2016年6月cfaips课程章节1ips写作

【梦轩考 专业提供CFAFRM全 ),'Ѕঃ׀੟/69੟□३ݾঃ੟ׁઐ֪੟ ͆Ї੟͇Ԙч͇੟Essaywritinginlevel IntroductiontoessayPart Evaluation&attribution Part eEthical Part 【梦轩考 专业提供CFAFRM全 EssayinthemorningsessionEssay1–PreparetheIPS(ޛ㛑᮷IndividualinvestorInstitutionalinvestorEssay2–otherEconomicsAssetallocationTrading,monitoring&rebalancingRiskmanagement&derivativesBehaviorfinance eysisPerformanceevaluationEquityAlternativeinvestmentsGIPS IPSTestIndividual2005Q7,2006Q1,2007Q1,2008Q1,2009Q1,2010Q1,2,2012Q1,2ˈ2013Q1,2,2014Q1,InstitutePension2005Q1,2006Q4,2006Q6,2008Q3,2009Q3,2010Q32012Q6,2013Q7,2014Endowments&2009Q3,2011Q3,2013Q7,2014Insurance2007Q6,2010 IPSQuestionCalculate:ToascertainordeterminebymathematicalCharacterize:TodescribetheessentialcharacterorqualityCriticize:Toconsiderthemeritsanddemeritsofandjudgeaccordingly;tofindfaultwith.Describe:Totransmitamentalimage,animpression,oranunderstandingofthenatureandcharacteristicsof.Determine:Tocometoadecisionastheresultofinvestigationorreasoning;settleordecidebychoiceamongalternativesorExin:Togivethemeaningorsignificanceof;toprovideanunderstandingof;togivethereasonfororcauseof.Formulate:Toputintoasystematizedstatementorexpression;toprepareaccordingtoaformula.Give:Toyieldorfurnishasaproduct,consequence,oreffect;toofferfortheconsideration,acceptance,oruseofanother. 【梦轩考 专业提供CFAFRM全 IPSQuestionIdentify:Toestablishtheidentityof;toshoworprovethesamenessJudge:ToformanopinionaboutthroughcarefulweighingofevidenceandtestingofJustify:Toproveorshowtobevalid,sound,orconformingtofactorreason;tofurnishgroundsorevidencefor.Prepare:Toputintowrittenform;todrawmend:Tobringforwardasbeingfitorworthy;toindicateasbeingchoiceforsomethingorasotherwisehavingone’sapprovalorSelect:Tochoosefromanumberorgroup–usually,byfitness,excellence,orotherdistinguishingfeature.Show:Tosetforthinastatement,account,ordescription;tomakeevidentor䇗㇍ශѣള㘹⭕Ⲻ᮷᮷⛯䶔䇗㇍ශφ᮷᮷⧦䊗+ф㔉䇰Ⲻ䙱䗇δњ IndividualInvestors’IPSWithAssetAllocation IndividualIndividualInvestors’ଞѧ੟ㅭ⽉ͫ߄੟□Ԉԯଞѧͫख़〒ԥ૯ͫ߄੟ଞѧ੟߄੟੟ͧ੟੟ࣞॹͫঈй߄ͨ੟נ⽉߄੟ଞѧנ߄੟੟ㅭ⽉ㅭ⽉ͫ߄੟ଞѧנޗ੟੟੟ݶҵख़〒ԥ૯ͫ߄੟੟੟ଞޗ੟Л੟ଞѧנ߄੟ଞѧנ߄੟【梦轩考 专业提供CFAFRM全 IndividualIndividualInvestors’Current Зޥঃؙ६ֹ К੟૭Ѧ ҷ՚ளॡ૭ѦъЗ К੟૭ ૭ѦIndividualInvestors’√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√Legal&√√√√√√√√√√√√Investoral√Estate√√√√√њӪIPSѝreturn䇑㇇㾱᮷᮷䀓䟺㓧㑱༽ᵲˈ䴰㾱㘳㲁ഐཚཊˈնӁ㿱᮷ਾˈ䇑᮷аර㇇аᒤᰦ䰤ᰦ䍴䠁ᴹਓˈ䴰㾱ਟᣅ䍴䍴ӗӗᰦ⳺ᕕ㺕㕪ᰦᙫcashinflowоcashoutflowˈ䇑㇇ᰦ䍴䠁㕪ᙫਟᣅ䍴䍴ӗtotalinvestableassets˄TIAሶ䍴䠁㕪ਓ䲔ԕTIAᗇᰦᰦ⳺⦷ˈѪᰦTIA䍝Ҡᰦᡰԕᰦк䍗㟘аර䇑㇇ᴹњਈᖒ2005ᒤо2006ᒤ㘳仈ˈ䇑㇇䴰㾱䰤䳄аᒤᙫㅜҼᒤⲴcashinflowоcashoutflowˈ䇑㇇ᰦ䍴䠁㕪ᙫਟᣅӗtotalinvestableassets˄TIA˅ˈѝ㾱ᰦޕㅜаᒤⲴ։䍴䠁ᒦޕTIAሶ䍴䠁㕪ਓ䲔ԕTIAᗇᰦᰦ⳺⦷ˈѪᰦTIA䍝Ҡᰦᡰԕᰦк䙊䍗㟘㛰Ҽර䇑㇇˖བྷ䜘仈රᱟ⺞ᇊᒤԭNǃPVǃPMTǃFV˄⌘ᰦ⧠䠁⍱ᰦঃਧ˅ˈ䀓IYDŽ 【梦轩考 专业提供CFAFRM全 4kindsofreturnPayattentiontothereturnRealrateofNominalrateofBeforetaxrateofAftertaxrateof 66stepstoformulateindividual’s6stepsto alInvestorsRenewtheobjectives AftertaxCash& TIAConstraints CalculateRisksIPS •Timerequiredvs. •Liquidityrealvs. prevs.posttax •Legal&RegulatoryRiskability& •UniqueR TTLL 【梦轩考 专业提供CFAFRM全 