China Fund Qualification - independent subject foundations cheat sheet
China Fund Qualification - independent subject foundations · Keep the key ideas within reach.
Investment instruments, portfolios and measured performance
Separate instrument claims, timing, fees and risk.
Expected return is not a guaranteed outcome.
Covariance matters for portfolio volatility and diversification has limits.
Use coherent cash-flow, benchmark and valuation assumptions.
Financial appraisal, financing and conditional valuation models
Define incremental cash flows and the valuation date.
Discount rate, cash-flow timing and risk assumptions must be consistent.
NPV, IRR, payback and accounting return measure different things.
Expected value does not eliminate downside or estimation uncertainty.
Supplied model rates are not current market or tax facts.
Financial statements, assets, inventory and cash-flow models
Cost of sales includes carriage inwards and excludes carriage outwards
Closing inventory affects both the trading account and the balance sheet
Drawings reduce capital and are never an expense
An increase in the doubtful debts provision is charged to profit and loss
Capital = opening capital + net profit − drawings
Issued capital and actual cash received are different concepts.
Share premium in the supplied par-value model is not sales revenue.
Distinguish equity distributions from interest on liabilities.
Prime cost includes direct materials consumed, direct labour and direct expenses
Cost of production adds production overheads and adjusts for work in progress
Selling and administration costs are not production costs
Inventory is valued at the lower of cost and net realisable value
Market, credit, liquidity and model-risk reasoning
Expected loss is an average under a stated model, not a maximum.
VaR does not bound losses or fully describe the tail.
Funding and market liquidity can deteriorate together.
Validate models and monitor assumptions, data and intended use.
Purpose, evidence and asset-valuation approaches
Define the subject, purpose, basis, date and assumptions.
Market, income and cost approaches rely on different evidence.
Match enterprise cash flows and equity cash flows to consistent rates.
Reconcile evidence rather than mechanically average every indication.
Futures, options, swaps and conditional hedging models
State direction, size, timeline and contract assumptions.
Payoff differs from profit after premiums and costs.
Hedging can introduce basis, liquidity and counterparty risk.
Margin is collateral and does not generally cap losses.