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2zJonathan AF4 > Misc > Flashcards

Misc Flashcards

1
Q

Purpose of ir sharpe etc (3)

A

Compare against benchmark
Assess risk adjusted returns
Outperformance, value alpha

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2
Q

Reasons for outperformance (3)

A

Sector
Consistency manager
Skill manager

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3
Q

Reasons for cash high (4)

A

Inflows
Failed deals
Redemptions
Recent disposal

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4
Q

Effects of high cash (4)

A

Drag on performance
Protects in falling market
Dilutes yield
Buying opps

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5
Q

Paif rules - 4

A

60% of income from property

60%of assets property

No corporate investor 10% more than nav

90% property income to shareholders within 12m TYE

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6
Q

How is paif taxed

A

Tax free on property

Ct on shares/cash

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7
Q

How are investors taxed on paif/reit

A

20% paid at source

Otherwise div/interest

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8
Q

List of risks

A

Protection
Non systematic
Systematic
Sector risk:not diversified

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9
Q

Define sequencing risk

A

Impact of volatility
On order and timing of withdrawals
On sustainsimg income
Greater in early years

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10
Q

5 reasons to rebalance

A

Change objectives
Market conditions
Clients asks
Underperformance
Value of investment returned

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11
Q

Index linked gilts price go down when?

A

Inflation lower than expected
Deflation
IR faster than inflation

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12
Q

How to calculate IL gilt rise 4

A

Rpi 3 months before
Divided by rpi at issue
X coupon and capital
Divide by 2

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13
Q

IL risks and drawbacks

A

Price volatility before maturity -ir
No fscs held directly
Possible capital loss
Deflation risk
Reinvestment risk at maturity

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14
Q

Benefits of IL

A

Retain buying power
No default risk
Tradable
Income stream

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15
Q

Break even calc

A

Conventional minus IL

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16
Q

Reasons 4 and effects 3 of holding cash

A

inflows
to cover redemptions
dividend payments
recent disposal

Drag on performance
reduce volatility
take advantage of opportunities

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17
Q

liquidity crisis open ended and close ended

A

Dilution levy
Gate
suspend redemptions

Gear
suspend
sell properties

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18
Q

5 limitations of EMH

A
  • Assumes standard deviation as measure of risk.
  • Does not take into account attitude to risk/capacity for loss.
  • Uses historic data to predict expected returns.
  • Excludes impact of costs and charges.
  • Assumes portfolio uses passive funds/cannot factor Alpha.
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19
Q

definition 5 tactical

A
  • Varying weightings/allocation;
  • short term;
  • with frequent rebalancing.
  • Substantial variation from objective.
  • Take advantage of market changes
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20
Q

5 benefits of capm

A
  • Easy to calculate/uses widely available information.
  • Takes account of systematic/market risk.
  • Reflects fact most portfolios are diversified to remove unsystematic risk.
  • Robust/trusted.
  • Gives an expected return/benchmark.
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21
Q

6 fees in ocf

A
  • Management fee/Annual Management Charge.
  • Administration fees/secretarial/directors fees/insurance.
  • Marketing.
  • Audit/tax compliance fees.
  • Registration/regulatory fees.
  • Custody/depositary/trustee.
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22
Q

5 additional fees to OCF

A

Transactions fees/initial charge/spread/Stamp Duty.
* Performance fees.
* One off legal/professional charges.
* Interest/gearing costs.
* Adviser charge.

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23
Q

8 whether to invest in…

A
  • Charges.
  • Tracking error
  • Standard deviation
  • Dealing frequency.
  • performance
  • Dividends.
  • passive/active.
  • Counterparty risk.
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24
Q

Sovreign debt risks 8

A
  • Local economics
  • Govnt policy
  • Unsecured
  • Rating of country
  • Local inflation
  • Can’t be sued
  • Currency
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25
Q

1 note on PIBS 1 note on pre shares

A

con cumulative, nominal amount paid out not share price

26
Q

5 features of money markets

A
  • Tradable
  • fixed term
  • lowish credit risks
  • £Big
  • Institutions & &
27
Q

How does SONIA work

A

o Interest rate benchmark
o Administered by B of E
o Average interest rate banks
pay to borrow overnight
from other institutions

28
Q

whats sub investment grade

A

2 B or less bad

29
Q

Macaulay defintion 5

A

weighted average
number of years
an investor must retain a bond
where the cash flows
equals the amount paid for the bond.

