Portfolio opportunity set

Similar financial terms

Efficient portfolio
A portfolio that provides the superior expected return for a given level of risk

Vega-neutral portfolio
A vega-neutral portfolio has an asset combination which implies a vega of zero.

Zero-beta portfolio
A zero-beta portfolio is constructed to have zero systematic risk, similar to the risk-free asset, that is, having a beta of zero. (i.e. in most cases, we assume the beta of debt to be zero).

Zero-investment portfolio
A zero-investment portfolio consists of zero net value because of a balanced establishment between long and short position, usually in the context of an arbitrage strategy.

Active portfolio strategy
A strategy that uses available information and forecasting techniques to seek a better performance than a portfolio that is simply diversified broadly. Related: passive portfolio strategy.

Well diversified portfolio
A portfolio spread out over many securities in such a way that the weight in any security is small. The risk of a well-diversified portfolio closely approximates the systemic risk of the overall market, the unsystematic risk of each security having been diversified out of the portfolio.

Weighted average portfolio yield
The weighted average of the yield of all the bonds in a portfolio.

Tilted portfolio
An indexing strategy that is linked to active management through the emphasis of a particular industry sector, selected performance factors such as earnings momentum, dividend yield, P/E ratio, or selected economic factors such as interest rates and inflation.

Structured portfolio strategy
A strategy in which a portfolio is designed to achieve the performance of some predetermined liabilities that must be paid out in the future.

Replicating portfolio
A portfolio constructed to match an index or benchmark.

Portfolio variance
Weighted sum of the covariance and variances of the assets in a portfolio.

Portfolio turnover rate
For an investment company, an annualized rate found by dividing the lesser of purchases and sales by the average of portfolio assets.

Portfolio separation theorem
An investor's choice of a risky investment portfolio is separate from his attitude towards risk.

Portfolio internal rate of return
The rate of return computed by first determining the cash flows for all the bonds in the portfolio and then finding the interest rate that will make the present value of the cash flows equal to the market value of the portfolio.

Portfolio insurance
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put option. The strategy's goal is to ensure that the value of the portfolio does not fall below a certain level.

Portfolio
A collection of investments, real and/or financial.

Passive portfolio
A market index portfolio.

Passive portfolio strategy
A strategy that involves minimal expectational input, and instead relies on diversification to match the performance of some market index. A passive strategy assumes that the marketplace will reflect all available information in the price paid for securities, and therefore, does not attempt to find mispriced securities.

Optimal portfolio
An efficient portfolio most preferred by an investor because its risk/reward characteristics approximate the investor's utility function. A portfolio that maximizes an investor's preferences with respect to return and risk.

Normal portfolio
A customized benchmark that includes all the securities from which a manager normally chooses, weighted as the manager would weight them in a portfolio.

Modern portfolio theory
Principles underlying the analysis and evaluation of rational portfolio choices based on risk-return trade-offs and efficient diversification.

Minimum-variance portfolio
The portfolio of risky assets with lowest variance.

Markowitz efficient set of portfolios
The collection of all efficient portfolios, graphically referred to as the Markowitz efficient frontier.

Markowitz efficient portfolio
Also called a mean-variance efficient portfolio, a portfolio that has the highest expected return at a given level of risk.

Market portfolio
A portfolio consisting of all assets available to investors, with each asset held -in proportion to its market value relative to the total market value of all assets.

Leveraged portfolio
A portfolio that includes risky assets purchased with funds borrowed.

Complete portfolio
The entire portfolio, including risky and risk-free assets.

Opportunity set
The possible expected return and standard deviation pairs of all portfolios that can be constructed from a given set of assets.

Opportunity costs
The difference in the performance of an actual investment and a desired investment adjusted for fixed costs and execution costs. The performance differential is a consequence of not being able to implement all desired trades. Most valuable alternative that is given up.

Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in comparable financial securities.

Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Assets
Anything that the firm owns. In the balance sheet, assets are divided into intangible assets and tangible assets.

Settlement price
The average of the prices that a futures contract trades for immediately before the bell signaling the close trading for a day. It is used in mark-to-market calculations.

Current Assets
The value of assets held at the Balance Sheet date that are represented by cash, or can be expected to be converted into cash within the next 12 months.

Deferred assets
Payments that will be assigned as expenses in a later period, but that are paid in advance and temporarily set up as assets on the balance sheet.

Fixed assets
Alternative name for noncurrent assets.

Acquisition of assets
A merger or consolidation in which an acquirer purchases the selling firm's assets.

