Risk Management In Investment Banking And Wealth Management Flashcards
What is risk?
Risk = chance of loss
What is return?
Return = potential gain
What is the relationship between risk and potential return?
Higher risk → higher potential return
What should investments aim to beat?
Beat inflation & interest rates
What are the characteristics of equities?
Equities: Volatile
What risks are associated with bonds?
Bonds: Credit & interest rate risk
What risks are associated with derivatives?
Derivatives: Leverage & counterparty risk
What are primary market risks?
Primary: IPO pricing, illiquidity
What are secondary market risks?
Secondary: Systemic risk, volatility
Who are seed investors?
Seed: Angel investors
What funding sources are available for start-ups?
Start-up: VC & crowdfunding
What funding sources are available for growth?
Growth: Series A/B, strategic partners
What funding sources are available for established companies?
Established: Public equity, bonds
What funding sources are available for expansion?
Expansion: M&A, debt, IPOs
What strategies are used during decline or exit?
Decline/Exit: Restructuring, sale, IPO
What is the risk control process?
Risk Control: ID → Analyse → Treat → Report
What is rebalancing?
Rebalancing: Align risk with profile
What should be done after a market event?
Market Event: Reassess after shocks
What should be managed within financial products?
Manage risk within financial products
What should be focused on in risk management?
Focus on regulation, transparency, internal control
