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Investment And Portfolio Management > Chapter 7 > Flashcards

Chapter 7 Flashcards

1
Q

When investors decide to invest in a particular asset class such as equities there are two ways they can do it

A

Direct investment and indirect investment

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2
Q

It is when an individual personally buys shares in a company such as buying shares in apple the technology giant

A

Direct investment

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3
Q

It is when an individual buys a stake in an investment fund such as mutual fund that invest in the shares of a range of different types of companies perhaps including apple

A

Indirect investment

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4
Q

There is a range of funds available that pool the resources of a large number of investors to provide access to a range of investments. this pooled funds are known as

A

Collective investment schemes (CIS)

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5
Q

It is one that can create new shares in response to investor demand of cancel them when sold so that their capital can expand or contract

A

Open-ended fund

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6
Q

It has a fixed capital days so if an investor wants to buy shares they will do so on the stock exchange and buy them from another investor who wants to sell

A

Closed-ended fund

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7
Q

These are funds that are established in europe and marketed internationally are often labeled as

A

Undertakings for collective investment in transferable securities (UCITS) funds

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8
Q

It is seen as a measure of quality that makes them acceptable for sale in many countries in the middle east in asia

A

Ucits branding

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9
Q

It pull the resources of a large number of investors with the aim of pursuing a common investment objective

A

Investment funds

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10
Q

The pooling of funds brings a number of benefits including

A

Economies of scale
diversification

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11
Q

It refers to the fund managers approach to choosing investments and meeting the fonts objectives

A

Investment styles

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12
Q

It is seen in those types of investment funds that are often described as index tracker funds

A

Passive management

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13
Q

It involves constructing a portfolio and such a way that it will track or mimic the performance of a recognized index

A

Index tracking or indexation

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14
Q

It seeks to outperform a predetermined benchmark over a specified time period

A

Active management

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15
Q

It means that the manager focuses on economic in industry trends rather than the prospect of particular companies

A

Top-down

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16
Q

It means that the analysis of a company’s net assets, future profitability and cash flow and other company specific indicators is a priority

A

Bottom up

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17
Q

Range of investment styles

A

Growth investing
value investing
momentum investing
contrarian investing

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18
Q

Which is speaking the shares of companies with present opportunities to grow significantly in the long-term

A

Growth investing

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19
Q

Which is taking the shares of companies that are undervalued relative to their present and future profits or cash flows

A

Value investing

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20
Q

Which is speaking the shares whose share price is rising on the basis that this rise will continue

A

Momentum investing

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21
Q

The flipside of momentum investing which involves picking shares that are out of favor and may have hidden value

A

Contrarian investing

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22
Q

Index trackers and actively managed funds can be combined in what is known as

A

Core-satellite management

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23
Q

These are funds that combine elements of both traditional passive and active investing

A

Smart beta funds

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24
Q

Basic to outperform traditional passive strategies by targeting value-creating investment ideas such as finding bar games following a trend or seeking safety

A

smart beta funds

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25
It is an investment fund that can issue and redeem shares at any time
Open-ended fund
26
the most well known type of US investment fund
mutual fund
27
most mutual fund shares are sold mainly through
brokers banks financial planners insurance agents
28
The price that an investor will pay to buy shares or received when they are redeem is based on the
NAV of the underlying portfolio
29
Three main types of funds in european open-ended funds
SICAV unit trusts OEIC
30
It refers to a series of EU regulations that were originally designed to facilitate the promotion of funds to retail investors across europe
UCITS
31
Is one of the main centers for funds that are to be distributed to investors across european borders and globally
luxembourg
32
An investment company with variable capital or in other words and open-ended investment company
SICAV - a Societe d'Investissement a Capital Variable
33
Do not have a legal personality instead their structure is based on a contract between the scheme manager and the investors
FCP
34
Is an investment fund that is established as a trust in which the trustee is the legal owner of the underlying assets in the unit holders are the beneficial owners
unit trust
35
Unit trust are described as
dual priced
36
The price the investor receives if they are selling
bid price
37
The price the investor base is buying
offer price
38
The difference between the bid price and offer price is
bid offer spread
39
They are a form of icvc that is structured as a company with the investors holding shares
OEIC
40
Refers to the use of the mid market prices of the underlying assets to produce a single price at which investors buy and sell
single pricing
41
The capital of this is therefore fixed and does not expand or contract in the way that an open-ended funds capital does
closed ended funds
42
The basic types of investment companies in the us
mutual fund closed ended funds unit investment trusts
43
It is considered to be a security that cannot be sold within 7 days at the approximate price used by the font in determining nav
illiquid security
44
It does not actively trade it's investment portfolio instead it buys are relatively fixed portfolio of securities
UIT
45
It is actually a company and not a trust, it will invest in a range of investments allowing its shareholders to diversify and lessen their risk
investment trust
46
Such investment trust are commonly referred to as
split capital investment trusts
47
These companies are allowed to borrow money on a long-term basis by taking out bank loans or issuing bonds
Investment trust
48
These are well established in countries such as the us uk australia canada and france
Real estate investment trusts
49
one of the main features of this is that they provide access to property returns without the previous disadvantage of double taxation
REITs
50
it gives investors access to professional property investment and might provide them with new opportunities such as the ability to invest in commercial property
REITs
51
the risk that the investment will not be able to be readily realized
liquidity risk
52
is an investment fund usually designed to track q particular index
exchange traded fund
53
a method of managing an investment portfolio that seeks to match the performance of a broad based market index
passive investment management
54
is the traditional form of index replication and is the one favoured by the largest and long established ETF providers
physical replication
55
three tracking methods of physical replication
full replication stratified sampling optimization
56
this method requires each constituent of the index being tracked to be held in accordance with its index weighting
full replication
57
this method requires a representative sample of securities from each sector of the index to be held
stratified sampling
58
this method costs less than fully replicating the index tracked, but is statistically more complex
optimization
59
involves the fund manager entering into a swap with a market counterparty to exchange the returns on the index for a payment
synthetic replication
60
are reputed to be high risk and sought to eliminate or reduce market risk
hedge funds
61
common aspects of hedge funds
structure high investment entry levels investment flexibility gearing liquidity cost
62
is medium to long term finance provided in return for an equity stake in potentially high growth companies
private equity
63
it is invested in exchange for an stake in a company and as shareholders the investors returns are dependent on the growth and profitability of the business
private equity
64
raise their capital from a variety of sources but mainly from large investing institutions
private equity firms
65
are now usually structured in different ways from retail investment funds
private equity arrangements

Investment And Portfolio Management (6 decks)

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