Wasting asset
An asset which has a limited life and thus, decreases in value (depreciates) over time. Also applied to consumed assets, such as gas, and termed "depletion."

Total asset turnover
The ratio of net sales to total assets.

Thus, the total asset turnover ratio compares the turnover with the assets that the business has used to generate that turnover.

In other words, we are just saying that for every 1 of assets, the turnover is x.

Tangible asset
An asset whose value depends on particular physical properties. These i nclude reproducible assets such as buildings or machinery and non-reproducible assets such as land, a mine, or a work of art. Also referred to as real assets.

Tactical Asset Allocation
Tactical Asset Allocation (TAA) is an asset allocation strategy that allows active departures from the normal asset mix based upon rigorous objective measures of value. Often called active management. It involves forecasting asset returns, volatilities and correlations. The forecasted variables may be functions of fundamental variables, economic variables or even technical variables.

Structured settlement
An agreement in settlement of a lawsuit involving specific payments made over a period of time. Property and casualty insurance companies often buy life insurance products to pay the costs of such settlements.

Skip-day settlement
The trade is settled one business day beyond what is normal.

Settlement rate
The rate suggested in Financial Accounting Standard Board (FASB) 87 for discounting the obligations of a pension plan. The rate at which the pension benefits could be effectively settled off the pension plan wished to terminate its pension obligation.

Settlement date
The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently 3 business days after the trade. For mutual funds, settlement usually occurs in the U.S.the day following the trade. In some regional markets, foreign shares may require months to settle.

Settlement
When payment is made for a trade.

Set of contracts perspective
View of corporation as a set of contracting relationships, among individuals who have conflicting objectives, such as shareholders or managers. The corporation is a legal contrivance that serves as the nexus for the contracting relationships.

Risk-free asset
An asset whose future return is known today with certainty.

Risky asset
An asset whose future return is uncertain.

Return on total assets
The ratio of earnings available to common stockholders to total assets.

Return on assets (ROA)
Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets).

Residual assets
Assets that remain after sufficient assets are dedicated to meet all senior debtholder's claims in full.

Reset frequency
The frequency with which the floating rate changes.

Reproducible assets
A tangible asset with physical properties that can be reproduced, such as a building or machinery.

Regular way settlement
In the money and bond markets, the regular basis on which some security trades are settled is that the delivery of the securities purchased is made against payment in Fed funds on the day following the transaction.

Real assets
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a financial obligation.

Quick assets
Current assets minus inventories.

Publicly traded assets
Assets that can be traded in a public market, such as the stock market.

Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an appropriate long-term "normal" asset mix that represents an ideal blend of controlled risk and enhanced return.

Other current assets
Value of non-cash assets, including prepaid expenses and accounts receivable, due within 1 year.

Non-reproducible assets
A tangible asset with unique physical properties, like a parcel of land, a mine, or a work of art.

Net assets
The difference between total assets on the one hand and current liabilities and noncapitalized longterm liabilities on the other hand.

Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed end fund, the market price may vary significantly from the net asset value.

Mutual offset
A system, such as the arrangement between the CME and SIMEX, which allows trading positions established on one exchange to be offset or transferred on another exchange.

Long-term assets
Value of property, equipment and other capital assets minus the depreciation. This is an entry in the bookkeeping records of a company, usually on a "cost" basis and thus does not necessarily reflect the market value of the assets.

Liquid asset
Asset that is easily and cheaply turned into cash - notably cash itself and short-term securities.

Limitation on asset dispositions
A bond covenant that restricts in some way a firm's ability to sell major assets.

Bank for International Settlements (BIS)
An international bank headquartered in Basel, Switzerland, which serves as a forum for monetary cooperation among several European central banks, the Bank of Japan, and the U.S. Federal Reserve System. Founded in 1930 to handle the German payment of World War I reparations, it now monitors and collects data on international banking activity and promulgates rules concerning international bank regulation.

Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving the delivery of the underlying.

Asset Protection Trust (APT)
A special form of irrevocable trust, usually created (settled) offshore for the principal purposes of preserving and protecting part of one's wealth offshore against creditors. Title to the asset is transferred to a person named the trustee. Generally used for asset protection and usually tax neutral. Its ultimate function is to provide for the beneficiaries of the APT.

Offset
Liquidating a purchase of futures contracts through the sale of an equal number of contracts of the same delivery month, or liquidating a short sale of futures through the purchase of an equal number of contracts of the same delivery month.

Admitted Assets
Assets admitted by state law to be included in an insurance company's annual statement. These assets are an important item when regulators measure insurance company solvency. They may include mortgages, stocks, bonds and real estate.