Intro

Question 1

3 major steps of Portfolio mngmt

Answer 1

1. PLANING (RR TT LL U)

. Risk tolerance
. Returns
. Time horizon
. Tax
. Liquidity
. Legal
. Unique investor preferences

Results : IPS (investment policy)

2. EXECUTION (asset allocation)
   Analysis of risk and return of various asset classes

Economics conditions, assets classes, etc.. ( asset allocation)

Bottom-up securities analysis and pick

3. FEEDBACK
   Monitor and rebalance

Question 2

Types of investor (companies and individuals ) and characteristics (6) (liq. Risk , time horizon)

Answer 2

1. Individuals (all depends)
2. Banks - High liquidity, short horizon
3. Endowments - low liq. High horizon (perpetual), High risk tolerance

Including Charitable foundation kakak

4. Insurance - low risk, high liq.
   Long horizon - life
   Short horizon - prev
5. Mutual funds - liq high, rest depends
6. Defined benefit pension - high horizon, low liq, risk high, income depends

Question 3

What type of investment Most likely to trade in NAV (net asset value)

Answer 3

Open - end mutual fund

MtM of share

Question 4

Do Hedge funds have a good amount of regulation?

Answer 4

No. Exempt from reporting of typical public investment

Question 5

Differences between
Buyout funds = Private equity funds
and
VCapital

Answer 5

BF = Few large investments
VC = “short time” horizon, small investments

Question 6

Pensions Plans (2)

Answer 6

Defined benefit - risk employer
Defined contribution - risk employee

Question 7

Money market funds

Answer 7

Short term investments
Overnight to 90days

Treasuries, commercial papers