4_finance_fundamentals

4_finance_fundamentals - ISyE 6673 Financial Optimization...

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Unformatted text preview: ISyE 6673 Financial Optimization Models Shabbir Ahmed E-mail: sahmed@isye.gatech.edu Homepage: www.isye.gatech.edu/~sahmed Topic: Finance Fundamentals Outline Goal of financial investment Typical financial instruments Some key financial principles Typical financial optimization problems An example of bond dedication 1 Financial investments Present commitment of (financial) resources to obtain future (financial) benefits. Benefits: Consumption smoothing: Transfer of current wealth to future points of need. Risk management: Insure against (potential) future losses. Increase wealth. A key problem: How to best allocate resources amongst various financial instruments to optimize future benefits? 2 Important Financial Instruments Fixed-income securities Promises a definite income to the holder over a span of time. Ownership of a definite cash-flow stream. Examples: Savings Deposit, Bonds....
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4_finance_fundamentals - ISyE 6673 Financial Optimization...

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