In an emergency meeting to decide how to deal with an impending Greek default, Euro Zone leaders are meeting in Brussels to discuss the possibility of a bailout to keep the Euro afloat and the European Union intact.  

The Greek problem has recently been exacerbated by referendums and protests indicating Greek citizens are no longer willing to cut their benefits, wages, or sale of assets.  Euro Zone members, especially the economically stronger nations of Germany and France, have pushed for further cuts in Greece in order to avoid default.   

Equally troubling are new reports that Italy is facing similar default issues, as political turmoil has created tension in Italy and uncertainty abounds.  Many in finance believe Italy is just as weak as Greece and may further pull down the value of the Euro while striking fear into international markets.  

A 401(K) hardship withdrawal is a form of loan permitted by the Internal Revenue Service, which enables a contributor to withdraw funds from their retirement plan to satisfy an immediate financial need. The Internal Revenue Service will permit a 401(K) hardship withdrawal if the following criteria are met:

• The 401(k) hardship withdrawal is needed to fulfill an immediate and important financial need

• The 401(k) hardship withdrawal is necessary to satisfy the particular need

• The contributor has no other means to fulfill the need—the individual cannot utilize any other source of funds 

• The 401(k) hardship withdrawal should not exceed the total amount needed by the individual

• The individual cannot contribute to their 401k plan for up to 6 months after the withdrawal date

• The individual must have first received all non-taxable distributions or loans available under their 401k plan

A 401(k) hardship withdrawal is typically permitted by larger companies; however, due to the high costs associated with administration, the maneuver may not be readily available with smaller companies. 

 

The following reasons are typically deemed acceptable by the Internal Revenue Service to engage in a 401(K) hardship withdrawal:

• Repairs of the contributor’s primary residence

• Funeral expenses

• Payments associated with home foreclosures

• Payments required to prevent the contributor from being forced out of their residence

• Payments needed for college tuition and other educational costs such as transportation, food, room & board etc.

 

• Purchase of a principal residence 

• Unexpected medical expenses 

All 401K hardship withdrawals are subject to 10% early withdrawal fees. Moreover, the funds secured from a 401k hardship withdrawal are also subject to income taxation. For instance, if an employee withdraws $10,000 as a hardship withdrawal, the individual will owe $1,000 in fees and will be taxed on the remaining $9,000. That being said, the following 401(K) hardship withdrawals will not be subject to the 10% penalty:

• The individual stops working, quits, retires or gets laid off at or after the age of 55

• The individual sustains unexpected medical debts that exceed 7.5% of their Adjusted Gross Income

• A court orders the individual to give funds to a divorced spouse or dependent 

• The individual sustains a permanent disability

• The individual stops working and begins taking regular payments based on a fixed schedule that will provide equal payments for the rest of their expected life; this provision must last 5 years or until the individual turns 59.5 years of age.

For a distribution from a 401(k) to be permitted on account of hardship, it must be used to satisfy an immediate and heavy financial reason. Moreover, the amount must be necessary to satisfy the particular financial need. The need of the employee will also include the need of the employee’s dependent or spouse. Whether the need is heavy and immediate will depend on the facts and circumstances; the above listed reasons are deemed acceptable by the Internal Revenue Service.

The amount of contributions available for a 401(K) hardship cannot be more than the amount of the individual’s total elective contributions (Roth contributions are also included) as of the date of distribution reduced by the amount of previous distributions. 

There is typically no limit on when an IRA holder may take a distribution from his or her IRA, however, the individual may be subject to unfavorable tax consequences. 

Certain distributions from an IRA account that are used for expenses similar to those that may be deemed eligible for hardship distributions from a retirement plan will be ruled exempt from the additional taxation on early distributions. 

A 401(K) retirement plan is a qualified profit-sharing account that allows an employee to contribute a portion of their wages to individual accounts. The basic rules of a 401K retirement law are as follows:

• An employer can contribute to employee accounts

• Elective salary deferrals are excluded from the employee’s taxable income (this does not hold true for designated Roth deferrals).

• Distributions—including all earnings—are includible in taxable income at retirement (this does not hold true for qualified distributions of designated Roth Accounts).

Within a 401(k) plan, an employee can choose to defer some of their salary; instead of receiving the deferred amount in their paycheck, the employee will delay or defer the funds. In this case, their differed funds are placed into the 401(k) plan. These deferred funds do not get taxed by the federal government or by the majority of state governments until it is withdrawn or distributed. 

