syllabus

Question 1

describe assets that may be 
assumed to be risk-free in practical work.

Answer 1

Tbills
Safe government securities 
Longer term Gov Bonds
Repo notes
Safe

Question 2

what is meant by a risk-free rate of return

Answer 2

refer to

1. Rate of return
2. Markets
3. Borrowing and lending
4. Level of risk.

Question 3

Describe the typical ways in which investment returns are taxed 


Answer 3

Income
Dividends
Capital
Total returns

Question 4

the effect of 
the taxation basis

Answer 4

on investor behaviour.

Question 5

describe the influences over the commercial and economic 
environment from:

Answer 5

1. central banks 

2. main investor classes 

3. government policy 


Question 6

Fundamental analysis consists of

Answer 6

Principles with respect to the value of

1. Equities, and/or
2. bonds

Question 7

Valuation

Answer 7

Apply appropriate methods of valuation

of individual investments

Question 8

Different valuations:

Answer 8

What differentiates different valuation methods

in different circumstances?

Question 9

Value:

Answer 9

1. fixed income products and derivatives
2. interest rate swaps
3. Interest rate 
futures 

4. arbitrage pricing and
5. the concept of hedging 

6. empirical characteristics of asset prices 

7. fixed income option pricing 

8. evaluating a securitisation
   - - (including CBOs and MBSs) 

9. evaluation of a credit derivative 


Question 10

Risk Management :

Answer 10

Consists of methods of

monitoring and controlling risk exposures

Question 11

Types of risk:

Answer 11

1 asset-liability mismatching risk 

2 market risk 

3 credit risk 

4 operational risk 

5 liquidity risk 

6 relative performance risk 


Question 12

explain in the context of mean-variance portfolio theory what is meant by

Answer 12

1. opportunity set 

2. efficient frontier 

3. indifference curves 

4. the optimum portfolio.

Question 13

market conduct regulatory regimes:

Answer 13

1. Describe the :
   –Principles, &
   –Aims of
   Market conduct regulatory regimes.

Question 14

Stakeholders to whom principles of regulation apply

Answer 14

1. Investment managers
2. Brokers
3. Market Makers
4. Banks
5. Traders

Question 15

Areas where regulatory and legislative principles are applied:

Answer 15

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



Question 16

knowledge and understanding of the theory of finance:

Answer 16

1. relationship between financial management and acting as an entrepreneur
2. motives for mergers and divestitures
3. key findings in behavioural finance\
4. main steps involved in financial planning

Question 17

specialist financial instruments:

Answer 17

 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 


Question 18

main types of derivative contract :

Answer 18

how traded


define their payoffs.

Question 19

actuarial techniques may be used to:

Answer 19

develop an appropriate

investment strategy.

Question 20

actuarial techniques used:

Answer 20

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 


Question 21

Investment Performance

Answer 21

1. analyse performance

2. Discuss limitations of analysis and performance measurement techniques

Question 22

performance measurement techniques:

Answer 22

1 portfolio risk and return analysis 

2 equity price 

3 net present value 

4 net asset value 

5 return on capital 



Question 23

investment indices:

Answer 23

1. the construction of and
2. the principal features of major investment indices uses of investment indices. 

3. Describe the principal indices of share prices in the
   South African,
   United Kingdom,
   United States,
   Japanese,
   German and
   French stock markets. 

4. Describe the principal bond indices
   –(South African and global). 

   5.Explain the problems encountered in constructing property indices.

Question 24

Portfolio Performance Assessment:

Answer 24

Discuss


1. performance of an investment portfolio
2. the limitations of such portfolio measurement.
3. Assess the performance of a portfolio relative to
   
   1. a published market index. 

   2. a predetermined bench- mark portfolio. 

4. Analyse the performance of a portfolio into components relating to
   - –investment sector selection and
   - –individual stock selection. 

5. Discuss the relative merits of assessing portfolio performance relative to published indices, other portfolios or a predetermined benchmark portfolio. 

6. Discuss the uses of risk-adjusted performance measures. 

7. Discuss the value of portfolio performance measurement and its limitations.

Question 25

the principal styles in portfolio management:

Answer 25

1. including risk control techniques. 2.  Describe and discuss the principal active management “styles” - -value, - -growth, - -momentum, - -rotational


Question 26

Techniques and Uses of Portfolio Management

Answer 26

1. principal equity portfolio management techniques.
 2. principal bond portfolio management techniques. 3. uses institutional investor might make of 1. financial 
futures and 2.options, 3. over the counter contracts. 4. interest 
rate swaps and 5. currency swaps. 
 6. forward 
foreign exchange contracts for currency hedging 4.  usefulness of multifactor models in practical investment 
management and risk control. 5. problems of making significant changes to the investment 
allocation of a substantial portfolio 6. Transition management and asset allocation techniques (including 
overlay strategies)

Question 27

Describe role of :

Answer 27

The custodian of securities.

Question 28

Portfolio construction with attention to:

Answer 28

``` 1  value at risk 
 2  tracking error 
 3  risk budgets 
 4 Risk Measurement, comparison and attribution of risk ```