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23 Cards in this Set
- Front
- Back
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Diversification ratio
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Average SD of returns for the N stock / SD of returns for equally portfolio
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Defined contribution pension plan
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Individual makes the investment decisions and takes on investment risk
able to defer taxes on investment income and gain until the funds are withdrawn |
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Defined benefit pension plans
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Funded by company, and obligated to provide specific benefits, such as lifetime income
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Endowment
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fund that provide financial support on an ongoing basis
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Foundation
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fund established for charity purpose
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Insurance vs property and casualty insurer
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Longer horizon vs shorter
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Investment policy statement
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details investor's investment objectives and constraints
objective benchmark should update at least every few years |
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Management process
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Planning step
execution step feedback step |
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No load fund
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Do not charge additional fees for purchasing or redeeming shares
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Money market sfunds
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short term debt securities
interest income low risk of change in share value |
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Bond mutual fund
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fixed income securities
differentiate by maturity, risk, issuers.. |
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Actively managed funds
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management selects individual securities which aim to produce returns greater than benchmark index
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Index funds (passively manage)
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portfolio constructed to match performance of particular index
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Exchange traded funds
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passively managed
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Hedge fund
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Not regulated as mutual funds
Limited number of investors Often sold to qualified investors with minimum amount of wealth |
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Buyout funds
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buy entire public companies and take them private
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leveraged buyout
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Take over a company with significant increase in debt
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Investment objectives
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derive from communication with client
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Investment constraints
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That must be considered in plan
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Investment guidelines
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How the policy will be executed, asset types permitted and leverage to be used
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IPS
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Description of client circumstances (Objectives)
Statement of purpose of IPS Statement of Duties Procedures to update IPS INvestment Objectives Investment Constraints Investment Guidelines Evaluation of performance 0 benchmark portfolio for evaluation Appendix - Strategy asset allocation |
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Investment Constraints
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Liquidity
Time horizon Tax Legal and regulatory Unique circustances |
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Investment guidelines
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leverage, derivatives, specific kinds of asset allowed
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