PBAM
Private banking primarily serves this client group.
What are High-Net-Worth (HNW) and Ultra-High-Net-Worth (UHNW) clients?
Bonds promise periodic interest payments and return of this at maturity.
What is principal?
Money markets typically involve instruments with maturities of this length.
What is overnight to one year?
The Federal Funds Rate is set by this institution.
What is the Federal Reserve?
Losses feel approximately this multiple more painful than gains feel rewarding.
What is roughly twice as painful?
Private banking typically charges clients this fee range based on assets under management.
What is 0.5%–2% AUM-based fees?
Bond prices and market interest rates move in this relationship.
What is inverse?
Treasury Bills are issued at a discount and redeemed at this value.
What is par?
An inverted yield curve signals this.
What is recession risk?
Overweighting recent market events is known as this bias.
What is recency bias?
Asset managers differ from hedge funds primarily in their approach to risk and time horizon.
What is focusing on long-term return maximization while minimizing risk rather than aggressive short-term strategies?
Credit spreads reflect a company’s ability to service debt and this liquidity factor.
What are liquidity buffers?
Capital markets allocate capital for corporate expansion, infrastructure, and this type of investment horizon.
What is long-term investment?
A normal yield curve typically represents this economic condition.
What is economic expansion?
Following the crowd to avoid regret is called this.
What is herd behavior?
Asset managers commonly oversee these pooled vehicles.
What are mutual funds, ETFs, index funds, pension funds, and sovereign wealth funds?
When the Federal Reserve hikes the federal funds rate, bond prices respond by doing this.
What is declining in value?
Repos influence financing costs and serve as an indicator of this type of market condition.
What is funding stress?
Expansionary fiscal policy typically does this to economic demand.
What is boost demand?
Fixating on irrelevant reference points like purchase price is this bias.
What is anchoring?
Asset managers oversee pooled capital vehicles primarily serving institutional clients. Name at least three examples.
What are mutual funds, ETFs, index funds, pension funds, or sovereign wealth funds?
Explain why short-term bondholders may face greater default exposure compared to long-term bondholders when debt ratios are high.
What is exposure to default risk on the balloon payment?
For PB & AM professionals, capital markets form the foundation of client portfolios through this framework guided by expected returns, volatility, and correlation.
What is Strategic Asset Allocation (SAA)?
Explain how inflation impacts currency value and long-term wealth preservation.
What is higher inflation weakens currency value over time, reduces purchasing power, raises rates, compresses valuations, and erodes long-term wealth?
What are buying high and selling low, panic selling during drawdowns, chasing recent winners, and over concentration in familiar assets.