8.4 Financial Applications
Portfolio Selection
A problem frequently encountered by managers of banks, mutual funds, investment services, and insurance companies is the selection of specific investments from among a wide variety of alternatives. The manager’s overall objective is usually to maximize expected return on investment, given a set of legal, policy, or risk restraints.
For example, the International City Trust (ICT) invests in short-term trade credits, corporate bonds, gold stocks, and construction loans. To encourage a diversified portfolio, the board of directors has placed limits on the amount that can be committed to any ...
Get Quantitative Analysis for Management, 13/e now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
