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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 Business Expansion InvestmentThe use of capital to create more money through the addition of fixed assets or through income producing vehicles. capital investment analysisRefers to various techniques and procedures Capital InvestmentsMoney used to purchase fixed assets for a business, such as land, buildings, or machinery. Also, money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses. 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 Equity investmentThrough equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock. 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 certificate (GIC)A GIC is an investment that gives you a guaranteed rate of return over a fixed period of time, usually between 30 days and 5 years. GICs are available from banks, trust companies, and other financial institutions. 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 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. InvestmentThe commitment of funds (capital) in anticipation of an increased Investment analystsRelated: financial analysts Investment bankFinancial intermediaries who perform a variety of services, including aiding in the sale of 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 centera responsibility center in which the manager Investment centreA division or unit of an organization that is responsible for achieving an adequate return on investment decisiona judgment about which assets will be Investment decisionsDecisions concerning the asset side of a firm's balance sheet, such as the decision to investment gradeBonds rated Baa or above by Moody’s or BBB or above by Standard & Poor’s. 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 SpendingExpenditures on capital goods including new housing. Financial ''investments" and sales of existing assets are not included. Investment tax creditProportion of new capital investment that can be used to reduce a company's tax bill Investment Tax CreditA reduction in taxes offered to firms to induce them to increase investment spending. 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 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. Market PortfolioThe total of all investment opportunities available to the investor. 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 Investmentinvestment spending 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 investment managementBuying a well-diversified portfolio to represent a broad-based market Passive investment strategySee: passive management. Passive portfolioA market index portfolio. Passive portfolio strategyA strategy that involves minimal expectational input, and instead relies on PortfolioA collection of investments, real and/or financial. PortfolioA collection of securities and investments held by an investor Portfolio DiversificationSee diversification 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 managementRelated: investment management Portfolio managerRelated: investment manager Portfolio opportunity setThe expected return/standard deviation pairs of all portfolios that can be 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. Portfolio WeightThe percentage of a total portfolio represented by a single specific postinvestment auditthe process of gathering information qualified investments (Canada)Qualified investments is the term used for investments that can be held in an RSP. These investments generally include: Regular Investment Plan (RIP)A plan under which you may make regular deposits of the same amount to your Mutual Funds account once a month, once every 2 weeks, or once a week. You can also make regular deposits up to four times a month on any dates you choose. 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 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 investmenta ratio that relates income generated Return on investment (ROI)Generally, book income as a proportion of net book value. 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. Return on investment (ROI)The net profit after tax as a percentage of the shareholders’ investment in the business. return on investment (ROI)A very general concept that refers to some 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-balance accountRegional bank account to which just enough funds are transferred daily to pay each day’s bills. Zero-balance account (ZBA)A checking account in which zero balance is maintained by transfers of funds zero-base budgetinga comprehensive budgeting process Zero-based budgetingA method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies. Zero-beta portfolioA portfolio constructed to represent the risk-free asset, that is, having a beta of zero. Zero coupon bondSuch a debt security pays an investor no interest. It is sold at a discount to its face price
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