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Zero-beta portfolio |
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Definition of Zero-beta portfolioZero-beta portfolioA portfolio constructed to represent the risk-free asset, that is, having a beta of zero.
Related Terms:Active portfolio strategyA strategy that uses available information and forecasting techniques to seek a Beta (Mutual Funds)The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means Beta equation (Mutual Funds)The beta of a fund is determined as follows: Beta equation (Stocks)The beta of a stock is determined as follows: Complete portfolioThe entire portfolio, including risky and risk-free assets. Country betaCovariance of a national economy's rate of return and the rate of return the world economy Dedicating a portfolioRelated: cash flow matching. Efficient portfolioA portfolio that provides the greatest expected return for a given level of risk (i.e. standard Excess return on the market portfolioThe difference between the return on the market portfolio and the Expected return-beta relationshipImplication of the CAPM that security risk premiums will be Factor portfolioA well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of Feasible portfolioA portfolio that an investor can construct given the assets available. Feasible set of portfoliosThe collection of all feasible portfolios. Foreign market betaA measure of foreign market risk that is derived from the capital asset pricing model. Fundamental betaThe product of a statistical model to predict the fundamental risk of a security using not Hedged portfolioA portfolio consisting of the long position in the stock and the short position in the call Leveraged betaThe beta of a leveraged required return; that is, the beta as adjusted for the degree of Leveraged portfolioA portfolio that includes risky assets purchased with funds borrowed. Leveraged portfolioA portfolio that includes risky assets purchased with funds borrowed. Market portfolioA portfolio consisting of all assets available to investors, with each asset held -in Markowitz efficient portfolioAlso called a mean-variance efficient portfolio, a portfolio that has the highest Markowitz efficient set of portfoliosThe collection of all efficient portfolios, graphically referred to as the Mean-variance efficient portfolioRelated: Markowitz efficient portfolio Minimum-variance portfolioThe portfolio of risky assets with lowest variance. Modern portfolio theoryPrinciples underlying the analysis and evaluation of rational portfolio choices Normal portfolioA customized benchmark that includes all the securities from which a manager normally Optimal portfolioAn efficient portfolio most preferred by an investor because its risk/reward characteristics Passive portfolio strategyA strategy that involves minimal expectational input, and instead relies on Passive portfolioA market index portfolio. PortfolioA collection of investments, real and/or financial. Portfolio insuranceA strategy using a leveraged portfolio in the underlying stock to create a synthetic put Portfolio internal rate of returnThe rate of return computed by first determining the cash flows for all the Portfolio opportunity setThe expected return/standard deviation pairs of all portfolios that can be Portfolio managementRelated: Investment management Portfolio managerRelated: Investment manager Portfolio separation theoremAn investor's choice of a risky investment portfolio is separate from his Portfolio turnover rateFor an investment company, an annualized rate found by dividing the lesser of Portfolio varianceWeighted sum of the covariance and variances of the assets in a portfolio. Replicating portfolioA portfolio constructed to match an index or benchmark. Structured portfolio strategyA strategy in which a portfolio is designed to achieve the performance of some Tilted portfolioAn indexing strategy that is linked to active management through the emphasis of a Unleveraged betaThe beta of an unleveraged required return (i.e. no debt) on an investment when the Weighted average portfolio yieldThe weighted average of the yield of all the bonds in a portfolio. Well diversified portfolioA portfolio spread out over many securities in such a way that the weight in any Zero coupon bondSuch a debt security pays an investor no interest. It is sold at a discount to its face price Zero prepaymentassumption The assumption of payment of scheduled principal and interest with no payments. Zero uptickRelated: tick-test rules. Zero-balance account (ZBA)A checking account in which zero balance is maintained by transfers of funds Zero-coupon bondA bond in which no periodic coupon is paid over the life of the contract. Instead, both the Zero-investment portfolioA portfolio of zero net value established by buying and shorting component Zero-one integer programmingAn analytical method that can be used to determine the solution to a capital Zero-sum gameA type of game wherein one player can gain only at the expense of another player. Zero-based budgetingA method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies. BetaA measure of the riskiness of a specific security compared to the PortfolioA collection of securities and investments held by an investor Portfolio DiversificationSee diversification Portfolio WeightThe percentage of a total portfolio represented by a single specific Zero-coupon BondA security that makes no interest payments; it is sold at a discount zero-base budgetinga comprehensive budgeting process BetaThe price volatility of a financial instrument relative to the price Zero curve, zero-coupon yield curveA yield curve for zero-coupon bonds; Zero-coupon bond, or ZeroA bond that, instead of carrying a coupon, is sold betaSensitivity of a stock’s return to the return on the market market portfolioportfolio 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. zero-balance accountRegional bank account to which just enough funds are transferred daily to pay each day’s bills. Zero-Coupon BondSee discount bond. Beta coefficientA measurement of the extent to which the returns on a given stock move with stock market. Beta riskRisk of a firm measured from the standpoint of an investor who holds a highly diversified portfolio. Market PortfolioThe total of all investment opportunities available to the investor. 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. Minimum price fluctuationSmallest increment of price movement possible in trading a given contract. Also
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