ProfilingProfilingIndividualSituationalSituationalSourceofEntrepreneurialactivity(actively,normallyaboveaveragewillingnesstotolerateInheritance,onetimewindfalls,builtupoverlongperiodsofsafeemployment(passively,belowaveragewillingnesstotoleraterisk)MeasureofPositivecorrelationbetweenlevelofrisktolerance& ’sperceptionofwealthStageoflife:(typicallyreducedwillingnesstotakerisk)FoundationAccumulationMaintenanceDistributionReturnReturnRequiredAssetMaintaintheinflationadjustedSpecificCashFlowSupport…DesiredNon-primary ReturnReturnLowBaseStockCurrentTotalInvestmentCapitalCurrentTotalInvestmentCapitalLivingRrNetCFsatRrNetCFsatRrNetCFsatRrNetCFsatT1(1RfNetCFsatT1(1fњӪњӪIPS–аර䇑AftertaxCash ysis P* Total P* P* P*(1+f)*Living Q*Down Total P*t+Q+M+D+ P*(1+f)*t+Q*(1+f)+Netcash њӪњӪIPS–аර䇑㇇ਈAftertaxCash e P Saleoflowbasis e (A+I)* Q1 Q1* E* H*Annual (A+I)*t+E+ Netcash њӪIPS–аර䇑ReturnCalculationCurrentportfolio’sNetCFinatExcludingthehouseandotherunavailableRealReturnaftertax/beforetaxNominalReturnaftertax/beforetax【梦轩考 专业提供CFAFRM全 RiskRiskTimehorizon&abilitytotakeriskTimehorizon&abilitytotakeriskpositivelyrelated.Portfoliosize&abilitytotakeriskpositivelyrelated.Goalimportance&abilitytotakerisknegativelyrelated.Spendingneeds&abilitytotakerisknegativelyrelatedFlexibilitycanincreasetheabilitytotakeriskAssetturnover&investmentstylebetweenwillingness&ability,followthelowerњӪIPSRisk ঃן⼙ޥঃAbility-Theyhavealongtime eare Loss •Ability- •AssetbaseisBasedon“……”inthe њњӪIPSInvestorclassifyalinvestor2儈㇑䘰SecuritiesinthecapitalLowbasisCashpaymentfromtheretirementsaving Trust/Inheritance/otherone–timeSizeofSizeislargerelativetotheCFStageofal【梦轩考 专业提供CFAFRM全 њњӪIPSReturnobjectivesalinvestor2ளॡ૭Asset •MaintainthelifestyleinOne-timegift/ њњӪIPSRisk

alinvestor2ளॡ૭Ability-Theyhavealongtimehorizon(…TheyhavealargeassetLowbasisstockcanbeReduceinheritance/gift/Iftheguyisstillyoung,he •Ability-Theyhaveno shemaybe •LivingexpensemustbepaidbytheњӪIPSRiskalinvestor2ளॡ૭PeopleinOriginalassetMoneymarket/bond→TIPS→Investmentfailinthepast→ responsibleinvesting)responsibleinvesting)DesiredbequestsHowquicklyanassetcanbeconvertedintocashwithoutalossinvalue.Focusisonneedforcashintheshortterminexcessofcashin-flowsfromearningsorportfolio medicalexpensesforlovedones) charitabledonations…)(medicalexpense,uninsuredlosses,InvestmentInvestmentcircumstanceschangesignificantly(e.g.priortoretirement/postretirement)Lengthofeachtimehorizonisimportantreturnssubjecttotaxation(e.g.,lossharvesting,long-termgains)securitiesattractivesubjecttotypesoftax: transfer,wealthIftaxtreatmentuncertain, legalcounselInvestmentLegal&s:altrust Balancetheinterestsofthe andremaindermenInvestmentInvestmentconstraintsTheAneedannualdistributionofB,startingnowandadjustedforinflationThisamountofmoneycanbeusedasCA:NameB:MoneyC:Use(Livingexpense,children’seducationTimeTheyhavealongtermsingle stagehorizon,fromretirementtodeathor…Theyhavealongtermhorizon,twomainstages:The1ststageistheinitialAyearsinretirement,theypayThe2edstageistherestofthetimeinA:HowmanyB:Children’seducationfee/healthcare 【梦轩考 专业提供CFAFRM全 