syllabus Flashcards
describe assets that may be assumed to be risk-free in practical work.
Tbills Safe government securities Longer term Gov Bonds Repo notes Safe
what is meant by a risk-free rate of return
refer to
- Rate of return
- Markets
- Borrowing and lending
- Level of risk.
Describe the typical ways in which investment returns are taxed
Income
Dividends
Capital
Total returns
the effect of the taxation basis
on investor behaviour.
describe the influences over the commercial and economic environment from:
- central banks
- main investor classes
- government policy
Fundamental analysis consists of
Principles with respect to the value of
- Equities, and/or
- bonds
Valuation
Apply appropriate methods of valuation
of individual investments
Different valuations:
What differentiates different valuation methods
in different circumstances?
Value:
- fixed income products and derivatives
- interest rate swaps
- Interest rate futures
- arbitrage pricing and
- the concept of hedging
- empirical characteristics of asset prices
- fixed income option pricing
- evaluating a securitisation
- - (including CBOs and MBSs) - evaluation of a credit derivative
Risk Management :
Consists of methods of
monitoring and controlling risk exposures
Types of risk:
1 asset-liability mismatching risk 2 market risk 3 credit risk 4 operational risk 5 liquidity risk 6 relative performance risk
explain in the context of mean-variance portfolio theory what is meant by
- opportunity set
- efficient frontier
- indifference curves
- the optimum portfolio.
market conduct regulatory regimes:
- Describe the :
–Principles, &
–Aims of
Market conduct regulatory regimes.
Stakeholders to whom principles of regulation apply
- Investment managers
- Brokers
- Market Makers
- Banks
- Traders
Areas where regulatory and legislative principles are applied:
1 trust law
2 corporate governance
3 role of the listings authority
4 environmental and ethical issues
5 competition and fair trading controls
6 monopolies regulators
7 investment restrictions in investment agreements
8 provision of financial services
9 institutional investment practices
10 role and responsibilities of directors
11 development of international accounting standards
knowledge and understanding of the theory of finance:
- relationship between financial management and acting as an entrepreneur
- motives for mergers and divestitures
- key findings in behavioural finance\
- main steps involved in financial planning
specialist financial instruments:
financial instruments available for short-term lending and borrowing
corporate debt and credit derivatives
swaps and swaptions
private debt
asset-backed securities, securitisation
venture capital
hedge funds
currency
infrastructure
commodities
structured products
new ways of investing in old asset classes
main types of derivative contract :
how traded
define their payoffs.
actuarial techniques may be used to:
develop an appropriate
investment strategy.
actuarial techniques used:
1 asset pricing models 2 asset / liability modelling 3 asset / liability mismatch reserving 4 credit rating an entity 5 liability hedging 6 dynamic liability benchmarks
Investment Performance
- analyse performance
2. Discuss limitations of analysis and performance measurement techniques
performance measurement techniques:
1 portfolio risk and return analysis 2 equity price 3 net present value 4 net asset value 5 return on capital
investment indices:
- the construction of and
- the principal features of major investment indices uses of investment indices.
- Describe the principal indices of share prices in the
South African,
United Kingdom,
United States,
Japanese,
German and
French stock markets. - Describe the principal bond indices
–(South African and global).
5.Explain the problems encountered in constructing property indices.
Portfolio Performance Assessment:
Discuss
- performance of an investment portfolio
- the limitations of such portfolio measurement.
- Assess the performance of a portfolio relative to
- a published market index.
- a predetermined bench- mark portfolio.
- Analyse the performance of a portfolio into components relating to
- –investment sector selection and
- –individual stock selection. - Discuss the relative merits of assessing portfolio performance relative to published indices, other portfolios or a predetermined benchmark portfolio.
- Discuss the uses of risk-adjusted performance measures.
- Discuss the value of portfolio performance measurement and its limitations.
the principal styles in portfolio management:
- including risk control techniques.
- Describe and discuss the principal active management “styles”
- -value,
- -growth,
- -momentum,
- -rotational
Techniques and Uses of Portfolio Management
- principal equity portfolio management techniques.
- principal bond portfolio management techniques.
- uses institutional investor might make of
- financial
futures and
2.options, - over the counter contracts.
- interest rate swaps and
- currency swaps.
- forward foreign exchange contracts for currency hedging
- usefulness of multifactor models in practical investment
management
and risk control. - problems of making significant changes to the investment
allocation
of a substantial portfolio - Transition management and
asset allocation techniques
(including overlay strategies)
Describe role of :
The custodian of securities.
Portfolio construction with attention to:
1 value at risk 2 tracking error 3 risk budgets 4 Risk Measurement, comparison and attribution of risk
