F_Useful Mnemonics 4

Question 1

pnefcpb : Causes of risk

Answer 1

political e.g. political developments, opposition from third parties, disagreement among sponsors
natural e.g. storm, earthquake
economic e.g. interest rate or currency movements
financial e.g. incorrect cashflow estimates - costs and revenues, problems accessing finance
criminal e.g. fraud
project e.g. insufficiently defined objectives, poor design, over time or over budget
business e.g. competition, loss of key personnel, safety hazards, insolvency of a contractor

Question 2

sham fads : Ways to value assets

Answer 2

smoothed market value
historic book value
adjusted book value
market value

fair value
arbitrage value
discounted cashflow
stochastic modelling

Question 3

sham fads : Ways to value assets

sham

Answer 3

smoothed market value
historic book value
adjusted book value
market value

Question 4

sham fads : Ways to value assets

fads

Answer 4

fair value
arbitrage value
discounted cashflow
stochastic modelling

Question 5

price : When information from benefit scheme should be disclosed

Answer 5

payments when payments commence
request on request
intervals at certain interval - more regular than on request
combination of all 
entry at entry into the scheme

Question 6

simmers : Reasons why disclosure is important

Answer 6

sponsor the sponsor is made aware of the financial significance of the benefits
informed decisions can be made by members and trustees
misleading avoid misleading beneficiaries
manages managing member expectations
encourages take up of the product
regulatory requirement
security of scheme is improved as sponsors and trustees are made more accountable

Question 7

divergence : Reasons for analysing surplus

Answer 7

divergence show the financial significance of AvE
information management information and for input to the accounts
variance the variance of the whole book must equal the sum of the variance of the individual parts
experience monitoring for feedback to the ACC
reconcile values for successive years
group the results into once off or recurring sources of surplus
executive data for executive remuneration schemes
new show the effects of new business strain
check on the valuation assumptions and calculations
extra check on the valuation data itself and the valuation process

Question 8

traitor : Features of the investor

Answer 8

tax position
regulation on investor
assets currently held
income requirements
tastes 
other other competitors, assets and opportunities
risk appetite

Question 9

fenced : Considerations in assessing different models

Answer 9

fit for purpose
expertise available in house
need for flexibility
cost of each option
expected number of times to be used
desired accuracy

Question 10

call st : Prime property

Answer 10

comparables
age, condition, use or flexibility
location
lease or ownership type

size
quality of tenant