Returns factor model

If the return factor model adequately accounts for common factors, then the specific returns are uncorrelated and we can write portfolio risk... 

Factor the spec into model types. If some parts of the pre or postcondition seem to be particularly associated with types in the model, write them there as effects that you use in the system operation specs (Section 3.8.3, Effects factor common postconditions, on page 150). This helps avoid replication in the spec, and allows it to be polymorphic. Although the type model is not necessarily a blueprint for its design, this distribution of concerns obviously looks forward to the distribution of responsibilities in design. effect LibraryManagementSystem Book return () pre borroweronull post etc... 

The model is subject to the same set of constraints as the deterministic model, with 0i as the risk trade-off parameter (or simply termed the risk factor) associated with risk reduction for the expected profit. 0j is varied over the entire range of (0, oo) to generate a set of feasible decisions that have maximum return for a given level of risk, which is equivalent to the efficient frontier portfolios for investment applications. 

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