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Investment Management Teecniques > A,B > Flashcards

A,B Flashcards

1
Q

Absolute advantage

A

A barrier to entry that helps deter

companies from entering an industry.

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2
Q

Absolute valuation model

A

A valuation model that outputs a point
estimate or precise value for the intrinsic
value of a stock, based on a set of forecast
company fundamentals

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3
Q

Accrual floating-rate loan

A

The final component of the equity forward
monetization is the loan contract. The bank
provides a loan to the shareholder against
the equity forward contract. In an accrual
floating-rate loan, the shareholder gets a
loan advance equal to 95% of the initial
price times the number of shares.

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4
Q

Accrued interest

A

Interest on a debt security that has accrued
since the last coupon payment date, but has
not yet been paid.

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5
Q

Active investment strategy

A 
An investment strategy that uses 
expectations about individual securities and 
the overall investment environment to 
build a portfolio that will take advantage of 
those expectations. See also Bottom-up 
analysis, Investment strategy, Passive 
investment strategy, and Top-down 
analysis.
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6
Q

Active listening

A

Assessing the significance of a message by
listening for the “core” meaning, and relate
it to other information about the client
before deciding on its significance and an
appropriate response.

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7
Q

Actively managed fund

A

A managed product whose manager makes
investment decisions based on his or her
outlook for the markets and securities in
which he or she invests. See also Passively
managed fund.

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8
Q

Ad hoc approach

A

An approach to strategic asset allocation
that is based on an IA’s opinion or
“gut feel.”

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9
Q

Adjusted Cost Base (ACB)

A

A fund or trust’s new average unit cost after
the original cost of the units is reduced by
the amount of the distribution

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10
Q

Age approach

A

An approach to strategic asset allocation
that recommends an allocation to debt
securities equal to the client’s age

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11
Q

Allocation return

A

The return on the portfolio based on the
decision to shift the portfolio’s weights from
the strategic asset allocation.

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12
Q

Alternative investments

A

Asset classes that are different from the
traditional three broad asset classes of
equities, bonds and cash.

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13
Q

Alternative Trading System (ATS)

A

An off-exchange private electronic network
that discretely and directly matches buyers
and sellers using a computer program.
There are no middlemen. Large orders can
be executed with little or no market impact.

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14
Q

Alpha

A

The degree to which a fund’s manager has
added value relative to the fund’s
benchmark index, given the portfolio’s
systematic risk (as measured by its beta)
relative to the index. See also Beta and
Risk-adjusted return.

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15
Q

American Depositary Receipt

ADR

A

A certificate representing ownership of the
securities of a foreign company. See also
American Depositary Share (ADS).

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16
Q

American Depositary Share (ADS)

A 
A security issued by a U.S. depositary 
(usually a trust company), and traded on a 
U.S. exchange, representing ownership 
interest in the securities of a foreign 
company. See also American Depositary 
Receipt (ADR).
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17
Q

Amortization schedule

A

The regular or semi-regular repayment of a
debt security’s principal over the life of the
security. See also Principal.

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18
Q

Ascending triangle

A

A triangle with a horizontal resistance line
and a positively sloped trend line acting as
support. See also Descending triangle,
Symmetrical triangle, and Triangle.

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19
Q

Asset allocation

A

The process used to determine the
appropriate proportions of an investor’s
portfolio to invest in different asset classes.
See also Asset class, Strategic asset
allocation, and Tactical asset allocation.

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20
Q

Asset class

A

A specific category of assets or investments,
such as cash, stocks, bonds, real estate and
international securities. Assets within the
same class generally exhibit similar characteristics and, most importantly,
behave in a somewhat similar manner in
the marketplace.

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21
Q

Asset location

A

The allocation of assets between registered
and non-registered accounts. See also
Non-registered account and Registered
account.

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22
Q

Asset-backed security (ABS)

A

Asset-backed security (ABS)

23
Q

Attending

A

Conveying to clients that the advisor
respects their needs and are interested in
helping them with their individual
objectives.