The contribution limits, as stipulated by 401k retirement law, are as follows:

The employee cannot contribute more than $16,500 to his or her retirement plan for the 2011 taxable year. If the employee is at or over the age of 5, an additional “catch-up” contribution is permitted. The additional contribution amount for 2011 is $5,500. The individual employee may withdraw funds from his or her plan; however, 401k retirement law states that such a maneuver is subject to a 10% taxation if the individual is under the age of 59 ½. 

• The 401 (k) holder can utilize other retirement plans

• The 401 (k) can be held by a business of any size

• The 401 (k) holder is required to annually file a Form 5500

Because of 401 (K) retirement law, the plan has a number of benefits and drawbacks. The following list will provide the pros and cons of the retirement plan as regulated by 401k retirement law:

• A 401k retirement plan allows for greater flexibility in contributions.

• 401k retirement law enables an employee to contribute more to the plan than an IRA would allow

• A 401k is a good plan if cash flow is an issue for the employee

• 401k retirement law allows for optional participant loans and hardship withdrawals—these maneuvers offer added flexibility for employees

• 401k retirement law calls for a number administrative costs; these costs are typically higher than more basic arrangements. Moreover, the additional loan and withdrawal flexibility will add administrative burdens for the employer.

 

A 401k rollover occurs when a holder of a 401k transfers or rolls their account over into a new IRA (Individual Retirement Account). This process will typically occur when the holder changes employers or retires and wishes to seize better control over how their retirement funds are invested. 

If you leave your job—for any reason—and have a 401k account, you can decide between taking a lump sum (subject to taxation), which will keep the funds with your old employer (if permitted by the company), or have your 401k plan rolled over into a new IRA. 

The easiest way to avoid federal withholding taxes and all applicable mandatory state taxations is to directly rollover your 401k into an Individual Retirement Account. The IRA is a tax-deferred account that may be used to receive benefits distributed from an employer-qualified account. Because all earnings will accumulate on a tax-deferred basis your funds will accumulate more rapidly when compared to the percentage return in an otherwise identical taxable account.  

The IRA is not an investment in itself, but simply an account that holds future investments (stocks, annuities, bonds, mutual funds and market funds) on your behalf. The most basic reason for opening participating in a 401k rollover is to avoid the taxation associated with “cashing-out” your 401k. 

Cashing out your 401(k) is a bad idea; when you cash out your 401(k) you will be taxed on the withdrawal. The combination of federal and state taxes is significant due to the higher marginal tax rate associated with the withdrawal. Furthermore, you may be subjected to an additional 10% early withdrawal penalty if you have not reached the age of 59 ½. Using a combined federal and state tax rate of 35%, a $200,000 cashed-out 401(K) will cost you $70,000 in taxes. 

A 401k rollover into a traditional IRA will not impact your taxable income, because the traditional IRA is a pre-tax account. However, a 401(k) rollover into a Roth IRA will increase your taxable income and bump up your tax marginal rate into the subsequent tax bracket. 

To efficiently engage in a 401k rollover, follow these basic steps:

1. Open an Individual Retirement Account with any bank or financial institution that offers an Individual Retirement Account. Typically, you will be required to go through a discount broker; when choosing the institution, be sure to pick the company that offers the best types of investments at the lowest fees and commissions. 

2. You must notify your employer that you wish to participate in a 401(k) rollover. After notification, you must make sure your employer makes the check payable to the investment institution that you choose. 

3. Once the transfer is finalized, your money will be sitting in a new interest bearing investment such as a money market account. Invest your money according to an asset allocation plan; the precise investment options will depend on your particular investment company. In general, you will want to invest in a well-diversified portfolio of low cost and passively managed ETFs or mutual funds. 

For an employee to qualify for the tax benefits available, a plan must contain language that meets the IRS’s requirements and operate in accordance with the plan’s particular provisions. The following is an overview of qualification rules; it is not intended to be an all-inclusive list of regulations. For a complete list of plan qualification rules, observe Publication 560 of the Internal Revenue Service found at www.irs.gov.

Plan Assets Must Not Be Diverted: The 401(K) must make it impossible for the underlying assets to be used for or diverted to any purpose other than the benefit of the holder (the employee) and their direct beneficiaries. 401(k) rules—in the most general sense—state that the underlying assets cannot be diverted to the employer. 

