ACTSC371 Study Guide - Final Guide: Real Interest Rate, Market Portfolio, Credit Default Swap

• School: University of Waterloo
• Department: Actuarial Science
• Course: ACTSC371
• Professor: Keith Freeland

Document Summary

Physical asset appears on balance sheet; it is used to increase productivity. The paper asset that is the liability of other person. Investment manager: gives advice to individual, management portfolio for them. Investment banker: advice the firm what the stock price should be, help ipo. Agency problem: conflict of interest, company"s management vs company"s stockholder: Company management act on behalf of their own interest, not the interest of stockholder (solution: bonus base on stock performance: no separation of the banking sector: Investment banker and investment manager from the same company. Auditor is consultant of the company it audited. 6-month interest rate: 4%, compounded two periods since it is half year interest rate. Benchmark rate that some of the world lending bank charge each other for short-term loans. The interest rate which a depository institution (central bank) lends funds to another depository institution (short-term).