HowtoTestInvestmentBanking

Application(with34+Important
TestScenarios)
PostedIn|TestingTipsandresources|LastUpdated:"April17,2017"

TodaysarticlewillbringyouenhancedclarityontheInvestment
BankingDomain.Youwillgettoknowwhattotestandhowinan
InvestmentBankingApplication.

Beforewedivedeeperintohowto
testinvestmentbanking
applications,itsimportantto
understandthisdomainfirst.So,
wewillfirstlearntheInvestment
Bankingdomainterminologies,
whichwillhelpyouunderstandthe
testcaseseasily.

Wehavealsoincludedsampletest
scenariosofvarioustestingtypeslikedatabase,security,and
performancetestingofaninvestmentbankingapplication.
Alsoread=>TestingBankingapplications

LetsstartwithInvestmentBasics:

Investmentisnothingbutsavingmoneyinawaythatwillgetyou
returnsforitinthefuture(shorttermorlongterm).Savingmoney
inaccountswillnotgenerateanybenefits.Instead,oneshould
investthemoneyinoptionslikeMutualFunds,Bondsetc.,which
yieldreturnsinthefuture.

LearnmoreaboutIBdomainhere.

WhyshouldoneInvest?

Oneneedstoinvestmoneyinordertoearnreturnsandgenerate
returnstomeettheirmonetarygoalsinlife.Inotherwords,wecan
saythatoneshouldinvesttomeetthecostofinflation(Inflation
meanstherateatwhichthecostoflivingincreasesinfuture).

WhentostartInvesting?
Theimportantruleforallinvestorsistoinvestearly,regularlyand
forthelongterm,notshortterm.

WhataretheavailableInvestmentoptions?

OnecaneitherinvestinPhysicalAssetssuchasrealestate,
gold/jewelry,commodities(seeds,crudeoil,naturalgas,metals
etc.,)orinFinancialAssetssuchasfixeddepositswithbanks,
provident/pensionfundetc.,orinsecuritiesmarketsuchasshares,
bonds,debenturesetc.

FinancialOptionsforInvestments:

FewShortterminvestmentoptionsare,

SavingsBankAccount:Thisisnothingbutsavingourfunds
inregularbankaccounts.Forsuchsavings,theinterestrate
willbeverylow,approximatelytheinterestratevaries
between4%5%p.a.
MoneyMarketorLiquidFunds:Thisisanotheroptionfor
shortterminvestmentwhichgivesbetterreturnsthanthe
abovementionedsavingsaccount.However,theinterestrate
forMoneyMarketFundswillbelesserthanthefixeddeposits.
FixedDepositswithBanks:Thisisabetterinvestment
optionwithabithigherinterestrateswhencomparedwiththe
abovetwooptions.Fixeddepositsarealsonamedasterm
deposits.Theinvestmentperiodforthisoptionstartswitha
minimumperiodof30days.
Apartfromtheaboveshortterminvestmentoptionstheseareafew
oftheLongterminvestmentoptions,

PostOfficeSavings:ThisissavingourmoneyinthePost
Officeundervarioustypesofschemes.Theriskinvolvedin
thisislow.Theinterestrateforthisoptionis8%perannum.
Theinterestamountforthisoptionispaidmonthlyandthe
maturitytermis6years.
PublicProvidentFund:Anothermainlongtermsavings
investmentoptionisPublicProvidentFund.Theinterestrate
forthisoptionisabout8%p.aandthematurityperiodis15
years.
CompanyFixedDeposits:Thisisadifferentkindof
investmentoptioninwhichwecaninvestforshortterm(6
Months)tomediumterm(35years)withacompany.The
interestratewillvaryfrom6%9%p.a.Theinterestamount
willbepaidmonthly,quarterlyorannually.

WhatYouWillLearn:[show]

IntroductiontoInvestmentBankingDomain:
InvestmentBankisafinancialentitythatsuggestsanindividual,
company,governmentsectoredfirm,etc.onhowtoraisetheir
financialcapitalbyparticipatinginthemarketactivities.

