Korea Certified Fund Investment Advisor (펀드투자권유자문인력) key terms
Korea Certified Fund Investment Advisor (펀드투자권유자문인력) · Get comfortable with the vocabulary.
- Diversification
Combining exposures to reduce dependence on a single source of risk, without eliminating all possible investment losses.
- Concentration risk
The potential adverse effect of excessive dependence on one issuer, asset class, sector or other common exposure.
- Duration approximation
An estimate of percentage bond-price change from a small yield movement, subject to the model and neglected convexity effects.
- Sequence risk
The effect of the order of investment returns on outcomes when contributions or withdrawals occur during the investment period.
- Strategic allocation
A long-term target mix of assets chosen to reflect the investor’s objectives, constraints and capacity for risk.
- Liquidity risk
The risk that an investment cannot be sold or accessed at the required time and acceptable price.
- Currency exposure
Sensitivity of a home-currency investment result to exchange-rate movements affecting foreign-currency assets, income or liabilities.
- Forward contract
An agreement committing counterparties to a specified future exchange under agreed terms, with relevant counterparty and settlement risks.
- Call option
A contract giving its holder a defined right to buy the underlying under specified exercise and expiry conditions.
- Put option
A contract giving its holder a defined right to sell the underlying under specified exercise and expiry conditions.
- Option premium
The price paid for the option right, which must be considered when converting a payoff into net profit.
- Leverage
Exposure that can make changes in the underlying produce a larger proportional effect on the investor’s relevant capital.
- Basis risk
The risk that the hedging instrument and the exposure being hedged do not move in the intended matching relationship.
- Daily reset
A fund mechanism that reestablishes its targeted exposure each day, making compounded multi-day outcomes path dependent.
- Net operating income
Property operating income after the defined operating expenses, with financing and other items treated according to the stated definition.
- Vacancy risk
The risk that unoccupied space or tenant turnover reduces expected rental receipts and may create additional costs.
- Capitalization rate
A rate used to relate a specified property income measure to value under a stated valuation model.
- Loan-to-value ratio
Debt measured relative to the stated property value at a particular date, not a standalone measure of every financing risk.
- Refinancing risk
The possibility that replacement financing is unavailable or available only on less favorable terms when existing debt falls due.
- Development risk
Uncertainty associated with permissions, construction, costs, timing and completion of a property development rather than an already operating asset.
- Distribution
A payment from a fund to investors whose source and conditions must be understood rather than assumed to be guaranteed profit.