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Zero-investment portfolio |
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Definition of Zero-investment portfolioZero-investment portfolioA portfolio of zero net value established by buying and shorting component
Related Terms:Active portfolio strategyA strategy that uses available information and forecasting techniques to seek a Complete portfolioThe entire portfolio, including risky and risk-free assets. Dedicating a portfolioRelated: cash flow matching. Dividend reinvestment plan (DRP)Automatic reinvestment of shareholder dividends in more shares of a 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 on investmentThe return one can expect to earn on an investment. See: capital asset 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 direct investment (FDI)The acquisition abroad of physical assets such as plant and equipment, with Future investment opportunitiesThe options to identify additional, more valuable investment opportunities Guaranteed investment contract (GIC)A pure investment product in which a life company agrees, for a Hedged portfolioA portfolio consisting of the long position in the stock and the short position in the call Investment analystsRelated: financial analysts Investment bankFinancial intermediaries who perform a variety of services, including aiding in the sale of Investment decisionsDecisions concerning the asset side of a firm's balance sheet, such as the decision to Investment grade bondsA bond that is assigned a rating in the top four categories by commercial credit Investment incomeThe revenue from a portfolio of invested assets. Investment managerAlso called a portfolio manager and money manager, the individual who manages a Investment product line (IPML)The line of required returns for investment projects as a function of beta Investment tax creditProportion of new capital investment that can be used to reduce a company's tax bill Investment trustA closed-end fund regulated by the investment Company Act of 1940. These funds have a Investment valueRelated:straight value. InvestmentsAs a discipline, the study of financial securities, such as stocks and bonds, from the investor's Legal investmentsinvestments that a regulated entity is permitted to make under the rules and regulations 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 Mutually exclusive investment decisionsinvestment decisions in which the acceptance of a project Net investmentGross, or total, investment minus depreciation. Net present value of future investmentsThe present value of the total sum of NPVs expected to result from 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 investment strategySee: passive management. Passive investment managementBuying a well-diversified portfolio to represent a broad-based market 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. Reinvestment rateThe rate at which an investor assumes interest payments made on a debt security can be Reinvestment riskThe risk that proceeds received in the future will have to be reinvested at a lower potential REIT (real estate investment trust)Real estate investment trust, which is similar to a closed-end mutual REMIC (real estate mortgage investment conduit)A pass-through tax entity that can hold mortgages Replicating portfolioA portfolio constructed to match an index or benchmark. Return on investment (ROI)Generally, book income as a proportion of net book value. Short-term investment servicesServices that assist firms in making short-term investments. 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 Underinvestment problemThe mirror image of the asset substitution problem, wherein stockholders refuse Unit investment trustMoney invested in a portfolio whose composition is fixed for the life of the fund. 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-beta portfolioA portfolio constructed to represent the risk-free asset, that is, having a beta of zero. Zero-coupon bondA bond in which no periodic coupon is paid over the life of the contract. Instead, both the 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. RETURN ON INVESTMENT (ROI)In its most basic form, the rate of return equals net income divided by the amount of money invested. It can be applied to a particular product or piece of equipment, or to a business as a whole. Investment centreA division or unit of an organization that is responsible for achieving an adequate return on Return on investment (ROI)The net profit after tax as a percentage of the shareholdersâ€™ investment in the business. Zero-based budgetingA method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies. capital investment analysisRefers to various techniques and procedures return on investment (ROI)A very general concept that refers to some InvestmentThe commitment of funds (capital) in anticipation of an increased 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 investment centera responsibility center in which the manager investment decisiona judgment about which assets will be postinvestment auditthe process of gathering information reinvestment assumptionan assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR return on investmenta ratio that relates income generated zero-base budgetinga comprehensive budgeting process 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 investment gradeBonds rated Baa or above by Moodyâ€™s or BBB or above by Standard & Poorâ€™s. 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 dayâ€™s bills. Investment BankerMiddleman between a corporation issuing new securities and the public. The middleman buys the securities issue outright and then resells it to customers. Also called an underwriter. Investment SpendingExpenditures on capital goods including new housing. Financial ''investments" and sales of existing assets are not included. Investment Tax CreditA reduction in taxes offered to firms to induce them to increase investment spending. Net Investmentinvestment spending minus depreciation.
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