Optimal portfolio
An efficient portfolio most preferred by an investor because its risk/reward characteristics approximate the investor's utility function. A portfolio that maximizes an investor's preferences with respect to return and risk. ...
Optimal contract
The contract that balances the three types of agency costs (contracting, monitoring, and
misbehavior) against one another to minimize the total cost.
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Managing Shariah-Compliant Portfolios: The Challenges, the Process, and the Opportunities
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In mathematics, the theory of optimal stopping is concerned with the problem of choosing a time to take a particular action, in order to maximise an expected reward or minimise an expected cost.
Pareto optimal
A Pareto optimal outcome is one such that no-one could be made better off without making someone else worse off.
Pareto optimal
Definition: A situation in which economic welfare is maximised. In other words when no one can be made better off without someone else being made worse off, following a reorganisation of production or distribution.
Optimal Currency Area Theory
Forming a monetary union carries benefits and costs. One benefit is that merchants no longer need worry about unexpected movements in the exchange rate.
Optimal Trim
The best calculated TRIM related to speed engine capacity, fuel consumption for a specificsailing condition.
Optimization ...
Optimal Portfolio
The portfolio which best meets the investor's needs and risk/return expectations among the range of all feasible portfolios.
Optimal solution - The most profitable or the least costly solution that simultaneously satisfies all the constraints.
Optimism - To expect the best in the issue under consideration.
Optimal quantity of pollution That level of pollution for which the marginal benefit of one additional unit of clean air just equals the marginal cost of that one additional unit of clean air.
P ...
Optimal taxation theory
Main article: Optimal tax
Most governments take revenue which exceeds that which can be provided by non-distortionary taxes or through taxes which give a double dividend.
Optimal amount of cash for a firm to hold, considering the trade-off between the opportunity costs of holding too much cash and the trading costs of holding too little cash.
Target company ...
Optimal Trader is a stock analysis software for analysis of stocks, funds, currencies, etc. In addition to risk management the software offers technical analysis based on neural networks and Portfolio Analysis.
Optimal portfolio An most preferred by an because its risk/reward characteristics approximate the investor's . A that maximizes an investor's preferences with respect to and risk.
Optimally, such simplification would yield time series that were so simple that they could reasonably be modeled as IID. In practice-and especially in financial applications-this is rarely possible.
Optimal Currency Area
The geographic area in which a single currency would create the greatest economic benefit.
Optimal Capital Structure
The debt equity mixture which, given the expected cash flows to the assets of the FI, maximizes the value of the FI to shareholders.
Option to buy (sell) ...
Pareto optimal allocation
The Pareto optimal allocation is the point where no one can be made better off without making someone else worse off.
Parity check ...
"We wanted optimal control over our financial future, and with Microsoft Dynamics, we have that and more," says Robert Dolan, chief executive officer for Saint Francis.
Optimal
Best, by whatever criterion decisions are being made; thus yielding the highest level of utility, profit, economic welfare, or whatever objective is being pursued.
Optimal currency area ...
WPO
Weakly Pareto Optimal
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Target cash balance
Optimal amount of cash for a firm to hold, considering the trade-off between the opportunity costs of holding too much cash and the trading costs of holding too little cash.
Capital market imperfections viewThe view that issuing debt is generally valuable, but that the firm's optimal choice of capital structure involves various other views of capital structure ( net corporate/personal tax, agency cost, ...
Sensitivity analysis Analysis of the effect on a project's profitability due to changes in sales, cost, and so on. Separation property The property that portfolio choice can be separated into two independent tasks: 1) determination of the optimal ...
Separation property The property that portfolio choice can be divided into two independent tasks: (1) Determination of the optimal risky portfolio, which is a purely mathematical problem, ...
Mathematical programming An operations research technique that solves problems in which an optimal value is sought subject to specified constraints.
Laffer Curve A curve assuming that for a given economy, there exists an optimal income tax... laggard A stock that is underperforming. lagging indicator An economic indicator that changes after the overall economy has changed.
to provide an incentive to reduce certain emissions to an optimal level or taxes on environmentally harmful products.
procedures to establish an optimal level of audit performance by practitioners. Included are proper supervision over field work, evaluation of internal control, and employment of generally accepted auditing standards.