InvestmentInvestmentconstraints3.TheyheldalargeportionoflowbasisstockRebalancingtheportfoliowillcreateatax eandcapitalaredifferent,sotheyprefer…toThe…needalegalcounseltocreateatrusttoPostretirement,theyarestillfirm’sinsider,theyneedfollowthedisclosureAsthepropertywillbedonated,soitisnotincludedinthetotalassetbaseThe…saytheydonotwanttoinvestin…The…wanttodonate…tolocal IndividualInvestors’IPS-Return[name]’sreturnobjectiveisto[copy],while[copy],aswellasRisk[name]has[below/above]averagerisktoleranceforthefollowing[name]has[above/below]average[ability/willingness]totakerisk IndividualInvestors’IPS-AbilitytotakeIncreaseabilitytotakeLongtime[name]isyoungandhasmorehumanLargeassetbasethatismorethanCouldpursueasecondCouldreducelivingLargemarginforerrorallowsthemto modatevolatilityinthe[name]couldchange 【梦轩考 专业提供CFAFRM全 IndividualInvestors’IPS-AbilitytotakeIncreaseabilitytotakerisk˄Cont’[name]hastheflexibilitytostoptheannualpaymenttoHasaflexibleretirementOpportunitiesfor eTheywillreceive[name]willpotentiallyinheritalargesumof[name]has [name]hasno eissignificantlyexceedshercurrentlevelof IndividualInvestors’IPS-AbilitytotakeDecreaseabilitytotakeOnlysource eishisinvestmentDesirestomaintainrealvalueoftheCoulddecidetoincreasespendingHeisathispeakofhiscareerandearningpowerandisunlikelytobeabletoachievecomparableearningpowerinthefuture. IndividualInvestors’IPS-AbilitytotakeDecreaseabilitytotakeThereisnoassurancethat[objective]willbecoveredandthecostcouldbesubstantial.SmallamountofassetNopost-retirement [name]doesnotparticipatein orindividual [name]hassmallpensionrelativetolivingexpensesohemustdependprimarilyonhisinvestmentportfolio.[name]hashighlevelofspendingrelativetoinvestable 【梦轩考 专业提供CFAFRM全 IndividualInvestors’IPS-WillingnesstotakeDecreaseConservativenatureofcurrentHoldingtoomuchcashsurplusesinalow-risk,low-returnUnwillingtosustainUnwillingtotakeadvantageofinvestmentPreferencetoavoidlossesduetoprevious[name]inheritedwealthwhichmayresultinareducedwillingnesstotakerisk. IndividualInvestors’IPS-WillingnesstotakeIncrease[name]ownhernstoretirerelatively[name]inconfidentthatequitywilldeliverpositive IndividualInvestors’IPS-Investmentconstraints1.The[name]needportfoliotoprovide[Money]fornextyear’s[name]’sportfolioisrequiredtoprovidehigh/lowliquiditytomeetPaylivingProvideahomeforPaytuitionforPayofmortgage eFundeducationexpensesforherchildrenin[number]DebtAnnualfamily 【梦轩考 专业提供CFAFRM全 IndividualInvestors’IPS-Investmentconstraints2.Time[name]hasshort/longtermtimehorizonmultistage/consistsof[number]oftwostagesforthefollowingreasons:Thefirststageconsistsof[time]untilhereachesageThesecondstage passestherestoftheInthe1ststage,theAmustpayB,andalsopayCfortheirInthe2edstage,theyareinretirement,EyearsfromA:NameB:Livingexpense,mortgagepaymentC:Educationfee/healthcarefeeD:Children/E:Howmanyyearsfromnow IndividualInvestors’IPS-InvestmentconstraintsThetaxrateis…,thetaxaspectshouldbeThe…‘staxtreatmentisuncertain,theyneedalegalTheprudentinvestorruleisThe…needalegalcounseltocreateatrusttoThe…saytheydonotwanttoinvestin…The…wanttocreateatrusttocarefor…The…wanttodonate…tolocalcharity