24
Q

Attitudinal question

A

A question that seeks an investor’s attitude

about one or more aspects of investing

25
Authorized participants
Institutional investors, specialists, or market- makers that have signed an agreement with and paid fees to a particular ETF sponsor. Becoming an authorized participant allows institutions to carry out direct in-kind transactions with the fund. After purchasing a creation unit, the authorized participant can split up and sell the individual shares of the unit on the open market.
26
Bankers’ acceptance (BA)
``` A commercial draft (i.e., a written instruction to make payment) drawn by a borrower for payment on a specified date. A BA is guaranteed at maturity by the borrower’s bank. ```
27
Bar chart
A type of chart that plots price on the vertical axis and time on the horizontal axis. The action in each period (which can be a minute, hour, day, week, month, etc.) is represented on a vertical bar, with the top of the bar representing the highest price for that period and the bottom representing the lowest price. In most cases, the opening and closing prices are also represented: a short horizontal line to the left of the vertical bar represents the opening price while a line to the right represents the closing price.
28
Barbell portfolio
A debt securities portfolio invested in of one or more bonds with short durations combined with one or more bonds with long durations. See also Bullet portfolio
29
Barrier to entry
``` An obstacle that prevents or a company from profitably producing a product or service. See also Absolute advantage, Product differentiation, and Economies of scale ```
30
Basic earnings per share
``` A company’s earnings per share based only on the weighted average number of common shares outstanding. See also Earnings per share and Fully diluted earnings per share. ```
31
Bearer bond
A type of debt security represented by an actual certificate with detachable coupons and a residual principal payment. Most debt securities are now issued in a book-based format rather than a bearer bond format. See also Book-based format
32
Behavioural finance
The study of how human psychology affects an individual’s investment decision-making process. See also Biased expectations, Mental accounting, Risk seeking, and Traditional finance.
33
Behavioural Finance Micro (BFMI)
The study of the behavioural biases (that is, irrational behaviours) of individual investors. It compares irrational investors to rational investors envisioned in classical economic theory, known as Homo economicus or “rational economic individual”.
34
Behavioural Finance Macro | BFMA
The study of “anomalies” or irregularities in the overall market that contradict the efficient market hypothesis.
35
Behavioural question
A question that seeks to model actual client actions in different circumstances, along the lines of “if this happened, what would you do?”
36
Benchmark creep
The upward tendency in longer run cumulative median manager returns due to survivorship bias.
37
Benchmark index
An index against which the performance of | a portfolio is measured.
38
Benchmark portfolio
A realistic, attainable standard used to | measure the performance of a portfolio.
39
Benchmark risk
The variation in portfolio returns by holding securities outside the benchmark universe. Any performance deviation will not come from security selection or market timing within the universe, but from style shifts.
40
Beta
A measure of the relative or systematic risk of a security or portfolio of securities compared to the overall market. Security betas are usually estimated using simple regression analysis.
41
Bias
A preference or an inclination (especially one that inhibits impartial judgement) or an unfair act or policy stemming from prejudice.
42
Biased expectations
Investors have biased expectations if they gather and act on information in an inefficient or biased way. Biased expectations are a key tenet of behavioural finance. See also Behavioural finance and Rational expectations.
43
Bid-Ask Spread
The amount by which the asking price exceeds the bid price; usually interpreted as an indicator of the liquidity risk for an investment.
44
Blind pool
An investment fund where investors are presented with general information about the type of securities that the pool management intends to invest in. However, the exact specifications of the investments are unknown and unavailable at the time that the investor commits funds.
45
Bollinger bands
``` Price bands that are plotted at a certain number of standard deviations above and below a moving average of prices. See also Moving average envelopes and Price bands. ```
46
Bond
A debt security secured by physical assets
47
Book-based format
A system in which debt securities are not represented by physical certificates but are maintained in computerized records. See also Bearer bond.
48
Bottom-up analysis
An active approach to equity investing that begins with a focus on individual stocks. Investors look at the characteristics of individual stocks and build portfolios of the best stocks in terms of forecasted risk-return characteristics. See also Active investment approach and Top-down analysis.
49
Bought deal
A method of issuing equity or debt securities whereby one or a group of investment dealers takes on the liability of buying the entire issue and then selling or distributing it to investors. See also Marketed deal.
50
Break
A term used to describe a situation where the price crosses above or below a trendline. See Trendline
51
Brownfield development
The redevelopment of an abandoned or underused commercial or industrial property, generally in an urban community
52
Bullet portfolio
A debt securities portfolio invested in one or more bonds with roughly equal durations. See also Barbell portfolio.
53
Buy-and-hold
A passive investment strategy in which a group of securities or managed products is purchased and then held until they are needed to be to meet a client’s goals. See also Passive investment strategy.

Investment Management Teecniques (11 decks)

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