Week 1 Risk Flashcards
Why should Age, Risk Appetite and Amount of Dependents be considered when making investments?
These aspects should all be considered as different people have different needs and when you have people that depend on you, you can’t just invest everything as you need liquid funds.
When considering Sharpe, what would be considered good?
The ratio of 1 is good but the higher the better.
Difference between Emerging and Frontier Economics?
Emerging: In the process of becoming developed, becoming more expensive to use as a base of operations.
Frontier: Less Advanced Economy, possess one or more of three characteristics:
➢Politically manipulated markets
➢Weak legal systems
➢Low per capita income or faltering GDP
Does insurance companies have a higher underwriting or investment profit?
Investment profit would make up around 70-80% of an insurance companies profits.
What are the theories behind negative interest rates?
Cash deposits at banks may incur a charge for money to be safely held in the bank
* Typically during a deflationary period
* Usually negative at a central bank, designed to encourage banks to lend money more easily so not held at the bank
Does negative interest rates attract foreign investment?
Negative interest rates do not attract foreign investments, as they would not make any return.
Vice Versa, if interest rates were high that would increase the value of currency and increase foreign investment.
