summarisation

Question 1

Short term and standard funds periods`

Answer 1

short term
- WAM no more than 60 days
- WAL no more than 120 days
Standard Funds
- WAM no more than 6 months
- WAL no more than 12 months

Question 2

Recession relation to GDP

Answer 2

When GDP falls in 2 successisve quarters

Question 3

Disinflation

Answer 3

means a slowdown in the rate of inflation — prices are still rising, but more slowly than before.

Question 4

DEFLATION

Answer 4

Where prices actually start to fall

Question 5

SPICED

Answer 5

Strong Pound Imports
Cheaper Exports Dearer.

Question 6

Modern Portfolio Theory

MPT

Answer 6

maximise profit and minimise risk thorugh diversification

Question 7

Most commonly used measure of risk?

Answer 7

• ## standard deviation

Question 8

CAPM

Answer 8

an investor requires a return that is equal to risk free plus a premium as compo for taking the risk

Question 9

what does standard devitation measure

Answer 9

measure how widely the actual return from an investment varies around its expected return.

A high standard deviation = more
volatile and more risky.

Question 10

Beta effects on price rises

Answer 10

• beta of 1 = follows market
• beta 0<1 security slower than the market
• beta of 1< security moves up/down at faster rate than the market

Question 11

Efficient Market Hypothesis

Answer 11

claims it is impossible to ahive in excess of average market returns by fund pickings as the prices of the funds are always correct and refelct their intrisnic value at all times

(impossible to outperform market)

Question 12

4 types of credit risk?

CDCD

Answer 12

• counterparty
• default
• credit spread risk
• downgrade risk