ThemainroleoftheInvestmentBankistoactasamediator
betweenthecompanies(whoareinterestedinsellingtheir
securities/shares)andtheindividuals(whoarewillingtopurchase
thesame).

Investmentbankoperatesintwowaysbuysideandsell
side.

Buysideincludesservicessuchasbuyingsharesforinvestors
whereasSellsideincludesunderwritingthestockandsellingthe
sharestotheinvestorsfromcompanies.

BuysideoperationofInvestmentBankwithanexample:

Supposeaninvestorwantstobuy50sharesofABCDCompany.
ThenhewillconsultanInvestmentbankwherethestockbroker
placesanorderforthesameanddeliversthesharestotheInvestor.

SellsideoperationofInvestmentBankwithanexample:

SupposeaCompanyPQRplanstoissuenewsharesofstockinIPO
thentheInvestmentBankverifiesthesharesandsellsthesameto
theirClients.ThiswayPQRCompanyraisesfundsbyissuingtheir
stock.

BelowarethefewimportanttermsofInvestment
BankingDomain:
1)StockExchange:Anentitythatcontrolsthebusinessofbuying
andsellingofsecurities.StockExchangecanberegionalornational
exchanges.
Example:NASDAQUSA,NSEIndiaetc.

2)Stock/Share/Equity:Totalcapitalofacompanyisdividedinto
equalunitseachunitistermedasshare/equity/stock.Stockalso
representsapartofownershipofacompany.

3)FacevalueofaShare:Theamountorvalue(usedduring
buyingorselling)allottedtoasharebythecompany.

4)IssuePrice:Thepriceofacompanyssharesatwhichtheyare
availableinthemarket.Whenthesesharesaretradedinthemarket
thepricemaybebeloworabovetheissueprice.

5)InitialPublicOffering(IPO):Thisisnothingbutsellingthe
securitiesorsharesofacompanytothepublicforthefirsttimein
themarket.

6)MarketCapitalization:Thefinancialvalueofacompanyis
calculatedbymultiplyingthesharepricewithnumberofshares
whichistermedasMarketCapitalization.

Example:SupposeaCompanyXhas100shares.Thecurrent
marketpriceofeachshareis$50.Thenthemarketcapitalizationof
theCompanyXis$5000.

7)SecurityMarket:Securitymarketisaplacewherebuyersand
sellersofsecurities(bonds,debentures,stocksetc.,)dotheir
transactionsofbuyingandsellingthesecurities.
8)SEBI(SecurityandExchangeBoardofIndia):Anauthority
thatmakessurewhetherthebuyersandsellersbehaveinaproper
wayinthemarket.Sothattheygettheirdesiredprofits.Thereare
differentsecurityandexchangeboards/commissionsasperthe
country.

9)Dividendonshare:Dividendisapercentageofthevalueofa
share,whichacompanyreturnstoitsshareholdersfromitsannual
profits.

10)BidPrice:BidPriceistherateatwhichthebuyerisreadyto
buythestock.

11)AskPrice:Thisisthepriceatwhichthesellerwantstosellhis
stock.

12)Futures:Afuturecontractisanagreementbetweenthebuyer
andthesellerinwhichthestockoffuturedeliveryistransactedata
particularprice.

Forexample,ifyouwanttopurchaseaMarchfuturecontractof
XYZCompanythenyouhavetodothatatthecurrentpriceavailable
inthemarket.LetssaythattheMarchfuturesaretradingat$100
pershare.Bythetimethecontractexpires(lastdayofthecontract
inMarchmonth)thepriceofthestockmaynotbethesame.Itmay
be$95or$110.Basedonthesepricedifferencesinvestorsmakes
profitsinthemarkets.

13)Options:Itisafinancialcontractbetweenthebuyerandseller
inwhichthebuyerhastherighttobuyorsellasecurityata
particularpriceonorbeforeaparticulardate.

Optionsareoftwotypes:Calls,andPuts.
Callmeanstherighttobuyanassetatapricewithinaperiodof
time.
Putmeanstherighttosellanassetatapricewithinaperiodof
time.