Benefits and Contributions must not Discriminate: Under the 401(k) plan, the contributions or benefits may not discriminate in favor of highly compensated workers. In most instances, an employee who makes over $110,000 per year or more are deemed as “highly compensated” employees for 2011 (this figure will increase to $115,000 in 2012). In order to meet this requirement—with regard to deferrals and employee matching contributions—a 401(k) plan may provide minimum employer contributions or meet the Actual Contribution Percentage or Actual Deferral Percentage tests. 

Allocations and Contributions are Limited: A contribution to 401(k) plans are not allowed to exceed certain limits described in tax code. The limits are attached to employer contributions and the amount of employee elective deferrals. 

Elective Deferrals are Limited: 401(k) rules state that employee elective deferrals are capped to the amount in effect under section 402(g) under the IRC for that particular year. The elective deferral limit for 2011 is $16,500; this figure will increase to $17,000 in 2012. These caps are subject to cost-of-living adjustments; however, 401(k) plans may allow participants over or at the age of 50 to provide catch-up contributions of $5,000 in addition to these amounts. 

Minimum Vesting Standards Must be Met: 401(k) plans must satisfy requirements concerning when benefits vest. To “vest” simply means to acquire ownership. Therefore, the vested percentage refers to the holder’s percentage of ownership in his or her 401(k) account. A participant must be 100% vested in their 401(k) elective deferrals. Moreover, a traditional plan may require the holder to complete a number of years of vested interest in matching or employer discretionary contributions. 

• The individual must be at least 21 years of age

• The individual has at least 1 year of service; however, a traditional 401(k) plan may require 2 years of service for eligibility to obtain employer contributions if the plan provides that after no more than 2 years of service the participant is 100% vested in the account. 

401(k) plans may not exclude an employee because the individual has reached a specified age. 

• The plan ends and not defined contribution plans are established or continued

• The employee becomes disables or passes away

• The employee reaches the age of 59 ½ years of age or suffers a financial hardship

• The plan year in which the holder reaches the earlier age of 65 or the retirement age as specified in the plan.

• The year in which the participant destroys service with the employer.

A 529 College Savings Plan, as codified in the United States Tax Code, are college savings plans that parents of potential college students may invest in order to save money for their child’s college tuition.  529 College Savings Plans permit parents to deduct the money invested in 529 College Savings Plans to qualify for State tax deduction, effectively lowering their taxable income.

There are two types of 529 College Savings Plans:  prepaid and savings.  Prepaid 529 College Savings Plans allow parents to purchase tuition credits at present day rates.  This essentially means that a parent who will have a child in college in 20 years may place money in a Prepaid 529 College Savings Plan, at the current rate of tuition, to be used 20 years from that date, even if tuition is higher in the future.  For example, if the current per credit tuition is $2,000 and the parent purchases 5 credits through the Prepaid 529 College Savings Plan then it will guarantee those 5 credits even if the per credit tuition rate is $4,000 by the time the child goes to college.

The other type of 529 College Savings Plan is different in that the growth of the Savings 529 College Savings Plan is based on market performance of the investment form, which is usually in the form of mutual funds.  In this way you may benefit greatly over a Preferred 529 College Savings Plan in that the market could outperform the rate of tuition increase.  However, in the alternative, the Savings 529 College Savings Plan may have stagnant, or negative growth, over time that would not equal or exceed the Prepaid 529 College Savings Plan.

A 529 College Savings Plan may be used for tuition, books, fees, equipment and supplies for any accredited college or university, public or private, in the United States as well as vocational schools and some universities from outside the United States.  529 College Savings Plans may also be used for room and board.  However, if the student lives off campus the student may only use the 529 College Savings Plan for expenses that would be equivalent to the cost of on campus room and board.  For example, if the cost of room and board on campus is $6,000 and the student lives in off campus housing costing $8,000 then the 529 College Savings Plan will only cover $6,000 of that.

One of the great advantages of a 529 College Savings Plan is that it affords tax exemption from state taxes.  This means that all the money that is contributed into the 529 College Savings Plan will be treated as if the money was never considered part of your income.  For example, if your income for the year is $100,000 and you contribute $10,000 to your 529 College Savings Plan in that year then, for tax purposes, you will be treated as if your income for the year was $90,000.  529 College Savings Plans are considered to be a great way to avoid estate taxes in that they are not considered part of you estate, but part of the estate of your child, however, they are not irrevocable.  This means that any unused portion of the 529 College Savings Plan may be taken out of the 529 College Savings plan and reinvested by the parent.  Even though it is perfectly legal to do this the parent will be required to pay income tax on the benefit incurred as well as a 10% early withdrawal penalty.

