particular!company!
in!the!utilities!industry!is!likely!to!outperform!others!in!the!same!industry,!but!thought!
share!prices!for!the!industry!as!a!whole!are!likely!to!be!volatile!in!the!near!future!you!
could!take!a!long!position!in!your!favoured!utilities!company!and!hedge!against!price!
movements!for!the!industry!as!a!whole!by!taking!an!equal!short!position!in!the!other!
utilities! companies.! If! your! favoured! company! outperforms! its! competitors! you! will!
make!a!profit!but!you!will!be!protected!from!wider!movements!in!industry!prices.!
!
Hedge'Fund'
'
A!fund,!usually!started!by!a!collective!of!wealthy!individuals!and!structured!as!a!limited!
partnership,! that! uses! aggressive! trading! strategies! with! the! aim! of! generating! large!
returns!for!its!investors.!
!
Interest! !
The!price!paid!for!borrowing!money!/!earned!on!lending!money.!
!
IPO'
'
Initial!Public!Offering,!the!first!offering!of!a!companys!common!stock!to!the!public.!
!
LIBOR' London! Interbank! Offered! Rate;! the! rate! at! which! banks! will! lend! to! each!
other!on!a!short!term!basis.!
!
Liquidity' '
A! measure! of! tradability! of! a! companys! shares! ! the! number! in! issue! and! actively!
trading!in!the!markets.!
!
Long'
'
To!have!a!long!position!is!to!be!invested!in!something,!for!example!having!purchased!a!
share.!
!
M&A'
'
Abbreviation!of!the!term!Mergers!and!Acquisitions.!
!
Market'Cap'
'
Market! Capitalisation;! the! market! value! of! a! companys! equity,! i.e.! the! number! of!
shares!in!issue!multiplied!by!the!share!price.!
!
Margin' '
Term! used! when! describing! the! difference! between! two! interest! rates.! Also! a! term!
used!for!the!initial!deposit!a!trader!must!put!forward!before!taking!a!futures!position.!
!

!
!
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!

Mezzanine'
'
Term!used!when!describing!a!type!of!financing!(usually!debt)!that!ranks!somewhere!in!
the!middle!in!terms!of!seniority!and!recourse.!
!
Option! !
A!contract!that!gives!the!holder!the!option!to!purchase!(call)!or!sell!(put)!an!underlying!
asset!at!some!point!in!the!future!for!a!predetermined!price.!
!
OTC'
'
Over! The! Counter;! the! act! of! trading! assets! directly! with! another! party,! rather! than!
through!an!exchange.!
!
Portfolio' '
A!collection!of!investments.!
!
Rating' '
Bonds!are!given!ratings!based!on!their!estimated!likelihood!of!default!by!agencies!such!
as!Standard!&!Poors.!
!
Rights'Issue'
'
The!subsequent!issue!of!more!equity!capital!to!the!public!in!order!to!raise!funds.!
!
Securities'
'
Refers!to!bonds!and!shares.!
!
Securitization'
'
The!process!of!creating!a!security!from!an!underlying!pool!of!cash!flows!(for!example!
from!mortgages).!
!
Sell'Side' '
The!part!of!the!market!that!sells!securities.!This!includes!companies,!governments!and!
the!brokers!who!recommend!them!to!clients.!
!
Short'
'
To! hold! a! short! position! is! effectively! to! have! borrowed! an! asset! and! sold! it! in! the!
market,! the! position! must! eventually! be! closed! by! repurchasing! the! asset! and!
returning!it!to!its!owner,!so!a!profit!will!be!made!if!the!assets!market!price!falls!during!
the!period.!
!
Swap!
!
An!agreement!to!exchange!a!stream!of!cash!flows!(or!a!liability)!for!another!similar!one!
for!a!predetermined!period.!
!

!
!
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!

Synthetic'
A! synthetic! position! is! oneGreplicated! using! derivatives! without! holding! the! actual!
underlying!asset.!
!
Systematic'Risk' '
Market!risk,!not!attributable!to!individual!securities!but!the!market!as!a!whole.!
!
Technical'Analysis! !
Using!historical!data!on!prices!and!trading!volumes!to!attempt!to!predict!future!share!
prices.! This! is! contrary! to! Fundamentals' Analysis! where! the! underlying! fundamental!
attributes!of!a!company!are!assessed!in!order!to!estimate!a!fair!price!for!its!shares.!
!
Treasuries'
'
U.S.!government!bonds!!they!are!the!largest!borrower!in!the!world!and!regarded!as!
the!safest.!
!
VAR'
'
ValueGatGrisk.!A!sophisticated!system!used!by!investment!institutions!to!estimate!and!
manage!their!net!exposure!at!any!time!to!market!movements.!
!
Venture'Capital' '
Equity! finance! provided! by! private! individuals! (venture! capitalists)! to! young,! start! up!
companies.! The! venture! capitalists! will! realise! a! profit! once! the! company! is! taken! to!
the!stage!of!a!public!flotation!(share!listing)!and!they!can!sell!their!holdings!on.!
!
Warrant' '
A!bond!with!an!attached!call!option!for!shares!in!the!company.!
!
Wholesale'
'
Term! used! to! distinguish! when! the! client! is! a! business! or! government! (e.g.! the!
wholesale!money!market!!a!place!for!business!to!obtain!short!term!borrowings).!
!
!

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!

7 Notes

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