FRR - 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.

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.

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.

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.

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.

An index-point change is not automatically an equal percentage change.

State the initial-base, midpoint or point elasticity convention.

A sample standard error differs from individual-observation dispersion.

Correlation and fitted prediction do not by themselves establish causation.

Use exact growth-factor ratios when precision matters.