InstitutionalInvestors’IPSWithAssetAllocation 【梦轩考 专业提供CFAFRM全 InstitutionalInstitutionalInvestors’√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√√Legal&√√√√√√√√√√Fund√√√√Effectofchangingint.on√MonteCarlo√√√√√√√√√Pensionn’sIPSwritingFoundation’sIPSwritingEndowment’sIPSwritingLifeinsurance’sIPSwritingNon-lifeinsurance’sIPSwritingBank’sIPSwriting PensionPensionInsurancePensionPensionnˈEndowments& Endowments&PensionPensionn,Endowments&Pensionn,Endowments&Pensionn,Endowments&【梦轩考 专业提供CFAFRM全 DBPensionns:ReturnDBPensionns:ReturnGoalisforassetstogeneratereturnsufficienttocoverpensionliabilities:PVA>PVLSpecificreturnrequirementdependsonfundedstatusandcontributions(assets)relativetoaccruedbenefits(liabilities)MinimizationofcontributionsisamorerealisticReturnobjectivemaybehigherifthesponsoristryingtolowerfuturecontributionsorwantstorecognizepension eonits TypicalreturnAdequatefundingrate,inflationMatchabenarkreturnumreturnforagivenlevelofAbsolutereturnobjective—e.g.,Thereturnobjectiveisgenerallyestablishedbytheactuarialdiscountratedeterminedbyanactuaryusingan"assetliabilitystudy' DBPensionns:ReturnDesiredReturnvs.RequiredDesired/StretchreturnisareturnthatisoftendesiredbymanagementandgenerallyhigherthantherequiredreturnSethigherthanrequiredreturnwiththegoaltoreduceoreliminatefuturepensioncontributionsRatemaybetoohighandexposeassetstounnecessaryriskandMaynotbeintheinterestofnReturnobjectivemaybemoreaggressivewhentheworkisLessaggressiveforretiredlivesReturnobjectivemaybeseparateforactiveandretiredlivesportionofpensionnontheexam,examinethecasecarefully Pensionn’sIPSInvestmentconstraintsPensionassets’returncancoverpensionliabilities(ABO,PBO…)GenerateasurplusTotalreturn=minimumrequiredreturn(discountrate)+excessnThesurplusincrease,thentherisktakingabilityincreaseLowerdebtratios,highercurrentandexpectedprofitability,thenrisktaking 【梦轩考 专业提供CFAFRM全 Pensionn’sIPSInvestmentconstraints2.CommonRiskThehigherthecorrelationbetweenoperationsandpensionassetreturns,thelowertherisktakingabilitynThenwilloffersomeEarlyretirementorlumpsumpayments,thentheliabilities’timehorizondecrease,theliquidityneedsincrease,sotherisktakingabilitydecreaseTheyoungeremployee,thehigheractivetoretiredlivesratio,thehigherrisktakingability DBPensionns:RiskIncreasedrisktoleranceLargernsurplus...PVAGreaterfundedstatus...higherLowerfirmdebt...lowerdebt/equityHigherprofitability...higherexpectedYoungeraverageage/greateractiveGoingconcernProvisionsforearlyretirementandlump-sumreduceabilitytotake DBPensionns:RiskForDBns,riskrelativetoliabilitiesisAsset/LiabilitymanagementisasubsetoftheoverallriskTypicalriskobjectivesStandarddeviationintermsofthe100%fundedstatusvs.futureFundedstatustoavoidreportingpensionObtainacertainleveloffunding 【梦轩考 专业提供CFAFRM全 DBPensionns:1.WorkMix(retiredvs.activeGreaterretiredlives,increasedliquidity2.Sponsorcontributionsvs.benefitHigherprofitabilityreducesliquidity3.nEarlyretirementorlumpsumprovisionsincreaseliquidityTimeDeterminedbytwofactors:Whetherthe