Chapter 1: Technology in Investment Management Flashcards
What is a Sovereign Wealth Fund?
A state-owned fund which invests to save and reduce the volatility of government revenues.
What is the difference between the primary and secondary market?
Primary market is the original issuance of securities.
Secondary is the trading without involvement of the issuer.
What is the difference between the principal amount and the consideration?
Principal amount is shares * price
Consideration includes all charges and fees
Why are bond trades more complicated?
Accrued interest must also be paid alongside the principal amount. As the holder at the time of the record date will receive all payment.
What are interest days?
The amount of days that interest has to be paid on.
What is the inclusive mathematical definition of consideration?
principal amount + accrued interest + commission + fees and charges
What is an ETD?
Exchange-Traded Derivatives
E.g. futures and options
What is a CFD?
Contract for difference
The seller will pay the buyer the difference between the current value of an equity and its value at a future date.
If the difference is negative the buyer pays the seller.
Why do UK Investors use CFDs?
To gain exposure to an asset without having to pay stamp duty.
What are the two main challenges with data?
Data cleanliness
Struggle to process it efficiently
