Question

1. What is the term for a private management advisory firm that serves a group of related and ultra-high-net-worth investors?

2. In a large financial services organization, what is the name used to denote the people and processes that play a supportive role in the maintenance of accounts and information systems as well as in the clearance and settlement of trades?

3. Are dealer banks described as buy-side or sell-side market participants?

4. List several advantages of separately managed accounts (SMAs) relative to funds.

5. Which of the following participants is LEAST LIKELY to be classified as an outside service provider to a fund: arbitrageurs, accountants, auditors, or attorneys?

Answer 1

Solution:

1.Family office and Private wealth Institutions are private management advisory firm that serves a group of related and ultra-high-net-worth investors.

2.Back office operation is the name used to denote the people and processes that play a supportive role in the maintenance of accounts and information systems as well as in the clearance and settlement of trades.

3.Dealer banks described as Sell side market participants.

4.i)A fund investor owns shares of a company(fund) that in turns owns other investments,whereas an SMA investor actually owns the invested assets as the owner on record.

ii)A fund invest for the common purpose of multiple investors,While an SMA may have objectives tailored to suit the specific needs of investor,such as tax efficiency.

iii)A fund is often opaque to its investor to promote confidentiality,while an SMA offers transparency to its investors.

5.Arbitrageurs is LEAST LIKELY to be classified as an outside service provider to a fund.