nisagoingconcern(multistage)orisaterminated n(singlestage)Theactivelivesportionofthenwillindicateatimehorizonassociatedwithexpectedtermtoretirement.Theretiredlivesportionwillindicateatimehorizonasafunctionoflifeexpectancyforthosecurrentlyreceivingbenefits. DBPensionns:LegalandMostcountriesfederallyregulatepensionManagershouldconformtothelocalIntheU.S.,ERISArequiressponsorstoexerciseduediligencewhenmakinginvestmentdecisionsERISA'soverridingstandardisthattheassetsshouldbemanagedforthenparticipants,notthesponsorConsultationwithappropriatelegalexpertsisTaxesandUniquePensionnsaretax-exempt,notaxERISArequiresduediligence,butsmallsponsorsmaynothavethenresourcesorexpertisetothoroughlyinvestigatealternativeassets(e.g.,derivatives,hedgefunds,etc.)Pensionnsmayimposerequirementsthatprohibitinvestmentinsometraditionaloralternativeassetchoices Pensionn’sIPSTheNo.ofretiredlivesincrease,theliquidityneedsThecontributionamountincrease,theliquidityneedsTheearlyretirementorlumpsumpaymentsexist,theliquidityneedsTimeThenisgoingconcern,thetimehorizonisTheemployeeyounger,thetimehorizonTheactivetoretiredratiohigher,thetimehorizon 【梦轩考 专业提供CFAFRM全 Pensionn’sIPSERISAregulatesDBAssetsmustbeinvestedforthesolebenefitofnSponsorsneedtoexerciseappropriatedueThepensionmayprohibitinvestmentinsometraditionaloralternativeassetchoices Foundations:Thereturnobjectivedependsonthetimehorizonstatedforthefoundation.Ifthefoundationwascreatedtoprovideperpetualsupport,thepreservationofrealpurchasingpowerisagoal.AminimumreturnequaltotherequiredpayoutplusexpectedinflationandfundexpensesMorefluid,creativeandaggressivethanpensionfundsbecausetheyhavenocontractuallydefinedliabilityAsset-onlyapproachtoassetThemaindriveristhelongtimeDuetolowspendingrequirements,theyusuallyhaveabove-averagerisk Foundations:AnticipatedandunanticipatedneedsforcashinexcessofcontributionsOtherthanthe5%minimum,foundationscanchooseanyspendingratetheyMostfoundationsmaintainareserveof10%to20%ofannualspendingtocompensatefordownyearsinfinancialmarketsTimeEstablishedormanagedwiththeintentoflastingintoperpetuity,usuallyveryExceptionisthosethatarerequiredtospenddowntheir Nontaxable, Unrelatedbusiness e(donatedbusiness).istaxedatcorporate rate.(e.g.,museumgiftshop) e(Div&Int)lessexpensesistaxedatReducedto1%ifspendingequaltoorexceeds 【梦轩考 专业提供CFAFRM全 Foundations:LegalandMoststateshaveadoptedUMIFA(UniformManagementofInstitutionalFundsAct)PrudentInvestorRulegenerallySkill,care,prudence,diligence,defraycosts,diversify,delegateInvestmentsshouldbeconsideredinadiversifiedportfolioCanvarybyUniqueCircumstances:issuerstolookConcentratedholdingsofalargesinglestockthattheyareprohibitedbydonorfromsellingUnrelated e—donatedSociallyresponsibleWiththepermissionofthedonorderivativescanbeAdequateneltoperformdue Foundation’sIPSReturn&1.Aminimumreturnequaltherequiredpayout+expectedinflation+fundexpensesHowtocalculatereturn?SpendingrateAnnualinflationrateReturnexcessinflationManagementexpensesontheportfolio