30
Q

2 factors that effect duration

A

Term to redemption and coupon rate

31
Q

Standard deviation calcs

A

average
distance
square
average
square

32
Q

5 systematic risks

A

IR
Inflation
Currency
Political
Tax

33
Q

7 non systematic

A

default
credit
liquidity
Operational
shortfall
reinvestment
regulatory

34
Q

2 passive risks

A

Market - follows
Style - replication causes tracking error

35
Q

6 factors where to invest

A

Charges
Style/objective
Alpha
Sd
Sharpe/ir
Financial strength
Manager
Dividend yield

36
Q

5 effects of current account ring n deficit

A

Increase ir to slow demand for imports or increase foreign investment

Growth falls due to fiscal and monetary

Weak pound

Uses foreign reserves

Inflation increases

37
Q

Tracking error caused

A

Inaccuracy of method eg sampling
Fees
Currency hedging
Cash drag
Tax
Div reinvestment lag

38
Q

Capm mpt assumptions

A

Risk averse
Information available to all same time
Costs
Holding period same for everyone
Buyers sellers can’t affect price
Unlimited borrowing risk free
Manu buyers sellers

39
Q

3 benefits and 3 drawbacks platform not direct

A

Income flexibility
Pre funding
Institution class

Services not used
Can’t hold alternative income products
Exit charges

40
Q

3 platform due diligence

A

Cash account ir
Continue existing income uninterrupted

41
Q

Income options on platform via cash account

A

Pay natural income
Pay regular income
Pay ad hoc

42
Q

4 benefits of platform consolidation

A

Consolidated payments
Bed and isa
Transaction history
Migrate to Lower find charges

43
Q

3 impacts to consider on advice firm platform switching

A

Reputation
Conflict of interest
Cost to firm

44
Q

3 client impact platform switching

A

Data breach
Transaction history loss
Income outage

45
Q

3 objectives to rebalancing

A

CFL
Invest cash
Change of objectives

46
Q

5 rebalance issues to consider

A

Frequency
Auto manual
Retain benchmark or alter
Liquidity
Trading costs

47
Q

Reasons for investments falling (3)

A

One off event
Poor sector
High beta or sd

48
Q

2 issues with sharp ratio

A

Costs
Assumes sd as measure of risk

49
Q

2 limitations of roce

A

Single period
Distorted by one off factors
Not just sh but creditors too

50
Q

Ucits rules 3

A

16 holdings
4 10%
5% others

51
Q

2 wp bonuses

A

Annual - regular, variable, can’t be removed

Final - one off, on maturity, death, surrender, not guaranteed

52
Q

Unitised versus conventional (4)

A

Units
Bonus in advance
Easier to switch
Easier to value

53
Q

3 things acd does oeic

3 depositary

A

Valuations/pricing
Prepares accounts
Reporting

Custodian
Monitors acd
Monitors borrowing limits

54
Q

5 Segmentation benefits

A

Can encase whole segments
Assign
Reduce chargeable gain
Defer chargeable gains
Maximise top slicing

55
Q

Active v passive better 4

A

No alpha to be had
Market efficient
Technical analysis doesn’t work
Costs

56
Q

Risks list 6

A

Geography
Non systematic
Sector
Economic
Liquidity
Protection

57
Q

Manager style factors

A

Administration and access
Bespoke/bulk buying
Costs/charges/control
Diversifications
Expertise/exercise voting rights
Regulatory

58
Q

Drawbacks of mwr hpr 4 bullets

A

Timing of cash flows
Outside control of fund manager
Was it a result of who or when
Not good for comparing

59
Q

Suitability factors 1

A

Atr
Timescales
Health
Liabilities
Experience
Tax
Ethical
Vulnerability

60
Q

Suitability factors 2

A

CFL
Objectives
Risk
Performance
Liquidity
Emergency
Costs
Style

2zJonathan AF4 (12 decks)

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