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Variance minimization approach to tracking |
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Definition of Variance minimization approach to trackingVariance minimization approach to trackingAn approach to bond indexing that uses historical data to
Related Terms:CovarianceA statistical measure of the degree to which random variables move together. Cross-sectional approachA statistical methodology applied to a set of firms at a particular point in time. Debt service parity approachAn analysis wherein the alternatives under consideration will provide the firm Mean-variance analysisEvaluation of risky prospects based on the expected value and variance of possible outcomes. Mean-variance criterionThe selection of portfolios based on the means and variances of their returns. The Mean-variance efficient portfolioRelated: Markowitz efficient portfolio Minimum-variance frontierGraph of the lowest possible portfolio variance that is attainable for a given Minimum-variance portfolioThe portfolio of risky assets with lowest variance. Optimization approach to indexingAn approach to indexing which seeks to Optimize some objective, such Portfolio varianceWeighted sum of the covariance and variances of the assets in a portfolio. Residual dividend approachAn approach that suggests that a firm pay dividends if and only if acceptable Risk premium approachThe most common approach for tactical asset allocation to determine the relative Serial covarianceThe covariance between a variable and the lagged value of the variable; the same as Signaling approachapproach to the determination of the optimal capital structure asserting that insiders in a Stratified sampling approach to indexingAn approach in which the index is divided into cells, each Tracking errorIn an indexing strategy, the difference between the performance of the benchmark and the VarianceA measure of dispersion of a set of data points around their mean value. The mathematical Variance ruleSpecifies the permitted minimum or maximum quantity of securities that can be delivered to Variance analysisA 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. VarianceThe weighted average of the squared deviations from the budget variancethe difference between total actual overhead controllable variancethe budget variance of the two variance approach to analyzing overhead variances fixed overhead spending variancethe difference between the total actual fixed overhead and budgeted fixed overhead; fixed overhead volume variancesee volume variance labor efficiency variancethe number of hours actually worked minus the standard hours allowed for the production labor mix variance(actual mix X actual hours X standard rate) - (standard mix X actual hours X standard rate); labor rate variancethe 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 yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); material price variancetotal actual cost of material purchased material quantity variance(actual quantity X standard price) - (standard quantity allowed standard price); material mix variance(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice); material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); net realizable value approacha method of accounting for by-products or scrap that requires that the net realizable value of these products be treated as a reduction in the cost of the primary products; primary product cost may be reduced by decreasing either noncontrollable variancethe fixed overhead volume variance; overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual realized value approacha method of accounting for byproducts or scrap that does not recognize any value for these products until they are sold; the value recognized total overhead variancethe difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead total variancethe difference between total actual cost incurred variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity variancea difference between an actual and a standard or variance analysisthe process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences volume variancea fixed overhead variance that represents CovarianceA measure of the degree to which returns on two assets move in VarianceThe dispersion of a variable. The square of the standard deviation. Direct materials mix varianceThe variance between the budgeted and actual mixes of Labor efficiency varianceThe difference between the amount of time that was budgeted Labor rate varianceThe difference between the actual and standard direct labor rates Materials price varianceThe difference between the actual and budgeted cost to Materials quantity varianceThe difference between the actual and budgeted quantities Production yield varianceThe difference between the actual and budgeted proportions Selling price varianceThe difference between the actual and budgeted selling price for varianceAverage value of squared deviations from mean. A measure of volatility.
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