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Portfolio Management Techniques > E, F, G, H, I > Flashcards

E, F, G, H, I Flashcards

1
Q

Effi cient frontier

A

A set of optimal portfolios that match a
client’s expected returns with their tolerance
for risk.

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2
Q

End values

A

Represents the ends toward which a person
strives and infl uences how a person acts
today to achieve tomorrow’s goals

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3
Q

Endowment funds

A

Portfolios that are managed to produce

income for a beneficiary organization.

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4
Q

Enhanced active equity investing

A

An active portfolio management technique
where the manager overweights the
securities that are expected to outperform
the benchmark and underweights the
securities that are expected to
underperform, using short selling if
necessary

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5
Q

Enhanced indexing

A

An indexing technique that results in
portfolios that are designed to provide
index-like performance with some excess
return net of costs

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6
Q

Ethical dilemma

A

Exists when two or more of the possible
choices pit different values against each
other

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7
Q

Ethical principles

A

Help guide behaviour in situations where

no regulation exists or applies.

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8
Q

Ethics

A

A set of consistent values that guide

individual behaviour.

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9
Q

Event-driven strategy

A

A hedge fund strategy that seeks to profit
from unique events such as mergers,
acquisitions, stock splits and buybacks.

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10
Q

Execution slippage

A

Occurs when the execution of a transaction

causes subsequent prices to worsen.

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11
Q

Exempt investors

A

Investors who do not require a fi rm to sell

them securities via a prospectus.

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12
Q

Exempt market dealer

A

A dealer who trades or advises in the

exempt market, such as private placements

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13
Q

Fairness policy

A

A policy that all investment management
firms should have outlining the way
employees with the firm will deal with clients in matters of making and providing
investment analysis, recommendations or
trade services. The policy ensures that all
clients are treated fairly by the firm’s
employees.

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14
Q

Fiduciary

A

In a fiduciary relationship, the person in

whom trust has been placed.

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15
Q

Fiduciary duty

A

The duty of a person in a position of trust
to act solely in the interest of the
benefi ciary

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16
Q

Financial engineering

A

The process of combining traditional or
alternative investments with fi nancial
derivatives

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17
Q

Financial intermediaries

A

The various companies and organizations
that connect and move capital between
suppliers and users of capital.

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18
Q

Financial intermediation

A

The movement of funds from suppliers of

capital to users of capital.

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19
Q

Financial Transactions and Reports
Analysis Centre of Canada
(FINTRAC)

A

A federal agency created to gather financial
information under the Proceeds of Crime
(Money Laundering) and Terrorist Financing
Act.

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20
Q

Foreign-denominated bonds

A

Bonds issued by domestic or foreign
corporations or governments offering
diversification from interest-rate and
currency risk.

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21
Q

Forward rate agreements (FRAs)

A

Over-the-counter contracts for hedging

interest rates

22
Q

Fund accounting

A

The proper accounting of the fund’s asset

values.

23
Q

Fund of hedge funds (FoHF)

A

A portfolio of hedge funds overseen by a
manager who determines which hedge
funds to invest in and how much to invest
in each.

24
Q

Fundamental indexing

A 
A methodology where each stock’s index 
weighting is determined by four 
fundamental measures, thus diluting 
weighting errors and erasing the link between portfolio weight and over- or 
undervaluation.
25
Q

General partner

A

Under a limited partnership, the

institutional investment manager

26
Q

Global Investment Performance

Standards (GIPS)

A

Standards that attempt to present
investment performance from firms of
different countries fairly and ethically to
current and potential clients; GIPS are the
product of the Investment Performance
Council of the CFA Institute, and although
not mandatory, most investment
management firms are GIPS-compliant.

27
Q

Go/no-go decision

A 
A decision made by the new product 
development committee on whether or not 
to proceed any further with the 
development of a particular fund or 
product.
28
Q

Growth-oriented approach

A

A bottom-up approach to investing that
focuses on the individual stock, specifically
on the earnings.

29
Q

Guarantor

A

The entity that guarantees the principal and

the return, if any, at maturity of a PPN.

30
Q

Head of equities

A

The person within an investment
management firm who has overall
responsibility for the portfolio management
of all the equities managed by the firm.

31
Q

Head of fi xed income

A

The person within an investment
management fi rm who has overall
responsibility for the portfolio management
of all the fi xed-income and money market
securities

32
Q

Hedge funds

A

Lightly regulated pools of capital whose
managers have great flexibility in their
investment strategies.

33
Q

Hedge ratio

A

The relative number of derivative contracts
per underlying asset necessary to insure
against portfolio value changes

34
Q

Hedged portfolio

A

A portfolio with no exposure to a specific

risk.

35
Q

High closing

A

An illegal activity where a portfolio
manager enters a higher bid price for a
security at closing to artifi cially increase the
net asset value of the fund to which the
security belongs

36
Q

Holdings-based style analysis

A

An analysis of a manager’s style that
examines each stock in the portfolio and
maps it to a style at a specific point in time,
creating, in effect, a history in the form of
“snapshots.”

37
Q

Horizon analysis

A

A technique used by analysts to react to
financial forecasts, where the analyst
chooses a horizon over which the rate
change is expected to evolve, and at the end
of which a new yield curve is predicted.

38
Q

Immunization

A

A means of protecting the bond portfolio

from interest-rate risk.

39
Q

Index funds

A

A fund that uses a passive portfolio
construction technique that merely tracks
the performance of a target portfolio with
no attempt at adding value using active
management

40
Q

Index tracking

A

A passive investment strategy where the
manager constructs a subset of the
benchmark that faithfully mimics the index

41
Q

Index-linked bonds

A

Bonds promising to pay interest based on

inflation levels.

42
Q

Institutional investor

A 
Any non-retail investor; also known as 
financial intermediaries, they include 
pension plans, mutual funds, insurance 
companies, endowments, charitable 
foundations, family trusts/estates and 
corporate treasuries.
43
Q

Interest-rate futures

A

Contracts used by banks, corporations and
individuals to hedge interest-rate risk for
future payments.

44
Q

Interest-rate risk

A

The variation in bond values due to

changes in market yields.

45
Q

Interest-rate swaps

A

Interest-rate swaps

46
Q

Investment committee

A 
A committee populated by a subset of 
individuals that serve on the board of 
directors of an investment management 
firm, that focuses on the investment 
management aspects of the fund’s 
operations.
47
Q

Investment consultants

A

See pension consultants.

48
Q

Investment dealer

A

A registration category for an investment
management fi rm that allows appropriately
registered staff to engage in the sale and
distribution of all types of securities to all
types of investors

49
Q

Investment-grade credit quality

rating

A

Means that the issuers of a fixed-income
security have at least a BBB credit quality
rating from at least one of the popular
fixed-income credit-rating agencies.

50
Q

Investment management

agreement

A

The contract that governs the relationship
between an institutional investment
manager (the “Advisor”) and its
institutional investor client (the “Client”).

51
Q

Investment policy statement

A

Investment policy statement

52
Q

Issuer

A

See Guarantor.

Portfolio Management Techniques (4 decks)

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