Investment Risks and Returns: Rapid Fire
Chapters in this video
- 0:00 Systematic versus nonsystematic risk and the alien test
- 1:31 The PRIME acronym for non-diversifiable risks
- 2:30 Bond teeter-totter: interest-rate risk versus reinvestment risk
- 3:39 Return of capital, total return, and tax-equivalent yield
- 5:17 No-load funds, 12b-1 ceilings, and the 5% markup policy
- 6:43 Breakpoint selling, soft dollars, and the letter of intent window
- 7:55 Specified adults, temporary holds, and trusted contact authority
- 8:15 Lightning round: numbers and rules to lock in
What this video covers
- Why diversification eliminates only nonsystematic risk, never systematic market risk, and what beta measures
- The PRIME acronym for systematic risks: purchasing power (inflation), reinvestment, interest-rate, market, and exchange-rate (currency) risk
- Why zero-coupon bonds carry maximum interest-rate risk but zero reinvestment risk, and why high-coupon callable bonds show the opposite pattern
- Prepayment risk versus extension risk in mortgage-backed securities and collateralized mortgage obligations when rates fall or rise
- How to calculate tax-equivalent yield and when municipal bond interest may trigger the alternative minimum tax (AMT)
- The no-load 12b-1 ceiling at 0.25%, the standard 12b-1 total cap at 1.00%, and what the 5% markup policy actually covers and excludes
- The temporary hold timeline: 15 business days initial, 25 with extension, up to 55 with state reporting, and who may authorize it
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