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Home Dictionary G Geographical Diversification Geographic diversification is a way to reduce the risk of a portfolio by avoiding excessive concentration in any one market. Geographic diversification can include investments in developing countries that offer more growth potential than advanced economies. There are risks such as unfavorable exchange rate fluctuations and unstable political systems. 90/10 Strategy
September 25, 2022 The 90/10 retirement investment strategy involves investing 90% of investment capital in low-cost S&P 500 index funds, and the remaining 10% in short-term government bonds. Accepting Risk
September 25, 2022 Risk acceptance or risk containment is a conscious strategy of recognizing the possibility of small or rare risks without taking measures to hedge, hedge or avoid these risks. Active Management
September 25, 2022 Active management includes making decisions to buy and sell assets in a portfolio. Aggressive Investment Strategy
September 25, 2022 Aggressive investing takes more risk in pursuit of greater returns. Annual Return
September 25, 2022 Annual or yearly return is a measure of how much an investment has increased on average each year over a period of time. Asset Management
September 25, 2022 The goal of asset management is to maximize the value of an investment portfolio over time while maintaining an acceptable level of risk. Assets Under Management (AUM)
September 25, 2022 Assets Under Management (AUM) is the total market value of investments that an individual or entity manages on behalf of investors. Attribution Analysis
September 25, 2022 Attribution analysis is an evaluation tool used to explain and analyze the performance of a portfolio (or portfolio manager), especially when compared to a certain benchmark. Audit Risk
September 25, 2022 Audit risk is the risk that the financial statements will be materially incorrect, even if the auditor’s report indicates that the financial statements do not contain any material misstatement. Basket Trade
September 25, 2022 Basket trading is a portfolio management strategy used by institutional investors to buy or sell a large number of securities at the same time. Benchmark
September 25, 2022 Benchmark is a standard criterion for measuring performance. Bottom-Up Investing
September 25, 2022 Investing from the bottom up is an investment approach that focuses on the analysis of individual stocks and downplays the importance of macroeconomic and market cycles. Certainty Equivalent
September 25, 2022 The confidence equivalent is the amount of guaranteed money that an investor would accept now instead of risking more money in the future. Correction
September 25, 2022 Correction is a decrease of 10% or more in the price of a security, asset or financial market. Cost Basis
September 25, 2022 The cost basis is the initial purchase price of the asset for tax purposes. Counterparty Risk
September 25, 2022 Counterparty risk is the likelihood or likelihood that one of the parties to a transaction may fail to meet its contractual obligations. Counterparty risk may exist in lending, investment and trading transactions. Covariance
September 25, 2022 Covariance is a statistical tool that is used to determine the relationship between the movements of two random variables. Decision Analysis (DA)
September 25, 2022 Decision Analysis is a systematic, quantitative and visual approach to making strategic business decisions. Delta Neutral
September 25, 2022 Delta-neutral portfolio strategy, which uses multiple positions with positive and negative delta balancing, so the total asset delta is zero. Disintermediation
September 25, 2022 De-intermediation is the process of removing one or more intermediaries from a transaction, supply chain, or decision-making process. Diversification
September 25, 2022 Diversification is a strategy that mixes a wide variety of investments in a portfolio in an attempt to reduce the portfolio’s risk. Downside Risk
September 25, 2022 Downside risk is an estimate of the potential loss in value of a security if market conditions cause the price of that security to decline. Efficient Frontier
September 25, 2022 The efficient frontier includes investment portfolios that offer the highest expected return for a given level of risk. Equity Risk Premium
September 25, 2022 Equity risk premium is the excess return earned by an investor when he invests in the stock market at the risk-free rate. Financial Exposure
September 25, 2022 Financial risk refers to the risk inherent in an investment and indicates the amount of money an investor could lose.