What is a AIM in FRM?? As you start preparing for your FRM (Financial Risk Manager) certification the first term you come across is the ""AIM"". So, what is a AIM? What does it really convey? To put in simple terms AIM is the snapshot of the topics/information that a FRM candidate needs to learn to acquire the skills needed for planning, designing, maging and optimizing the risk prtfolio of your client. To put it simple it is the syllabus of FRM exam:). In learnersreference.com, we'll be providing information on these AIM's which will help you to understand the concepts, crack FRM first attempt and land in your Risk manager dream job Financial Risk Management: Process of detecting, assessing, managing financial risk Financial institutions manage financial risks on behalf of clients (Ex: people, firms, governments) Some of the financial risk certifications are FRM, PRM, CFA Four major types of financial risk: Market Risk: Volatility or fluctuation in prices in financial markets results in losses Diversification strategy in portfolios may help reduce market risk Types of Market Risk: Equity Risk Interest Rate Risk Commodity Risk Currency Risk Absolute Risk Relative Risk Liquidity Risk: Arises because of the inability to liquidate the position at a fair price that will result in loss Examples include in depressed financial markets firms cannot sell their shares to raise sufficient cash since the value of the shares is lower in depressedfinancial markets Credit Risk: Arises because of counterparty not fulfilling their obligation/default by counterparty Credit Risk = Probability of Default x Loss given default has occurred Example: Company not paying their dues that they owe because of bankruptcy Types of Credit Risk: Credit Default Risk Concentration Risk Country Risk Operational Risk: Risk arising because of poor management decisions, poor monitoring systems, flawed economic models in assessing risk, human errors, fraud Ex: JP Morgan losses to the tune of more than 2 billion dollars in their London office because of lack of strict monitoring controls, Rouge Traders inderivative trading causing loss to the company Relate Significant market events of the past several decades to the growth of risk management industry : Several significant events have occurred in the past that has affected the common man, financial institutions and business that has led to huge financial loses. Some of the significant events in the past are as follows: Black Monday of 1987 that saw a sharp decline in U.S stock price for a single day Asian equity markets decimation of 1997 Russian default of 1998 2001 September world trade attack Sub mortgage crisis that started on 2007 and whose impact is felt even today These events remind us that it is even more important to use financial risk management policies and practices to insulate ourselves from future financial losses. Past Events triggering Financial Risk Management: Several significant events have occurred in the past that has affected the common man, financial institutions and business that has led to huge financial loses. Some of the significant events in the past are as follows: Black Monday of 1987 that saw a sharp decline in U.S stock price for a single day Asian equity markets decimation of 1997 Russian default of 1998 2001 September world trade attack Sub mortgage crisis that started on 2007 and whose impact is felt even today These events remind us that it is even more important to use financial risk management policies and practices to insulate ourselves from future financial losses.","AIM1.3 Relate Significant market events of the past several decades to the growth of risk management industry Is Intangible Asset Same As Financial Asset? In this tumbling economy  world economies are stimulated by quantitative easing policy of central banks of the respective economies. In simple terms quantitative easing is pumping of cashflow into country's banks by central bank. The central banks will purchase financial assets of those financial institutions like banks in return. So, what is a financial asset? In simple terms an asset that doesn't have a physical existence but will yield cashflow in return during a trade. A simple example is a fixed deposit in a bank which derives returns in form of interest based on fixed contractual agreement with the bank/financial institution. It doesn't have a pysical existence like a piece of land/realestate property Now comes the common question of is a financial asset intangible asset? Simple answer is not always. An intangible asset in general refers to variables (or) constants that drive business. Some good examples are company brand recognition, intellectual property, patent, business model, company's rapport with customers, copyright, goodwill etc. They don't have direct financial value but indirectly support them to generate money and provide financial stability to the firm Before reimbursement expense ratio: Before reimbursement expense ratio in mutual funds is the percentage of a fund's average net assets that is used to cover the annual operating expenses of managing a mutual fund before reimbursements are made to the fund by managers.Also known as the "gross expense ratio" Different Types Of Broker Dealers: Different Types Of Broker Dealers exist in the market. A brief listing is given below: Corporate clearing firm - these firms service the non-clearing firms. Dealer's brokers - these firms act as conduit between broker dealers. Equity dealers - these firms are found in OTC (Over The Counter) market. Futures trading firm - futures exchange. Futures on commodities like grains, metals, currencies, bonds, common stocks etc are made. Institutional broker dealers - Act as broker dealers for corporations, mutual funds, trust companies Investment banking firm - firms involved in IPO (Initial Public Offering) Market making firms/dealers/trading firms Merchant banking firms merger and acquistion specialist mortgage backed dealers - buyer receives interest and principal periodically municipal bond dealers - they trade state and local governmen debt products non-clearing broker dealers - these firms use the services of clearing firms to settle trade online broker dealers option market making firms prime brokers regional broker dealers retail firms specialist firms third-market broker/dealers - they perform off-board trading wire house Corporate Bond Corporate Notes: Corporations borrow long term capital through debt instruments known as bonds.Corporations borrow intermediate term financing through notes.Corporations borrow short term financing through commercial loans. Corporations borrow using short term instruments like commercial papers.