Capital rationing

Definition:

Placing limits on the amount of new investment undertaken by a firm, either by using a higher cost of capital, or by setting a maximum on the entire capital budget or parts of it.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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Perfect hedge

A situation in which the profit and loss from the underlying asset and the hedge position are equal.

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