14)Portfolio:APortfolioisacombinationofvariousinvestment
assetsmixedandmatchedforgainingprofitsasperaninvestors
goal.Itemsthatareincludedintheportfoliocanbeshares,
debentures,mutualfundsetc.

15)Depository:Anentitythatholdsthesecuritiesandfundsof
depositorsinanaccount.ThetwodepositoriesinIndiaareNational
SecuritiesDepositoryLimited(NSDL)andCentralDepository
ServicesLimited(CDSL).

16)MutualFunds:Anentitythatcollectsmoneyfrominvestors
andinveststhesameinvariousfinancialinstrumentslikeshares,
bonds,debenturesetc.

17)NetAssetValue(NAV):NAVofthefundisthecumulative
marketvalueoftheasset.NAVperunitisthenetvalueofthe
assetsdividedbythenumberofunits.Buyingandsellingofshares
inthemarketaredoneonthebasisofNAVrelatedprices.

18)NiftyIndex:Itisascientificallydeveloped,50stockindex,
whichshowsthemovementoftheIndianmarkets.Itbehavesasa
barometerfortheIndianmarkets.
19)WatchList:Alistofselectedsecurities.Itismainlyusedto
monitortheirmovementinthemarketregularly,closelyor
frequently.

InvestmentBankingOrganizationalStructure:

InvestmentbankingcomprisesofFrontOffice,MiddleOffice,
andBackOffice.

1)FrontOffice:Thisplaysamajorroleingeneratingfunds.The
mainareasoffrontofficeareInvestmentbanking,Sales&trading,
andResearch.

InvestmentBankinghelpscustomersinraisingfundsin
capitalmarketsandalsosuggeststhecompaniesinraising
theircapital.
Sales&Tradingdealswithbuyingandsellingofstock
(shares,bondsetc.,)
Researchinvolvesreviewingthecompanyreportsabouttheir
buy/sellratings,companysprospectsetc.Thiswillhelpin
providingadvicetotheirclientsintherightway.

2)MiddleOffice:ThisdealswithRiskManagement,Corporate
TreasuryandFinancialControl.
 RiskManagementinvolvesanalyzingthemarketsituations
andinformingtheclientsoftherisksinvolvedintheirtrades.
CorporateTreasuryisresponsibleforthefundsofInvestment
Banks.
FinancialControltracksthecapitalflowofthefirmandits
success.

3)BackOffice:ThisincludesOperationsandTechnology.

Operationscheckswhetherthetradeshavebeenexecuted
properlyandfundstransferredsuccessfully.
Technologysupportsthesoftware,data,andsystemsof
InvestmentBanks.

TradeLifeCycle:
Themaingoalofeverytradeorderistogetexecutedatasuitable
pricewithaminimumriskspread.

Thevariousstagesofatradeorderareasfollows,

Decisionoftheinvestortotrade
Placingthetradeorder
Executionofthetrade
Clearingofthetrades(Tradevalidationandconfirmation)
Settlementoftrades
Funds/Securitiessettlement

HowtoTestInvestmentBankingApplication:
BeforemovingtothetestingpartofInvestmentBanking
applicationsherearethesamplescreenshotsofhowanIB
applicationlookslike.

#1)Fromthebelowscreenyoucanviewthetermsoptions(sell
andbuyofIBMshares),bidprice,askpriceetc.,

(Note:Clickonanyimageforenlargedview)

#2)Fromthebelowscreenyoucanviewthepositions,quantityand
priceofaparticularsymbol.

#3)BelowisthesamplescreenshotofHowaWatchListofanIB
applicationlookslike.
#4)Thisscreenshowsthegraphicalviewofasymbol.

#5)Belowscreendisplayshowapositionororderisclosed.

#6)Thisshowstheprofiledetailsofaclient.
#7)BelowscreendisplaystheviewofmobileIBapplication.
[screenshotsource1andsource2]

TestScenarios:
DifferentInvestmentBankingapplicationshavedifferentsoftware
testingandQArequirements.Belowarefewgeneraltestscenariosor
testcasesusefulfortestingsuchapplications.