Foundation’sIPSReturn&2.NocontractuallydefinedliabilityMoreaggressivethanShortfallrisklimitmaybeHowever,weneedconsiderDoseannualcontributionIsthespendingtheprimarysourceofIsthereanyone-timeliquidityfunding 【梦轩考 专业提供CFAFRM全 Foundation’sIPSComparethespendingrequirementtoportfolio’ssizePayattentiontoone-timeliquidityneedTimeMostfoundationshaveinfinitetimehorizons,sothetimehorizonisButsomespecialfoundationsrequiredtospenddowntheir Foundation’sIPS……isexemptfromU.S.taxes,aslongastheannualminimumpayoutrequirementismet eistaxableattheregularcorporate……adoptUMIFAPrudentinvestorruleapplySaletheunrelatedWhetherthesalewouldrealizesufficientproceedstocompensateforthelossoffutureannualafter-tax SpendingSimplespendingSpendingt=S(marketvaluet-where:S=thespecifiedspendingRolling3-yearaveragespendingDampenvolatilitythatcanimpacttheendowment’sportfoliovalueandthesponsor’soperatingbudgetSpending=(spendingrate)marketvaluet-1 marketvaluet-2 GeometricspendingThisspendingruleaddressesoneofthecriticismsoftherollingaveragespendingruleinthatextraordinarychangesinportfoliovaluemaycausedramaticshiftsinspending.Spendingt=(R)(Spendingt-1)(1+It-1)+(1-R)(S)(marketvaluet-R=smoothingrate(0.6~0.8),I=rateofinflation,S=spending 【梦轩考 专业提供CFAFRM全 Endowments:ReturnEndowmentsaredesignedtopermanentlyfundandprovidebudgetaryforuniversities,colleges,hospitals,MaintainperpetualpurchasingpowerisCreativetensionexistsbetweentheneedfor eagainstpreservationofpurchasingpower3S's=significant,stableandsustainablecashflowtosupportTotalreturnapproachisappropriate(spendfromboth eandcapitalThelong-termspendingratemustbelessthantheexpectedrealrateofProblem:spendingrate>5%canleadto-erosionofMinimizingspendingvolatilityusingaspendingruleisalso Endowments:RiskMostendowmentshavehighrisktoleranceduetotheirlongtimeLowerabilitytotolerateriskHigherspendingHeavyrelianceupondonations,10%ormoreitsabilitytotolerateriskisdiminishedGreaterbudgetNospendingruleinSmallersizeof Endowments:LiquidityandTimeLowliquiditySpendingneedsvs.giftsandLargecashoutlaysmaysometimesbeneededforcapital newlibraryTimehorizonisverylongterm(typicallyCanbemultistageifamajoroutlayis 【梦轩考 专业提供CFAFRM全 Endowments:TaxesandLegalandTax-Dividendsonnon-U.S.securitieswithholdingUnrelated emaybeMoststateshaveadoptedUMIFA—delegation,care,prudence,maintaincorpusandrespectdonorrestrictions.Prudentinvestorrules501(c)(3)IRSregulationsstatethat eshouldbenefitagroupnotLittleernmentUniqueDuetotheirdiversity,endowmentfundshavemanyuniqueInvestmentinalternativeinvestmentsrequiresignificantresourcesandSocialissues(e.g.,defensepoliciesandracialbiases)aretypicallytakenintoconsiderationwhendecidinguponindividualinvestments Endowment’sIPSReturn&1.Aminimumreturnshouldtomaintaintherealvalue(purchasingpower)ofthetogrowtheportfolioinordertoprovideon-goingsupportequalto……ofthe……budgettocovertheannualinvestmentmanagementHowtocalculateSpendingrate+Annualinflationrate+Managementexpensesontheportfolio Endowment’sIPSReturn&2.Timehorizonistypicallyinfinite,sorisktakingabilityRelativelyimportancetheendowmentcontributesarelativelylowpercentage(…)of……’sbudget,sorisktakingabilityincreasePastperformancethepastinvestmentperformancewasgood(bad),sorisktakingabilityincrease(decrease) 