EFCB Triple E - independent subject foundations cheat sheet

Separate capital, liquidity, profitability and credit quality.

Assess repayment cash flows and downside exposure, not collateral alone.

State interest and coverage-ratio conventions explicitly.

An anomaly is a lead for review rather than proof of wrongdoing.

Distinguish a budget flow, a debt stock and the financing transactions.

A bank loan can create a corresponding deposit; a 1/r multiplier is a deliberately simplified model.

Policy rates influence, but do not equal, every retail borrowing rate.

Real and nominal measures need the relevant price index and base normalization.

Spending and tax multipliers require their model and sign conventions.

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.

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.

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.