PositiveScenarios:
1)TheInvestmentbankingapplicationshavedifferentloginsfor
differentuserslikebrokers,dealers,individualsorinvestorsetc.
VerifytheloginsofappropriateuserswiththeirloginIDsasthe
permissionsforaccessingtheapplicationforalltheusersmaynot
bethesame.

Forexample,abrokerhasthepermissiontoviewthetradinglimits
oftheindividualsbasedontheamount/fundsintheindividuals
account.However,thisfacilitymaynotbeavailableforthe
individual.

2)ThefunctionoftheWatchlistcanbeverifiedbyadding,
removingthesecurities/symbolstoit.Ensurethattheremoved
symbolsshouldgetdeletedfromtheWatchlistandviceversa.

3)BuyOrderTotestthisfunctionality,placeatradebuyorder
foranysymbolwithsomequantitylike10or20etcandsubmitthe
same.Thengotheorderssectionandverifythedetailswhetherthe
orderhasbeenplacedsuccessfullyornot.

4)SellOrderPlaceatradesellorderasabove(buyorder)and
verifythedetails.

5)ChangeOrderGototheorderssectionandopenanyprevious
orderorexistingorderandmakefewchangeslikeeditingthe
quantityorsymboletcandverifywhetherthemodificationsget
updatedornot.

6)CancelOrderOpenanexistingorderandtrytocancelit.The
ordershouldbecanceledsuccessfully.
7)Differenttypesofordershavetobetested.

MarketorderTrytoplaceatradeorderforthemarket
priceandcheckwhetherthetradegetsexecutedforthatprice
atthesamepointoftime.
LimitorderTrytoplaceanorderforaparticularpriceand
checkwhetherthetradehasbeenexecutedwhenthemarket
pricemeetsthepricesetbytheuser.

8)Checkandverifywhetherthepropernotificationsorwarning
messagesaregettingdisplayedforthecorrespondingactions.

Forexample,afterplacingatradebuyorderandsubmittingit,a
messageshouldbedisplayedthattheorderhasbeenplaced
successfully.

9)Trytoupdatetheuserinformationlikeemail,mobileno.etc,
saveitandlogoutfromtheapplication.Logintotheapplicationand
verifywhethertheupdatedinformationhasbeensavedornot.

10)IftheAUT(applicationundertest)supportsvariousterritories
orgeolocations,checkfewfunctionalitiesforvariouslocations.

11)Testthecalculationspartoftheapplicationverythoroughlyand
also,testitslocalization.

12)Testtheconnectionsoftheapplicationswhethertheyworkout
ofthestagingenvironments.
13)Thesecurityoftheapplicationshouldalsobetestedasit
containsthepersonaldataoftheusers.

14)Multitaskingoftheapplicationsshouldalsobetestedwhen
otherappsareopenonthedevice.

15)Applicationsquality,lookandfeel,userfriendlinessetcarealso
tobetestedasitgainstheuserstrust.

NegativeScenarios:

1)Trytoplaceatradeorderformorethanthevalueoffunds
availableintheaccountandtheordershouldnotgetplacedandit
shouldpopupawarningmessagestatingthatthefundsare
insufficient.

2)Testthequantityofsharesfeatureintheapplication.Placea
tradeorderforthenumberofsharesgreaterthantheavailable
quantityofshares.Tradeshouldnotbeplacedasthequantityof
sharesrequestedismorethantheavailablequantity.

3)Trytoplaceatradeorderforastockforwhichtheexpirydate
hasbeenreached.Theordershouldnotgetplaced.