【梦轩考 专业提供CFAFRM全 Endowment’sIPSTheextentto…dependsuponfundingfromtheTomeetthespendingneeds,theliquidityneedis…%ofthelastfiscalyearendmarketvalue,or…%,includinginvestmentmanagementPayattentiontoone-timeliquidityTimeTheendowmenthasasingle-stage,long-termtimehorizonItisexpectedtosupportthe…’sbudgetinperpetuity Endowment’sIPS……isexemptfromU.S.Unrelated eistaxableattheregularcorporate……adoptPrudentinvestorruledefenseracial Endowment’sIPSAboutthespendingThe…spendingruledecreasethevolatilityofavailableannualtheportfoliocanacceptmoreRisktakingabilitylong-termreturnswillbespendingallowancewillbe 【梦轩考 专业提供CFAFRM全 LifeInsuranceReturnMinimumreturn:RatesetbyactuariesbasedonmortalityratestomeetfundaccumulationratesEnhancedmargin:Spreadmanagement(abovecreditedrates)usedtobemorecompetitiveizeinterestearnedovercreditedSurplus(PVassets-PVliabilities):Focusongrowth;useequityinvestmentsinrealestate,venturecapital,taxableaccount LifeInsuranceCompanies:Risk viewsinsurance investmentportfoliosasquasi-trustAssociationofInsurancecommissioners(NAIC)directslifeinsurancecompaniestomaintainanassetvaluationreserve(AVR)asacushionagainstsubstantiallossesofportfoliovalueorinvestment Valuationconcerns:Marketvolatilitycanleadtosurpluswrite-down,whichwouldlowerrisktolerance(ability)andcreateacapitaladequacyCashflowvolatility:Loss,delayorvolatilityofcollecting createssignificantproblemsTimelyreinvestmentofcashflowisessentialtoincreasethesurplusReinvestmentrisk:reinvestingcoupon eataratelowerthantheoriginalcouponorpurchaserateIfinterestratesfall,profitabilityfalls;thisriskismanagedusingPrevalentwithannuityCreditriskisamajorconcernandismanagedthroughdiligentcreditysisandportfoliodiversification LifeInsuranceCompanies:ThreeprimaryDisintermediation:asinterestratesincreaseduetoinflation,holdersborrowagainsttheirpoliciesorsurrenderpoliciesleavingLifeInsuranceCompanieswithsignificantoutflowsConsequently,liabilitydurationsshorten,andliquidity esmoreUtilizemultiplescenarioforecastingofinterestrateexposuretomanageliquidityneedsAsset-liabilitymismatch:Asinterestratesincrease,disintermediationoccurs,andthemayhavetoliquidateorconvertlongdurationassetstocash,sometimesataloss,tomeetliquidityneedsMismatcharisessinceliabilitydurationschangemoreslowlythanassetManagingdurationand esAssetmarketabilityrisk:Traditionally,insurancecompanieshaveinvestedinlessliquidassetssuchas:Privatecementdebt,commercialmortgageloans,equityrealestate,andventurecapitalLiquidity ingincreasinglyimportantwhichhasledconstrainedcommitmentstotheseasset 【梦轩考 专业提供CFAFRM全 LifeInsuranceCompanies:holder'sshare(notCorporateshare,namelyfundstransferredtosurplus(taxed),whichaccruestoshareholder'softheLegalandThreemainareasofEligibleinvestments:TherearequalitystandardsandlimitscedonassetEquitieslimitedtoNonUSinvestmentsarealsolimitedtosomeextentasa%ofadmittedBondsinterestcoverageratiomustmeetminimumstandardsorminimumcreditchoices