ADMS 4501 Lecture Notes - Asset Allocation, Feedback, Life Insurance

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Note: present value is equal to sum of future cash flows discounted. Etfs ( exchange traded funds): before etfs, we had adrs which are american deposit receipts . Fixed income markets are much larger than equities market. Note: in canada: govt bonds and t bills have relatively lowest return and lowest risk as per s. d. Followed by invest grade corp bonds, large cap equities, small cap equities. The small cap equities would have the largest return , however the highest volatility or sd. Note: all investment in indices that have returns above the sml is a good investment. 1935 2012 if you invest in 1935. On the u. s stock would generate : 10. 7% Balanced portfolios : 8. 7% ( 60% equities, 40% bonds) International equities ( outside of north america) : 7. 9% Chapter 2: preliminaries: they have to have life insurance, non- life insurance and cash reserve ( e. g. tfsa, look at investor"s life cycle :

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