The exception to the early withdrawal penalties are:  the designated beneficiary dies; the designated beneficiary becomes disabled; or the designated beneficiary receives a scholarship, veterans assistance, or employer provided education assistance.  If one of these things occurs then the penalties will not apply.  Even if none of these exceptions apply no penalty will be incurred by the 529 College Savings Plan holder if, for some reason, the entire allotment of savings is not used on the named beneficiary and the amount remaining is rolled over to another beneficiary.  If the leftover amount of the 529 College Savings Plan is rolled over to another qualified recipient within 60 days then the there will be no penalty associated with early withdrawal.

Financial aide consists of government assistance to citizens of the United States to help pay for post-secondary education including bachelors degrees, graduate and professional degrees and for other forms of continuing education. Financial aide in the United States can take many forms including grants, scholarships, loans, tax credits and deductions, and work study programs.

In the United States, every year there are upwards of $160 billion allocated by the federal and state governments for financial aide to deserving students. This includes $110 billion from the federal government in the form of grants and loans; $10.2 billion from State based financial aide; and $6.8 in federal tax credits and deductions.

In order to get money from the federal government you will need to apply for financial aide by filling out a FAFSA form. This form serves the purpose of putting the federal government on notice of your need for financial aide; what forms of financial aide you may need; and what financial aide you will qualify for.

The FAFSA form, or Free Application for Federal Student Aide may be downloaded and printed from the United States Department of Education website by going to www.fafsa.ed.gov. The FAFSA form is a free application provided by the United States Department of Education that allows the federal government to assess whether or not an applicant for student aid, either in the form of grants or loans, is eligible to recieve funding from the United States government for their education. The FAFSA form is used for all forms of funding for post-secondary education including: bachelors degrees, masters degrees, juris doctors, among others.

The FAFSA form will require you to input information including your income,and if you are a dependent, your families income; the cost of attendance of the educational institution; your status as a full time or part time student; and whether you will be attending post-secondary education for the whole year or on a semester basis.

By filling out the FAFSA form, the department of education will properly be able to assess your need based on your, and your families, income. The eligibility under FAFSA will also analyze your expected family contribution which is calculated based on your household income, number of students from the household in college, and your families net assets (not including 401ks).

Your FAFSA form will allow you to apply for numerous kinds of loans and grants that are funded by the federal government. These include Pell Grants, Federal Supplemental Educational Opportunity Grants, Perkins Loans, Stafford Loans, PLUS loans, and Federal Work Study programs.

A Pell Grant is a form of financial aide furnished by the United States Department of Education that helps students who could not normally afford the luxury of a secondary education, the opportunity to attend college or, in some cases, post-bachelors degree education. The federal Pell Grant helps 5.4 million individuals pay for college every year through the United States Department of education, which allots $17 billion a year towards the funding of Pell Grants. Grants, unlike loans, never have to be repaid to the federal government.

Prior to the 2011 amendments, Pell Grants would issue a maximum of $5,550 dollars per student in financial aide. As of the 2011 amendments a student who meets the hardship requirements and is given Pell Grants may receive $4,705 in financial aide. The amendment stripped funding from the department of education by $5.7 billion and due to that there has been a decrease in per student funding of $845 per student, with some students losing their status altogether.

If the funding from a Pell Grant is not enough to meet your financial aide requirements you may also use your FAFSA form to apply for Stafford loans.

Stafford loans are forms of financial aide that are sponsored by the federal government through lending institutions. The way they work is that you apply for a loan, through FAFSA, and upon your approval you will be allotted a certain amount of financial aide for you education. The benefit of taking Stafford loans is that they are guaranteed by the federal government . In that way the lending institution is going to allow you a lower interest rate because you are backed by the United States government, which is as close to a guarantee of repayment as anything.

