|Principal of diversification|
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Definition of Principal of diversification
Principal of diversification
Highly diversified portfolios will have negligible unsystematic risk. In other
Dividing investment funds among a variety of securities with different risk, reward, and
The process of spreading a portfolio over many investments to
Strategy designed to reduce risk by spreading the portfolio across many investments.
Investing so that all your eggs are not in the same basket. By spreading your investments over different kinds of investments, you cushion your portfolio against sudden swings in any one area. Segregated equity funds have become a popular and secure way for average investors to get the benefits of greater diversification.
An investment technique intended to minimize risk by utilizing a wide variety of investments within a portfolio. In a diversified portfolio, a decline in the value of one investment, for example, should be offset by the strength of other investments.
The organizing principle of modern portfolio theory, which maintains that any riskaverse
A technical accounting term that encompasses the
The attempt to reduce risk by investing in the more than one nation. By
Investing in a variety of maturities to reduce the price risk to which holding long
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 strategy whereby an investor simply invests in a number of different assets and
In an interest rate swap, the predetermined dollar principal on which the
1) The total amount of money being borrowed or lent.
The original amount loaned, which is repaid plus interest. See face value.
The obligation due under a debt instrument exclusive of interest.
A situation that can be modeled as one person, an agent, who acts on the behalf
The face amount of debt; the amount borrowed or lent. Often called principal.
Generally, refers to the face value of a debt.
Principal only (PO)
A mortgage-backed security in which the holder receives only principal cash flows on
See Par value.
Remaining principal balance
The amount of principal dollars remaining to be paid under the mortgage as of
Value additivity principal
Prevails when the value of a whole group of assets exactly equals the sum of the
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