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Objective Function
Definition
In quantitative methods, this is the mathematical expression of the objective or goal of a process.
Using the term Objective Function :
The quantitative analyst designated his objective function as "minimizing standard deviation" when running his portfolio allocation model.
Pay Special Attention To :
Model risk, or garbage in, garbage out is always a risk in quantitative models. Always check your data sets for validity and appropriateness. Also, ensure your assumptions are correct.
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Related terms
Quantitative Analysis , Actual Extreme Events , Factor Push