Alsoread=>HowtoClassifyPositiveandNegativeTest
Scenarios

TestingtheDatabaseofanInvestmentBanking
application:
 1.LogintotheIBapplicationandcreateaprofileforaClient
withallrequiredmandatorydetailsandsavethedetails.Now
logintothedatabaseofthesameIBapplicationandverifythe
detailsoftheclientthroughSQLqueries.Allthedetails
enteredthroughthefrontendapplicationneedstobesavedin
thedatabase.
2.OpenanexistingrecordofaClientandmodifyfewdetailslike
email,addressorphonenumberandsavethedata.The
updateddetailsshouldgetsavedinthedatabase.
3.WhilecreatingaprofileforaClient,enteronlyafewdetails
andwithoutsavingthedataclosetheapplicationorsignout
fromtheapplication.Nowcheckinthedatabasethatthe
earlierentereddetailsshouldnotgetsaved.
4.Trytocreateaduplicaterecordforanalreadyexistingclient,
therecordshouldnotgetcreated.
5.OnbehalfofaClientplace2or3tradeordersandsubmit.
Nowverifythedatabasewhetherthesametradeordersgot
updatedinthedatabaseornot.
6.LogintoaClientsaccountandcancelanexistingorder,now
checkthesameinthedatabasethattheparticularrecord
shouldgetcanceled.

TestingtheSecurityofanInvestmentBanking
application:
 1.CreateaClientsprofile,entertheusernameorloginidand
enterthepasswordtoo.Thedatainthepasswordfieldshould
beencryptedsothatthehackerscannotfindthepassword.
2.Trytologintotheapplicationwithinvalidcredentials.The
systemshouldnotallowthelogin.
3.WhilenavigatingthroughthepagesintheIBapplicationor
websitethebackbuttonfunctionalityofthebrowsershould
notwork.(Mainlyforfinancialwebsitesthisfunctionality
shouldbeblocked.)
4.Logintotheapplicationandtrytoperformanytransaction
andleavethesystemidleforsometime.Thentrytoproceed
withthetransactionthesystemshouldgetloggedoff.This
indicatesthesessiontimeoutoftheapplication.
5.TrytologintotheapplicationwithforaparticularuserIdwith
aninvalidpasswordandrepeatthesamefor3attempts.Then
theparticularloginidshouldbeblocked.Thisfeaturerestricts
hackersfromenteringintothesystemwithbulkdata.
6.Logintotheapplicationandperformanytransaction.Andnow
verifythecookiesofthebrowser,theyshouldbeinan
encryptedformtoavoidhackingofthedata.

TestingthePerformanceofanInvestmentBanking
application:
1.WhilenavigatingthroughtheIBwebsitecheckwhetherthe
systemrespondsquicklytoanactionperformedornot.This
determinesthespeedoftheapplication.
2.TrytologintotheIBapplicationwithvarioususerIds
simultaneouslyfromvarioussystems(no.ofusersthatthe
 applicationcanhandle).Theapplicationshouldhandle
multipleuserloginsthewayitisintendedto.
3.LogintoIBsitewithauserIdandplacethehugenumberof
tradesincludedwithsomecomplexfundstransactions.This
revealstheabilityoftheapplicationtohandlelargevolume.
4.LogintoIBsitewithvarioususerIdsfromvarioussystems
parallellyandperformhugetransactionsfromalltheusedIds
atthesametime.Thisshowshowmuchstresstheapplication
canhandle.

TipsfortestinganInvestmentBankingApplication:
ThetestercannottesttheInvestmentBankingortrading
applicationuntilhe/shegainsagriponthedomain.
AnInvestmentbankingapplicationisnotjusttestedfor
knowledgebutshouldbetestedforthelogicbehindit.
Whiletestingthefunctionalityrelatedtotrades,concentrate
ontheexpirydatesofthestock.
WhileplacinganytradesthroughanIBapplicationyoushould
becarefulandconcentrateontheSymbols,astheremaybe
analphabetdifferenceinthem.Forexample,whileplacinga
tradeorderforSilver,justmakesureforwhichtypeofSilver
youareplacingtheorder.(Silver=30kglot,SilverM=5kg).

Conclusion:
Withtheabovementionedterminology,youwillnowbeableto
understandthelivemarketanalysistoanextent,whichinturn
helpsyourtestingprocessandmakesiteasier.
Aboutauthor:ThisisguestpostbyLaxmi.Sheishaving7+years
ofSoftwaretestingexperiencemainlyinBFSIdomain.Sheis
currentlyworkingasaSr.softwaretestengineerinoneofthetop
MNCs.

ThisisalltheinformationonInvestmentDomainandtesting
tipswithsimpletestingideasthatIwantedtoshare.As
always,hopingthatithelpsandwaitingtoanswerany
questionsyoumighthave.