Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

PRA book > The PRA Business Model > Flashcards

The PRA Business Model Flashcards

1
Q

What are the two main aspects for a PRA?

A

Informational
Benchmarking - providing financial and physical benchmarks is key to profitability
(third for some - consultancy etc)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Why do PRAs want as many strands to their business models?

A

Added value to the core subscription makes the subscription more sticky

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the ultimate aim of a PRA?

A

To diversify from pure reliance on subscription and to broaden revenue base. They know they can’t raise prices forever and insurance against weak commodity cycles when subscriptions may drop

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a value hierarchy?

A

Informational usage is at the bottom of the hierarchy while benchmark usage sits at the top

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Informational usage is made up of what?

A

Written news and information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the value of information for a PRA subscriber?

A

Whether it makes them money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the lowest value information?

A

None exclusive news

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is “market moving”?

A

If the dissemniation of the info will have consequences for the price of the commodity affected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

A good specialist news story, is one…

A

Where you can trade off the headline

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is fundamental data?

A

Part of informational, any data that relates to supply and demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What’s an example of fundamental data?

A

Grain harvest sizes, wind power outage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the least valuable pricing data?

A

Just a general check or just for informational purposes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What mark to market pricing?

A

Where the middle office of a commodity firm needs to compare the positions that their company had taken in the market with daily information in order to check the performance of their trading activity and portfolio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Why would a risk manager subscribe to a daily feed like a PRA?

A

To compare the values that her firm is assigning to specific commodities that they buy or sell with with the values the PRA is assigning them

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What would a risk manager do if there were major discrepancies?

A

Reduce a traders position if his view of the market is diverging majorly from the PRA data. You can’t operate a risk management business without a PRA making it the most valuable for all of the informational uses of PRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Why is there a cap to how much you can charge for a PRA

A

The risk manager can choose from any PRA, can take a feed from Reuters bloomberg or broker information to construct their own PRA

17
Q

What comprises the top third of PRA value hierarchy?

A

Benchmark usage

18
Q

If a PRA is used as a benchmark it is

A

Used as the basis for physical or financial transactions

19
Q

What do traders use benchmarks for?

A

Shorthand when they negotiate trades

20
Q

What is the least valuable type of benchmark usage for a PRA?

A

A spot contract usage - as a one time thing the two counterparts cab use a different benchmark every time. We want long term annual supply deals

21
Q

The longer the duration of the deal that uses the benchmark..

A

The better chance the PRA will come to dominate the market

22
Q

What is a “term deal”?

A

A PRAs pricing in a lengthy supply deal

23
Q

Why do PRAs want term deals?

A

1) provides security from being displaced by another PRA agency
2) gives greater security of revenue - the counter parties can’t cancel their subscription whilst the deal is still going on?

24
Q

The definition of a major physicals benchmark…

A

It is referenced outside the market to which it specifically refers (oil is more likely to be referenced outside its market than something obscure like polymers)

25
Q

What are the benefits for a PRA to having a major physical benchmark?

A

It enhances the reputation, makes it easier to enter new markets and introduce its services to traders in far removed areas

26
Q

What grows up around major physical benchmarks?

A

A derivative market

PRA book (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions