Chap 13 Flashcards
what is an immunisation bond strategy
it aims to protect the funds againt changes in interest rates
what is systematic risk
this is risk that is specific to the investment only
what type of risk can be reduced through diversification
unsystematic risk
what is the bond verison of beta
portfolio duration / market duration
what is the money weighted time to retun
this takes into account when cashflows arise
what is the holding period return
(end value - start value) / start value * 100
what type of return is the same as the IRR
the money weighted rate of return
how you do you find the money weighted rate of return
it where you discount each ammount back
beta equation
beta = covaraince / variance
when would you use the sharpe ratio
on a undiversified fund
how do you find the time weighted return
it is the geometric mean of the returns
what is the main concern of a dedicated portfolio
a call provision, as if the bond is recalled early then the cashflows will not add up
what is the jensen eqn
jensen = actual return - expected return
what is the best match for a life insurance policy
gilts
what is the market beta based on
a passively managed portfolio with the same beta
