Financial DSS: Systems for Supporting Investment Decisions

Market volatility and innovations in financial trading have made investment decision making increasingly complicated and risky. However, the availability of reliable financial market data and powerful software tools has never been greater. In this environment, decision support systems (DSSs) are playing more-important roles and improving the quality of decisions made by both professional and individual investors. This chapter illustrates the capabilities of financial DSSs with several examples of spreadsheet-based investment modeling and decision analyses. For investors seeking better decision performance, DSS tools are essential. The DSS illustrations include portfolio optimization, arbitrage trading models, and value-at-risk modelling. The examples highlight the basic features an investment DSS would provide. With some extensions, these are the features that would be evident in the most powerful commercial investment software packages.

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