Cfa Level 3 2013 Summary
Behavioral Heuristics – Check Anchor/OAR Availability– Conservatism, Anchoring, Overconfidence, Ambiguity aversion, Representativeness, Availability
Traditional Finance – TF-RAR - Risk averse, Asset integration, Rational expectations
Behavioral Finance – BF-LAB - Loss averse, Asset segregation, Biased expectations
Type of Investors – CMIS - Cautious, Methodical, Individualistic, Spontaneous
IPS Process – OCSAEEA, Old Cars Sell At Eastern European Auctions – Objectives, Constraints, Strategy, Allocation, Execution, Evaluation, Adjustments
IPS Constraints – URLIT - Unique, Regulatory/legal, Liquidity, tIme, Tax
TDA vs. TEA – Higher Enders Take TEA – Higher Ending Tax rate TEA better
Residence vs. Source – Pay Greater rate with Credit, Exempt Source Income, Deduct Paid Taxes
If our Human Capital is Bond-like, we should invest more aggressively (equity) and our demand for life insurance increases.
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Type I & II Error – Type I, I did something (rejected H0) wrong; Type II, failed TO reject H0
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Null = Manager adds no value; Reject & conclude that manager adds value when he actually does not.
DB Risk Toler/Objs. Factors– P.S. San Francisco Risked Everything With Certain Plan Features - Pension Surplus, Sponsor Finances, Risk Exposures, Workforce Characteristics, Same
Prudent Man Rule : Foundation for all write stds. Of prudence apply in Legal/Reg.
Prudent Expert : DB/DC plan
Prudent Investor : Endowment, Life Insurance
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Prudent Man Rule: the requirement that a trustee, investment manager of pension funds, treasurer of a city or county, or any fiduciary (a trusted agent) must only invest funds entrusted to him/her as would a person of prudence, i.e. with discretion, care and intelligence. Prudent Man Rule requires that each investment be judged on its own merits. Under the Prudent
Traditional Finance – TF-RAR - Risk averse, Asset integration, Rational expectations
Behavioral Finance – BF-LAB - Loss averse, Asset segregation, Biased expectations
Type of Investors – CMIS - Cautious, Methodical, Individualistic, Spontaneous
IPS Process – OCSAEEA, Old Cars Sell At Eastern European Auctions – Objectives, Constraints, Strategy, Allocation, Execution, Evaluation, Adjustments
IPS Constraints – URLIT - Unique, Regulatory/legal, Liquidity, tIme, Tax
TDA vs. TEA – Higher Enders Take TEA – Higher Ending Tax rate TEA better
Residence vs. Source – Pay Greater rate with Credit, Exempt Source Income, Deduct Paid Taxes
If our Human Capital is Bond-like, we should invest more aggressively (equity) and our demand for life insurance increases.
-------------------------------------------------
Type I & II Error – Type I, I did something (rejected H0) wrong; Type II, failed TO reject H0
-------------------------------------------------
Null = Manager adds no value; Reject & conclude that manager adds value when he actually does not.
DB Risk Toler/Objs. Factors– P.S. San Francisco Risked Everything With Certain Plan Features - Pension Surplus, Sponsor Finances, Risk Exposures, Workforce Characteristics, Same
Prudent Man Rule : Foundation for all write stds. Of prudence apply in Legal/Reg.
Prudent Expert : DB/DC plan
Prudent Investor : Endowment, Life Insurance
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Prudent Man Rule: the requirement that a trustee, investment manager of pension funds, treasurer of a city or county, or any fiduciary (a trusted agent) must only invest funds entrusted to him/her as would a person of prudence, i.e. with discretion, care and intelligence. Prudent Man Rule requires that each investment be judged on its own merits. Under the Prudent