efficient portfolio

efficient portfolio
An asset or portfolio of assets that earns the maximum possible return for its given level of risk. An asset or a portfolio of assets is considered to be efficient if no other asset or portfolio of assets offers a higher expected return with the same (or lower) risk or offers a lower risk with the same (or higher) expected return. This concept is part of a financial explanation sometimes called the Markowitz Portfolio Model or the Efficient Frontier Theory. The efficient portfolio is defined mathematically based upon the expected returns, the standard deviation of returns, and the covariance of returns for the portfolio. American Banker Glossary
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A portfolio that provides the greatest expected return for a given level of risk ( i.e., standard deviation), or, equivalently, the lowest risk for a given expected return. Bloomberg Financial Dictionary

Financial and business terms. 2012.

Look at other dictionaries:

  • Efficient portfolio — A portfolio that provides the greatest expected return for a given level of risk ( i.e. standard deviation), or equivalently, the lowest risk for a given expected return. The New York Times Financial Glossary …   Financial and business terms

  • efficient asset or efficient portfolio — An asset or portfolio of assets that earns the maximum possible return for its given level of risk. An asset or a portfolio of assets is considered to be efficient if no other asset or portfolio of assets offers a higher expected return with the… …   Financial and business terms

  • Efficient Portfolio Management — ( EPM) The EPM regulations set out the ways in which certain types of unit trust may use derivatives. EPM requires that all derivatives positions of the trust are covered. Dresdner Kleinwort Wasserstein financial glossary …   Financial and business terms

  • Markowitz efficient portfolio — Also called a mean variance efficient portfolio, a portfolio that has the highest expected return at a given level of risk. The New York Times Financial Glossary Also called a mean variance efficient portfolio, a portfolio that has the highest… …   Financial and business terms

  • Mean-variance efficient portfolio — Related: Markowitz efficient portfolio …   Financial and business terms

  • mean-variance efficient portfolio — Related: Markowitz efficient portfolio …   Financial and business terms

  • efficient asset — or efficient portfolio An asset or portfolio of assets that earns the maximum possible return for its given level of risk. An asset or a portfolio of assets is considered to be efficient if no other asset or portfolio of assets offers a higher… …   Financial and business terms

  • portfolio theory — A branch of financial economics associated with Harry M. Markowitz (born 1927) that analyzes the *diversification of *risk through the holding of a *portfolio of investments. A major assumption underlying portfolio theory is that investors are… …   Auditor's dictionary

  • Efficient-market hypothesis — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Efficient diversification — The organizing principle of modern portfolio theory, which maintains that any risk averse investor will search for the highest expected return for any level of portfolio risk. The New York Times Financial Glossary …   Financial and business terms

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