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Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, which is the study of production, distribution, and consumption of goods and services; the discipline of financial economics bridges the two. Financial activities take place in financial systems at various scopes; thus, the field can be roughly divided into personal, corporate, and public finance.
A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities.
In economics and finance, risk neutral preferences are preferences that are neither risk averse nor risk seeking. A risk neutral party's decisions are not affected by the degree of uncertainty in a set of outcomes, so a risk neutral party is indifferent between choices with equal expected payoffs even if one choice is riskier.
A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job. The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, or ratings analyst. The job title is a broad one: in banking, and industry more generally, various other analyst-roles cover financial management and (credit) risk management, as opposed to focusing on investments and valuation; these are also discussed in this article.
In finance, a portfolio is a collection of investments.
Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institutions, such as insurance companies, pension funds, corporations, charities, educational establishments, or private investors, either directly via investment contracts/mandates or via collective investment schemes like mutual funds, exchange-traded funds, or REITs.
Active management is an approach to investing. In an actively managed portfolio of investments, the investor selects the investments that make up the portfolio. Active management is often compared to passive management or index investing.
Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. The focus is on the characteristics of the overall portfolio. Such a strategy contrasts with an approach that focuses on individual assets.
The Center for Research in Security Prices, LLC (CRSP) is a provider of historical stock market and investable index data. CRSP is an affiliate of the Booth School of Business at the University of Chicago. CRSP maintains some of the largest and most comprehensive proprietary historical databases in stock market research. Academic researchers and investment professionals rely on CRSP for accurate, survivor bias-free information which provides a foundation for their research and analyses. As of 2023, CRSP claims over 600 clients. The name is usually pronounced "crisp".
Frank J. Fabozzi is an American economist, educator, writer, and investor, currently Professor of Practice at The Johns Hopkins University Carey Business School and a Member of Edhec Risk Institute. He was previously a Professor of Finance at EDHEC Business School, Professor in the Practice of Finance and Becton Fellow in the Yale School of Management, and a Visiting Professor of Finance at the Sloan School of Management at the Massachusetts Institute of Technology. He has authored and edited many books, three of which were coauthored with Nobel laureates, Franco Modigliani and Harry Markowitz. He has been the editor of the Journal of Portfolio Management since 1986 and is on the board of directors of the BlackRock complex of closed-end funds.
In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets. If asset prices do not change in perfect synchrony, a diversified portfolio will have less variance than the weighted average variance of its constituent assets, and often less volatility than the least volatile of its constituents.
The following outline is provided as an overview of and topical guide to finance:
Menachem Brenner is a professor of finance and a Bank and Financial Analysts Faculty Fellow at New York University Stern School of Business.
A quantitative fund is an investment fund that uses quantitative investment management instead of fundamental human analysis.
Portfolio optimization is the process of selecting an optimal portfolio, out of a set of considered portfolios, according to some objective. The objective typically maximizes factors such as expected return, and minimizes costs like financial risk, resulting in a multi-objective optimization problem. Factors being considered may range from tangible to intangible.
In modern portfolio theory, the efficient frontier is an investment portfolio which occupies the "efficient" parts of the risk–return spectrum. Formally, it is the set of portfolios which satisfy the condition that no other portfolio exists with a higher expected return but with the same standard deviation of return. The efficient frontier was first formulated by Harry Markowitz in 1952; see Markowitz model.
Quantitative analysis is the use of mathematical and statistical methods in finance and investment management. Those working in the field are quantitative analysts (quants). Quants tend to specialize in specific areas which may include derivative structuring or pricing, risk management, investment management and other related finance occupations. The occupation is similar to those in industrial mathematics in other industries. The process usually consists of searching vast databases for patterns, such as correlations among liquid assets or price-movement patterns.
A pay-for-performance fee structure, in relation to the investment industry, describes a fee that is paid to a financial advisor or investment manager when their performance returns exceed those of their designated benchmark. The performance fee is generally calculated as a percentage of the investment outperformance gained. The rationale for a pay-for-performance fee is that it provides a low-cost base solution for investors and aligns their interests with investment managers who only get compensated for outstanding performance.
Anup Agrawal is a professor of Finance and Powell Chair of Finance at the University of Alabama. He is known for his research in Corporate Finance and Investments, including Corporate Governance, Mergers and Acquisitions, Executive Compensation, Corporate Innovation, Corporate Fraud, Insider Trading, Security Analysts, and Market Efficiency.
Martin Jay Gruber is professor emeritus of finance and scholar in residence at the Stern School of Business, New York University, where he was previously Nomura professor of finance (1987-2010) and chair of the finance department (1989-1997).
References
- 1 2 3 4 5 "Edwin Elton's profile at NYU Stern School of Business". Archived from the original on 18 June 2010. Retrieved 26 March 2009.
- ↑ Edwin J. Elton; Martin J. Gruber; Stephen J. Brown (6 December 2013). Modern Portfolio Theory and Investment Analysis, 9th Edition: Ninth Edition. Wiley Global Education. ISBN 978-1-118-80580-0.
- ↑ List of Books on Amazon