Portfolio construction

The importance of name selection in portfolio construction is growing rapidly. It has been propelled primarily by two factors. First, there has been an increase in the number of borrowers, which has led to better and more diversified sector population. Second, the process of bank dis-... 

The divergence of performance is a powerful reason to adopt name selection when constructing portfolios. The increase in credit research capabilities with investors and with the resultant sophistication, it is inevitable that name rotation will become an important input to the portfolio construction and/or management process. As investors become more attuned to individual credit concerns, one can no longer expect bonds in the same sector to move in strict step with each other. 

Well before the wide use of organoselenium compounds in chemistry, it was discovered that electrophilic selenium compounds of the type RSeX add stereospecifically to alkenes.45 Since that time this reaction has been an important tool in the portfolio of organic chemists and has been used even for the construction of complex molecules. Comprehensive reviews on this chemistry have appeared46-49 and in recent times the synthesis of chiral selenium electrophiles and their application in asymmetric synthesis has emerged. As shown in Scheme 1, the addition reactions of selenium electrophiles to alkenes are stereospecific anti additions. They involve the initial formation of seleniranium ion intermediates 1 which are immediately opened in the presence of nucleophiles. External nucleophiles lead to the formation of addition products 2. The addition to unsymmetrically substituted alkenes follows the thermodynamically favored Markovnikov orientation. The seleniranium ion intermediates of alkenes with internal nucleophiles such as 3 will be attacked intramolecularly to yield cyclic products 4 and 5 via either an endo or an exo pathway. Depending on the reaction conditions, the formation of the seleniranium ions can be reversible. 

The Portfolio. The data on relative costs and environmental impacts are used to construct an eco-efficiency portfolio, which clearly shows the strengths and weaknesses of each product or process. The relative costs are plotted on the x-axis of the portfolio, and the relative environmental impacts on the y-axis. The closer a product or process is to the upper right-hand corner, the more eco-efficient it is. Multiplying the normalized values of the economic and ecological assessment results in a number for the eco-efficiency. Products or processes characterized by the... 

As a consequence of this unacceptable situation, the interest in model systems suitable for the construction and study of complex lipid/protein membrane architectures increased steadily over the years [7], The classical portfolio of model membranes used for biophysical and interfacial studies of lipid (bi)layers and lipid/protein composites includes Langmuir monolayers assembled at the water/air interface, (uni- and multi-lamellar) vesicles in a bulk (liposomal) dispersion, the bi-molecular lipid membrane (BLMs), and various types of solid supported membranes [8], All these have their specific advantages but also suffer from serious drawbacks. 

In 2000, again after some wrong turns, the FERC mandated that pipeline companies price new or expanded services on an incremental basis. Setting incremental pricing as the default rule for new pipeline construction put an end to the fight over traditional certification. If a pipeline company approached the Commission with a new proposal, it was no longer required to demonstrate connected gas supplies. With a portfolio of letters of intent from committed incremental shippers, the Commission had virtual prima facie evidence of economic need. The typical time period needed to plan and construct a typical large-scale pipeline expansion project dropped from five years to two. "... 

As an example of the extrapolation faUacy, consider portfolio performance over the last two decades. If one constructed an efficient portfoUo in 1990 bas on the 1980s history, laige allocations would have been made to international equities. This is primarily due to the fact that lapanese stocks produced the best returns in the woild up to 1989. Yet in the 1990s, Japanese equities feU by more than 50% from their 1989 peak, and the best asset allocation would have been to U.S. equities. Using the 1980s history to construct MV portfoUos would have produced dismal portfoUo returns (Table 3). 

Empirical work by Chopra and Ziembra (1993) demonstrated that the most critical aspect of constructing optimal portfolios is the return forecast For this reason, a shortcut employed by some practitioners is to concentrate on the return forecast and use historical risk emd correlation to construct optimum portfolios. This may prove satisfactory because correlations and risk are more stable than returns tmd are therefore more easily predicted. However, this Une of attack may be ineffective if return forecasts substantially deviate fiom history and are combined with historical risk and correlations. In this case, the optimal aUocations can skew overwhelmingly to the high return assets Whatever method is used to obtain forecasts, once the optimum portfoUo is determined, the memager can momentarily relax and wait. Of course, actual outcomes wUl seldom match expectations. 

COMBINING MEAN-VARIANCE ANALYSIS WITH OTHER TECHNIQUES—CONSTRUCTING OPTIMAL HEDGE FUND PORTFOLIOS... 

What is the significance of this Here we take it as given that because price processes can be described as equivalent martingale measures (which we do not go into here) they enable the practitioner to construct a risk-free hedge of a market instmment. By enabling a no-arbitrage portfolio to be described, a mathematical model can be set up and solved, including risk-free valuation models. 

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