Chapter 8 Pmt

Front 1

What needs to be done in order for the portfolio manager-trader relationship to be most effective?

Back 1

Each individual must recognize the skills and strength of other, and strive to make decisions based on them

Front 2

Some institutional fixed income investment managers can invest their clients funds on a long-only basis, Therefore cannot incorporate other portfolio management techniques, such as leverage and short selling. What are those institutions?

Back 2

Pension plans and endowments,

Life insurance and property casualty,

Institutional investment managers offering pooled funds,

Front 3

What types of institutional investment managers can incorporate leveraged and short selling techniques in fixed income?

Back 3

Traders, market makers at brokerage dealers,

proprietary traders,

Hedge fund managers

Front 4

Traders and market makers at broker leverage , finance, their fixed income portfolios by using ?

Back 4

Repo transactions

Front 5

What's repo transaction ?

Back 5

Sells a fixed income security to a 3rd party on a specific day at an agreed price,

simultaneously, agrees to buy back same security at a set price on a future date, usually one day later

Front 6

2 methods can be employed to replicate a bond index.

What are they?

Back 6

Cellular or Stratified Sampling,

Tracking error minimization

Front 7

What are 3 characteristics that affects a bond value using cellular method?

Back 7

Maturity,

Coupon,

Credit risk

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Front 8

Indexed portfolios created by the blank space have proven to be very successful in tracking a bond index

Back 8

Cellular Approach

Front 9

What are the 2 conditions for cellular method to be effective?

Back 9

Stratification must be fairly detailed,

A large portfolio must be created in order to fill each cell Appropriately

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Front 10

In the case of tracking error minimization, what method is applied to find the optimum index portfolio of minimized tracking error?

Back 10

Quadratic Programming

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