Using the Kaldor criterian an activity will contribute to Pareto optimality if the maximum amount the gainers are prepared to pay is greater than the minimum amount that the losers are prepared to accept.
Arbitrage is a financial transaction that involves a simultaneous purchase and sale of a given security or asset for the purpose of attaining the optimal profitability through yield differential.
When the real estate market is booming and investment opportunities are optimal, many potential buyers will go to extremes to get into the market.
For example, if a business firm's objective is to make the biggest profits possible (as economists generally assume it is), then the firm's optimal level of output at any given level of sales prices and production costs is that at which its profits ...
When the best plan that a player can make for some future period will not be optimal when that future period arrives, the plan is dynamically inconsistent.
Asset Allocation The process of determining the optimal division of an investor's portfolio among different assets. Most frequently this refers to allocations between debt, equity, and cash.
Overall investment strategy that seeks to construct an optimal portfolio by considering the relationship between risk and return, especially as measured by alpha, beta, and R-squared.
Welfare Economics - A branch of economics that focuses on the optimal allocation of resources and goods and how this affects social welfare.
An efficient frontier is a line of Pareto optimal portfolios created from a risk-return graph that plots standard deviation (risk) on the x-axis and return on the y-axis.
The technique does illustrate how easy it is to analyse optimal solutions on print runs. It illus-trates also why printers and other suppliers are so anxious to demand advance payments or prompt payment.
Approach to the determination of the optimal capital structure asserting that insiders in a
firm have information that the market does not have; therefore, the choice of capital structure by insiders can ...
Result in modern portfolio theory, that the problem of finding an optimal portfolio for a given level of risk tolerance can be separated into two easier problems: first finding an optimal mix of market securities that doesn't vary with risk tolerance, ...
The risk that incorrect or sub-optimal interest rate risk management decisions will be made because of errors in the model used to measure risk exposure.
Nash equilibruim is a theorem in Game Theory which defines a situation where each of the players has reached an optimal position. for their gain/return.
The first 60 months of index and manager data are analyzed and the means, variances and co-variances (correlations) are passed to the optimizer to find the optimal set of weights.
The property that portfolio choice can be divided into two independent tasks: (1) Determination of the optimal risky portfolio, which is a purely mathematical problem, ...
B/C loan refers to the class of debt facilities provided to borrowers with less-than-optimal credit qualifications. B/C loans have higher interest rates and more restrictive terms due to the higher level of risk involved for the lender.
How do agents arrive at their optimal portfolio?
Why do different people will have different optimal portfolios?
Why, even after they reach their optimal portfolio, do agents continue to trade?
The view that issuing debt is generally valuable, but that the firm's optimal choice of capital structure involves various other views of capital structure ( net corporate/personal tax, agency cost, bankruptcy cost, and pecking order), ...
An operations research technique that solves problems in which an optimal value is sought subject to specified constraints. Mathematical programming models include linear programming, quadratic programming, and dynamic programming.
Mature economy ...
According to the Modern Portfolio Theory (pioneered by Harry Markowitz in his paper "Portfolio Selection"), it is possible to establish an "efficient frontier" for optimal portfolios, yielding the maximal possible return at a certain risk level.
DEDUCTIVE ACCOUNTING THEORY - (mathematical method) assumes that optimal accounting standards and repor...
DEDUCTIVE LOGIC - Logic traditionally used in expert systems, which defines a method for reasoning from...
Definition: Allocative efficiency occurs when there is an optimal distribution of goods and services. This involves taking into account consumer's preferences.
Optimization
A computer analysis which generates an "optimal" media schedule given a specific set of parameters, i.e., budget level, reach goal, frequency goal, etc..
The argument that expected indirect and direct bankruptcy costs offset the other
benefits from leverage so that the optimal amount of leverage is less than 100% debt finaning.
Blue-chip company
Large and creditworthy company.
Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against that plan.
Portfolio Theory
Theory concerned with the formation of optimal or efficient portfolios of risky securities.
Often there can be a slight difference in grade, location, maturity, actual portfolio composition or product relative to the optimal hedge instrument.
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt financing.
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deals primarily with human interactions
assumptions — bounded rationality, satisfying behaviour, profit sub-optimality. An example of a company that currently operates this way is Google ...
 See also: Expense, Banks, Expected return, Capital structure, Bills
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