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: [email protected] 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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