There are two main types of Stafford loans. The first are subsidized and the second are not. The subsidized loans are the first type you will want to get from the federal government’s department of education, through Sallie Mae. The amount that will be allotted per student through subsidized loans is low, but usually allows around $12,000 per year. The benefit of these loans is that they do not garner interest until the completion of your education. Federal Stafford Loans are subsidized in that the interest that accumulates while you are pursuing your education is payed for by the federal government. or example, if you borrow $36,000 over 3 years for your college education starting in 2011 you will not be charged interest for the school years ending in 2012, 2013, and 2014., but upon your graduation in 2014, or if you leave your educational institution before graduation, then your interest will start accumulating immediately.

In contrast, unsubsidized Stafford oans through the federal governments department of education will begin accumulating interest upon the time that your loans are dispersed to you. Because of this reason it is always beneficial for students to avoid unsubsidized loans through either the federal government department of education or through a private lending institution.

The interest rates that are associated with stafford loans are relatively low. Due to the guarantee of repayment by the federal government a lending institution will charge a lower interest rate and the loan is almost guaranteed to be granted if you meet the requirements. Under c.urrent regulations the annual percentage rate of interest for a federal subsidized stafford loan is 6.6% annual interest for those students who are enrolled in higher education for at least half time. This is going to change under the 2011 amendments under the Budget Control Act of 2011. Under the Budget Control Act new, starting in July 2012, interest rates for both federally subsidized and unsubsidized stafford loans will be fixed at 6.8% annual interest. In addition, under the Budget Control Act, individuals who are seeking graduate or professional degrees will be ineligible for subsidized loans as of July 1, 2012.

Upon the completion of your education you will be required to repay your stafford loans. Upon graduation, or dropping below half-time, you will be allotted an initial deferment of 6 months. This is called the grace period. During the grace period you will not be required to begin repaying your loans, however, the interest upon your loans, even those that are subsidized will begin to take effect. Once your 6 month grace period is over you will be required to start paying monthly installments to satisfy your loans. The default standard is repayment over a 10 year period. This may be altered upon request and many times you will be permitted to stretch your repayment period up to 30 years. Granted, you will end up paying more in the long run but it is beneficial for those individuals right out of college who are not making a high salary. Once the grace period is over you must begin repaying your stafford loan. Failure to do so will put you in default and prevent you from receiving future government loans and severely damage your credit. If you are in a situation where it is impossible for you to make payment then you may apply to the federal government for a deferment based on hardship.

A Perkins Loan operates in much the same way as a Federally subsidized stafford loan in that it is a subsidized loan guaranteed by the federal government. The difference is that where a stafford loan operates by going through a private lending institution to gather funding for the loan, a Perkins Loan takes its funding directly from your educational institution. So the federal government is borrowing money from your university and guaranteeing repayment upon graduation, or the dropping of the student from at least half time status. Federal Perkins loans have an interest rate of 5% per year that begins to accumulate at the time of graduation, or dropping below half time registration. A Perkins Loan, through completion and approval of a FAFSA form, will guarantee an undergraduate student as much as $5,500 per year with a lifetime allowance of $27,500; and post-graduate, and professional, students up to $8,000 per year with a lifetime allowance of $60,000.

Federal PLUS loans are unsubsidized federal financial aide which cover the cost of education. Federal PLUS loans can be used for undergraduate, graduate, and professional educations; with different Federal PLUS loan applications for each one. A federal PLUS loan can cover the entire cost of your education and, theoretically, you can borrow unlimited financial aide through Federal PLUS loans. A federal PLUS loan has a fixed interest rate of 7.9% and a 4% origination fee. The origination fee acts as an activation fee for the loan. This means that if you take a loan for $100,000 you will be charged $4,000 initially and will only receive $96,000 but still be liable to repay the full $100,000 with capitalized interest.

In addition to loans and grants a student may apply for federal work study programs. Federal work study is a form of financial aide that allows a student to work in the community or in their field of study part time in conjunction with their education to help pay for their education. A student who meets the financial needs requirements may be placed in a federal work study program in which the federal government will pay up to 75% of the salary that the student garners through their work study program.

The federal government is not the only source of financial aide that a student can apply for. State based financial aide accounts for $10 billion dollars in annual financial aide. Every state has different rules involving the qualifications and types of financial aid that they offer. Most states offer reciprocity with other states based on financial aide. This means that if you qualify for a specific amount of financial aide while residing in one state and then subsequently move to another state, even if under the new states rules you would not qualify for financial aide, the new state would allow you to qualify for financial aide based on reciprocity with the other state. Every state is different and you should go to www.fafsa.com/student-financial-aid to find out more about your specific states financial aide opportunities.

