Important Points for IC 99 - Asset Management Exam
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Net cash flows : Projected Cash Flow Statement is prepared taking into account Net Cash flows from Operating Activities, Investment Activities and Financing Activities. Discount rate, investment returns on capital & reserves are also considered. Net Cash flows from Operating Activities comprises of projected inflow and projected outflow.
Asset Portfolio is referred to as the asset or investment allocation. It is the generally accepted practice that asset portfolio decision and designation depend on the investors risk tolerance, time frame of financial assets and corresponding liability or obligation to pay future claims of fund owners.
In ALM process, all financial liabilities are to be projected on the basis of relevant data. Required data are to be collected and collated from both internal and external sources and properly analysed for the purpose.
Net Cash flow = Cash outflow - Cash Inflow
Cash proceeds generated from assets are projected using the coupon rate or dividend rate or EPS till the maturity on year on year on basis.
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