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Definition of Portfolio variance
Weighted sum of the covariance and variances of the assets in a portfolio.
Related: Markowitz efficient portfolio
The portfolio of risky assets with lowest variance.
Graph of the lowest possible portfolio variance that is attainable for a given
A strategy that uses available information and forecasting techniques to seek a
the difference between total actual overhead
The entire portfolio, including risky and risk-free assets.
the budget variance of the two variance approach to analyzing overhead variances
A statistical measure of the degree to which random variables move together.
A measure of the degree to which returns on two assets move in
Related: cash flow matching.
The variance between the budgeted and actual mixes of
A portfolio that provides the greatest expected return for a given level of risk (i.e. standard
The difference between the return on the market portfolio and the
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of
A portfolio that an investor can construct given the assets available.
Feasible set of portfolios
The collection of all feasible portfolios.
fixed overhead spending variance
the difference between the total actual fixed overhead and budgeted fixed overhead;
fixed overhead volume variance
see volume variance
A portfolio consisting of the long position in the stock and the short position in the call
Index Portfolio Rebalancing Service (IPRS)
Index portfolio Rebalancing Service (IPRS) is a comprehensive investment service that can help increase potential returns while reducing volatility. Several portfolios are available, each with its own strategic balance of Index Funds. IPRS maintains your personal asset allocation by monitoring and rebalancing your portfolio semi-annually.
labor efficiency variance
the number of hours actually worked minus the standard hours allowed for the production
Labor efficiency variance
The difference between the amount of time that was budgeted
labor mix variance
(actual mix X actual hours X standard rate) - (standard mix X actual hours X standard rate);
labor rate variance
the actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period;
Labor rate variance
The difference between the actual and standard direct labor rates
labor yield variance
(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate);
A portfolio that includes risky assets purchased with funds borrowed.
A portfolio that includes risky assets purchased with funds borrowed.
A portfolio consisting of all assets available to investors, with each asset held -in
portfolio of all assets in the economy. In practice a broad stock market index, such as the Standard & Poor's Composite, is used to represent the market.
The total of all investment opportunities available to the investor.
Markowitz efficient portfolio
Also called a mean-variance efficient portfolio, a portfolio that has the highest
Markowitz efficient set of portfolios
The collection of all efficient portfolios, graphically referred to as the
material mix variance
(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice);
material price variance
total actual cost of material purchased
material quantity variance
(actual quantity X standard price) - (standard quantity allowed standard price);
material yield variance
(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price);
Materials price variance
The difference between the actual and budgeted cost to
Materials quantity variance
The difference between the actual and budgeted quantities
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
The selection of portfolios based on the means and variances of their returns. The
Modern portfolio theory
Principles underlying the analysis and evaluation of rational portfolio choices
the fixed overhead volume variance;
A customized benchmark that includes all the securities from which a manager normally
An efficient portfolio most preferred by an investor because its risk/reward characteristics
overhead efficiency variance
the difference between total budgeted overhead at actual hours and total budgeted
overhead spending variance
the difference between total actual overhead and total budgeted overhead at actual
A market index portfolio.
Passive portfolio strategy
A strategy that involves minimal expectational input, and instead relies on
A collection of investments, real and/or financial.
A collection of securities and investments held by an investor
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put
Portfolio internal rate of return
The rate of return computed by first determining the cash flows for all the
Related: Investment management
Related: Investment manager
Portfolio opportunity set
The expected return/standard deviation pairs of all portfolios that can be
Portfolio separation theorem
An investor's choice of a risky investment portfolio is separate from his
Portfolio turnover rate
For an investment company, an annualized rate found by dividing the lesser of
The percentage of a total portfolio represented by a single specific
Production yield variance
The difference between the actual and budgeted proportions
A portfolio constructed to match an index or benchmark.
Selling price variance
The difference between the actual and budgeted selling price for
The covariance between a variable and the lagged value of the variable; the same as
Structured portfolio strategy
A strategy in which a portfolio is designed to achieve the performance of some
An indexing strategy that is linked to active management through the emphasis of a
total overhead variance
the difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead
the difference between total actual cost incurred
variable overhead efficiency variance
the difference between budgeted variable overhead based on actual input activity and variable overhead applied to production
variable overhead spending variance
the difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity
A measure of dispersion of a set of data points around their mean value. The mathematical
The weighted average of the squared deviations from the
a difference between an actual and a standard or
The dispersion of a variable. The square of the standard deviation.
Average value of squared deviations from mean. A measure of volatility.
A method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved.
the process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences
Variance minimization approach to tracking
An approach to bond indexing that uses historical data to
Specifies the permitted minimum or maximum quantity of securities that can be delivered to
a fixed overhead variance that represents
Weighted average portfolio yield
The weighted average of the yield of all the bonds in a portfolio.
Well diversified portfolio
A portfolio spread out over many securities in such a way that the weight in any
A portfolio constructed to represent the risk-free asset, that is, having a beta of zero.
A portfolio of zero net value established by buying and shorting component
Homogenous expectations assumption
An assumption of Markowitz portfolio construction that investors
Magic of diversification
The effective reduction of risk (variance) of a portfolio, achieved without reduction
A strategy that seeks to combine assets a portfolio with returns that are less than
A model for selecting an optimum investment portfolio,
A strategy whereby an investor simply invests in a number of different assets and
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