fi 412
Study online at https://quizlet.com/_hycjpn
1. Nominal Expected Returns: Calculated without first adjusting for inflation
2. Real Expected Returns: Accounts for expected losses in purchasing power due to inflation
3. Fisher Effect: Real Expected return = Nominal Expected return - expected inflation
4. Complexity: some financial assets involve optionality granted to the issuer or investor that affects future cash
flows, can effectively be thought of as a combination of two or more simpler assets
5. Four major U.S. asset classes: Common stocks, Bonds, Cash, Real estate
6. Systematic risks: those risks that are assumed to affect the valuation of all assets within an asset class
7. Idiosyncratic risks: those risks that are unique to the issuer of a particular asse
8. Financial risk Management involves: • Identifying financial risks
• Quantifying each identified risk
• Evaluating how to deal with each identified risk
9. Traditional IRA: Contributions are pre-tax (reduce taxable income), investments grow tax free, taxes levied
on distributions
10. Roth IRA: contributions from after-tax income, investments grow tax free, no taxes on withdrawals inretirement.
11. Defined benefit plans: Employees paid benefits in retirement based on earnings and tenure of employ-
ment
12. Defined contribution plans: Employer specifies how funds will be contributed to employee retirement
accounts, no guarantee of future payouts to retired employees, employee has some control of how funds are invested
13. 401(k): For Private sector workers
14. 403(b): for nonprofits
15. 457 Plan: For public sector workers
16. Collective Investment vehicles: 1. Registered investment companies (or RICs - mutual funds and
closed-end funds)
2. Real estate investment trusts (REITs)
3. Exchange-traded funds (ETFs)
4. Venture capital (VC) firms
17. Basel Committee on Banking Supervision: Sets international banking standards (e.g., Basel
III, introduced post-2008 - capital requirements, stress tests, liquidity, leverage)
18. Fed Oversee: • State-chartered banks that are members of the Federal Reserve System.
• Bank holding companies and financial holding companies.
• Foreign bank operations in the U.S
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Study online at https://quizlet.com/_hycjpn
1. Nominal Expected Returns: Calculated without first adjusting for inflation
2. Real Expected Returns: Accounts for expected losses in purchasing power due to inflation
3. Fisher Effect: Real Expected return = Nominal Expected return - expected inflation
4. Complexity: some financial assets involve optionality granted to the issuer or investor that affects future cash
flows, can effectively be thought of as a combination of two or more simpler assets
5. Four major U.S. asset classes: Common stocks, Bonds, Cash, Real estate
6. Systematic risks: those risks that are assumed to affect the valuation of all assets within an asset class
7. Idiosyncratic risks: those risks that are unique to the issuer of a particular asse
8. Financial risk Management involves: • Identifying financial risks
• Quantifying each identified risk
• Evaluating how to deal with each identified risk
9. Traditional IRA: Contributions are pre-tax (reduce taxable income), investments grow tax free, taxes levied
on distributions
10. Roth IRA: contributions from after-tax income, investments grow tax free, no taxes on withdrawals inretirement.
11. Defined benefit plans: Employees paid benefits in retirement based on earnings and tenure of employ-
ment
12. Defined contribution plans: Employer specifies how funds will be contributed to employee retirement
accounts, no guarantee of future payouts to retired employees, employee has some control of how funds are invested
13. 401(k): For Private sector workers
14. 403(b): for nonprofits
15. 457 Plan: For public sector workers
16. Collective Investment vehicles: 1. Registered investment companies (or RICs - mutual funds and
closed-end funds)
2. Real estate investment trusts (REITs)
3. Exchange-traded funds (ETFs)
4. Venture capital (VC) firms
17. Basel Committee on Banking Supervision: Sets international banking standards (e.g., Basel
III, introduced post-2008 - capital requirements, stress tests, liquidity, leverage)
18. Fed Oversee: • State-chartered banks that are members of the Federal Reserve System.
• Bank holding companies and financial holding companies.
• Foreign bank operations in the U.S
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