Portfolio Management Techniques Flashcards

1
Q

Registration Categories under NI 31-103

A

Firms in Ontario must be registered wit the appropriate regulator, either the Ontario Securities Commission or an approved self regulatory organization, namely the Investment Regulatory Organization of Canada (IIROC) or the Mutual Fund Dealers Association of Canada (MFDA). Firms can fall into several categories of registration, under two main categories of dealers and advisors.

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2
Q

Dealer

A

A dealer is a person or company who is in the business of trading securities in the capacity of a principal or agent.

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3
Q

Investment Dealer

A

A dealer who engages in the business of trading in securities in the capacity of an agent or principal and is a dealer member of IIROC. An investment dealer also has the authority to act as an underwriter.

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4
Q

Mutual Fund Dealer

A

A dealer registered exclusively for the purpose of trading in shares or units of mutual funds. Other than in Quebec, a mutual fund dealer must be a member of MFDA.

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5
Q

Scholarship Plan Dealer

A

A dealer who is restricted to scholarship plans, educational plans, or educational trust investments.

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6
Q

Exempt Market Dealer

A

A dealer who trades or advises in the exempt market , such as private placements.

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7
Q

Restricted Dealer

A

An open category that will allow flexibility in registration

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8
Q

Portfolio Manager

A

Persons or companies who manage the investment portfolios of clients through discretionary authority granted by the clients

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9
Q

Restricted Portfolio Manager

A

Persons or companies who act as an adviser in respect of a security in accordance with the terms, conditions, restrictions or requirements applied to its registration.

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10
Q

Dealing Representative

A

An individual who may act as a dealer or an underwriter in respect of a security that the individual’s sponsoring firm is permitted to trade or underwrite.

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11
Q

Canadian Securities Administrators

A

A working group of regulators from each provincial and territorial regulator and is charged with forging uniformity in regulation where possible.

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12
Q

High Closing

A

Entering a higher bid price at closing to artificially inflate the price and increase the NAV

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13
Q

Late Trading

A

Mutual fund allows a trader to enter an order to either purchase or sell after the established cut off time

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14
Q

End Values

A

The end towards which a person strives and influence how a person acts today to achieve tomorrow’s goals. They include a sense of accomplishment, family security, self respect, social recognition, and wisdom.

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15
Q

Means Values

A

Actions taken to achieve a future goal. These include ambition, competence, honesty, independence, and responsibility.

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16
Q

Unified Value System

A

A system in which the ends and means mutually reinforce and support each other. Individuals and corporations get into trouble when their means values do not support their end values.

17
Q

The Value System of a Portfolio Manager will:

A

Influence the portfolio manager’s perception of situations and problems

Influence their decisions and solutions to problems

Sets limits on their understanding of what constitutes ethical behaviour

Help them resist when they are being pressured to s=do something they believe is wrong

18
Q

Ethical Dilemma

A

When two or more of the possible choices pit different values against each other. Eg. one choice would lead to the fulfillment of an end value such as social recognition, yet at the cost of a means value such as honesty, while another would fulfill the end goal of self respect, yet at the cost of a mens value such as ambition.

19
Q

Truth vs Loyalty

A

The values of honesty or integrity clash with the values of commitment, personal responsibility, or keeping a promise.

20
Q

Individual vs Group

A

The vaques of the individual clash with the rights or values of the group. This yup of dilemma may appear in the form of ‘us vs them’ or ‘self vs others’.

21
Q

Short vs Long Term

A

Immediate needs or desires run counter to future goals or prospects

22
Q

Justice vs Mercy

A

The values of fairness, equity, and righteousness conflict with the values of compassion, empathy, and love.

23
Q

What are the three things that must be present for their to exist a trust based relationship between the portfolio manager and client

A

The portfolio manager has a specialized knowledge and skill that the client does not have

The portfolio manager belongs to an industry that is well regulated

The portfolio manager places the interests of the client before his own

24
Q
  1. What are the three constant elements in a client relationship is trust expressed
A

Disclosure of information

Influence over Decisions

Exercising Control

25
Q

Prudent Man Rule

A

Directs the fiduciary to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of capital invested.

26
Q

Institutional Investors

A
Pension Plans
Mutual Funds
Insurance Companies
Endowments
Charitable Foundations
Family Trusts/ Estates
Corporate Treasuries
27
Q

Defined Benefits

A

Pension plan entitlements are typically calci=ulated on the basis of the employees salary profile and tenure of employment. These entitlements formally represent liabilities to the sponsor who is responsible for making contractual pension payments regardless of how the investment performs

28
Q

Defined Contributions

A

The beneficiary is typically provided with a menu on investment choices among which to allocate regular contributions. The investment risk is borne entirely by the beneficiaries, with payouts determined by the cumulative performance of the investments.

29
Q

Endowment Funds

A

Portfolios that are managed to produce income for a beneficiary organization. Endowments usually invest in long term assets and attempt to earn a targeted rate of return, typically in the range of 5% per annum. This income finances part of the annual cost of operation of the beneficiary’s organization.