F_Useful Mnemonics Flashcards
sounder tractors : Factors affecting investment strategy
size absolute or relative size of assets objectives uncertainty of the liabilities nature of the liabilities diversification existing portfolio return expected long term return
tax treatment of assets and investor, e.g. high income tax vs low CGT tax
restrictions statutory, legal or voluntary restrictions
accrual of future liabilities
currency of the existing liabilities
term of the existing liabilities
other strategies adopted by other funds or competitors
risk appetite
solvency requirements
tech scam : regulatory influences on assets held
types
extent
currency
hold
single
custodianship
amount
mismatching
dr doneq : Problems with industry data
details insufficient
risk risk factors are coded in different ways
differences difference in target market, administration systems, underwriting, geographical areas, distribution channels, data recording
outdated
not not everyone contributes
errors
quality the quality is only as good as the contributors
variable crisps card : Requirements of a good model
valid adequately rigorous inputs arbitrage behaviour length easy
communicable reflects independent sensible parameters simple
clear
a
refineable
developable
mtv caterpillar : Problems with overseas investments
mismatching domestic liabilities
tax
volatility of currency
custodian needed
accounting differences
time delays
expenses expenses incurred and expertise needed
regulation poor
political problems and instability
information asymmetries, information is scarce and harder to obtain
language difficulties
liquidity problems
administration additional administration required
repatriation repatriation problems and restrictions on asset ownership
mtv caterpillar : Problems with overseas investments
mtv
mismatching domestic liabilities
tax
volatility of currency
mtv caterpillar : Problems with overseas investments
caterpillar
custodian needed
accounting differences
time delays
expenses expenses incurred and expertise needed
regulation poor
political problems and instability
information asymmetries, information is scarce and harder to obtain
language difficulties
liquidity problems
administration additional administration required
repatriation repatriation problems and restrictions on asset ownership
dr doneq : Problems with industry data
dr
details insufficient
risk risk factors are coded in different ways
dr doneq : Problems with industry data
doneq
differences difference in target market, administration systems, underwriting, geographical areas, distribution channels, data recording
outdated
not not everyone contributes
errors
quality the quality is only as good as the contributors
sounder tractors : Factors affecting investment strategy
sounder
size absolute or relative size of assets objectives uncertainty of the liabilities nature of the liabilities diversification existing portfolio return expected long term return
Risk vs reward
- Is the loan an acceptable risk, given risk tolerance, other exposure etc?
- Are repayment terms (eg interest rate charged) acceptable?
Ability to repay
- Is the borrower able to service and repay the debt when due?
- How certain is the source of repayment?
- What margin of safety has been built into the projections and assumptions
Purpose
- To what use will the monies be put?
- Is the borrower in a sector where there are concerns, or where the total exposure is already sufficient?
- Is the project acceptable on ethical/moral grounds?
- Will the lending be subject to country, currency, environmental, resource, technological or other inherent risk?
- Are there controls to ensure that the monies are correctly applied?
Security
Is there any security in place should the borrower fail?
Amount
- Is the amount borrowed reasonable, taking into account the stated purpose?
- How much does the borrower contribute? Who stands to lose most if the project fails?