Direct payments from the federal and state governments are not the only benefits that you can receive through financial aide. You can also be eligible for certain tax deductions and credits through your income tax return. Financial aide in the form of tax deductions and credits account for $6.8 billion in financial aide yearly. There are a number of different types of tax credits and deductions that you may be eligible for, including The Lifetime Learning Tax Credit; The Tuition and Fees Deduction; and Student Loan Interest Deduction.

The Lifetime Learning Tax Credit is a form of financial aide that takes the form of up to $2,000 in yearly tax credits. In order to qualify you do not need to pursue a degree. The Lifetime Learning Tax Credit allows, even individuals taking one class, to qualify for the credit. In addition you must be a United States citizen and your modified adjustment gross income must be below $60,000 or $120,000 if you are married and file a joint income tax return. The credit is non-refundable, in that the credit only applies to the tax you owe. In other words, even if you qualify for $2,000, if you have $1,000 that you owe to the federal government you can only get a credit of $1,000 and may not carry over the difference to the following tax year.

You can also qualify for the Tuition and Fees Deduction allows for up to $4,000 in annual tax deduction on your federal income tax return. In order to qualify you must have a modified adjustment gross income of less than $80,000 or $160,000 if you are married and filing a joint tax return. You may not use the Tuition and Fees Deduction if you are also using the Education Tax Credit; if you are married and filing separately; or you have deducted expenses for tuition and fees through some other form of legal tax deduction.

Another form of financial aide through the use of tax returns is the Student Loan Deduction. The Student Loan Deduction will allow you to deduct your student loan payments from your federal income tax. In order to qualify your modified adjustment gross income must be lower than $75,000 or $150,000 if you are married and filing jointly. If you are married and filing separate tax returns you will not qualify.

Quantitative Finance, also known as Mathematical Finance, is a complex field of applied mathematics that is primarily concerned with the financial markets. Quantitative finance possesses a close relationship with financial economics, which is in essence, the underlying theory of Quantitative Finance.

In most forms, Quantitative Finance will derive and subsequently extend the numerical or mathematical model that is originally suggested by a financial economic theory. For example, a financial economist will study the structural relationships and reasons why a corporation may trade under a specific share price, while a Quantitative Financial economist will assume the share price as a given, and attempt use stochastic calculus or other advanced forms of mathematics to elucidate upon the fair value of derivatives of the underlying stock. This method, which is known as the valuation of options, is one of the principle areas of focus within the field of Quantitative Finance.

The values of an option contract are dependent on a number of different variables, in addition to the share price of the underlying asset. The evaluation process is extremely complex; multiple pricing models are used to distinguish the fair value of derivatives through an analysis of the following concepts: Moneyness, rational pricing, put-call parity, and option time value.

In addition to sharing similar theories or models with financial economics, Quantitative Finance also overlaps with the field of computational finance (also referred to as financial engineering). In most areas of the study, these two fields are largely synonymous; however, one glaring theoretical differences exists where computational finance focuses on application, whereas Quantitative Finance will predominantly investigate derivation and modeling.

In a broad sense, the theorem of arbitrage-free pricing is an application which relates arbitrage opportunities with risk neutral devices or measures that are equivalent to the original probability measure. This theorem, in a finite state market has two parts: 1.) There is no arbitrage if and if a risk neutral measure is equivalent to the original probability measure. The second aspect of the arbitrage-free pricing model states that in a situation where arbitrage is absent, a market is viewed as complete if and only if there is a unique risk measure that is equivalent to the original probability measure.

The Field of Quantitative Finance grew from the novel The Theory of Speculation, which was introduced in 1900 by Louis Bachelier. This introduction to Quantitative Finance discussed the use of Brownian motion to evaluate the earliest forms of stock options. Although the book sparked a revolution in regards to the evaluation of option pricing, it hardly caught any attention outside of the academic population.

Another influential work of Quantitative Finance was the theory of portfolio optimization by Harry Markowitz. This publication used mean-variance to estimate portfolios to judge investment techniques; eventually this theorem sparked a shift from the concept of trying to identify the best individual stock for a particular investment. The field of Quantitative Finance used a linear regression strategy to quantify the risk and return associated with an entire portfolio of stocks and fixed-income instruments to develop an optimized strategy used to develop a portfolio with the largest mean return subject to levels of variance.