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Safety-First Rule

What is 'Safety-First Rule'

Within the context of post-modern and modern portfolio theory, a safety-first rule involves creating a portfolio based on a minimum level of portfolio returns, which is called the minimum acceptable return. By setting up a minimum acceptable return, investors will mitigate the risk of not achieving their investment objective.

Explaining 'Safety-First Rule'

A safety-first rule is a form of margin of safety that can be used when creating a portfolio using post-modern portfolio theory. When maximizing the objective function, the expected return used in the security market line equation in lowered, to reflect this margin of safety. The objective function in this capacity is the Sharpe ratio or the Sortino ratio.


Further Reading


Safety-first, stochastic dominance, and optimal portfolio choice
www.cambridge.org [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Portfolio choice and equilibrium in capital markets with safety-first investorsPortfolio choice and equilibrium in capital markets with safety-first investors
www.sciencedirect.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Safety first—an expected utility principleSafety first—an expected utility principle
www.cambridge.org [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

The safety first expected utility model: Experimental evidence and economic implicationsThe safety first expected utility model: Experimental evidence and economic implications
www.sciencedirect.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Safety first portfolio selection, extreme value theory and long run asset risksSafety first portfolio selection, extreme value theory and long run asset risks
link.springer.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Generalized safety first and a new twist on portfolio performanceGeneralized safety first and a new twist on portfolio performance
www.tandfonline.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Smoothed safety first and the holding of assetsSmoothed safety first and the holding of assets
www.tandfonline.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Safety-first analysis and stable paretian approach to portfolio choice theorySafety-first analysis and stable paretian approach to portfolio choice theory
www.sciencedirect.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Evaluating Environmental Risks Using Safety‐First ConstraintsEvaluating Environmental Risks Using Safety‐First Constraints
onlinelibrary.wiley.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …

Generalized safety first and the planting of cropsGeneralized safety first and the planting of crops
www.tandfonline.com [PDF]
… we use the language of the portfolio choice problem common in the financial economics literature … In this paper, we defined a class of generalized n -order Safety-First rules and have … returns, the union of optimal portfolio choices under the n -Order Safety-First rule provides a …


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