Zero-Investment Portfolio - Definition

The zero-investment portfolio is a financial portfolio that is composed completely or mainly by securities that cumulatively result in a net value of zero. In some instances, economists consider portfolios to be zero-investment portfolios when the resulting net value is almost zero. Generally, an investor will attempt to achieve a zero-investment portfolio for reasons relating to the rules of Arbitrage.

To understand the concept behind a zero-investment portfolio, it is necessary to grasp the fundamentals of arbitrage. Essentially, arbitrage is the process of buying certain amounts of securities on one market, while selling the same Amount of the same or similar securities on another market. In some instances, the principle of arbitrage is also applied to buying and selling securities of like value on the same market. The point of arbitrage is to minimize the overall Risk of losing money, while at the same time taking advantage of opportunities to make money.

Terms near "Zero-Investment Portfolio"

Zero-One Integer Programming

Zero-Rated Goods

Zero-Sum Game

Zero-Volatility Spread (Z-Spread)

Zeta Model

Zig Zag Indicator

ZMK

Zombie Bank

Zombie Debt

Zone Of Possible Agreement