Concept

Time horizon

Summary
A time horizon, also known as a planning horizon, is a fixed point of time in the future at which point certain processes will be evaluated or assumed to end. It is necessary in an accounting, finance or risk management regime to assign such a fixed horizon time so that alternatives can be evaluated for performance over the same period of time. Although short term horizons such as end of day, end of week, end of month matter in accounting, generally it is mere summing-up and the simplest mark to market processes that take place at these short term horizons. No scenario analysis or mark to future activities are usually undertaken for such short periods, except for very large portfolios. The most common horizons used in planning are one "quarter" (a quarter year, or three months), a year, two years, three years, four years (especially in a representative democracy where this is a quite common term of office and election cycle) and five years (in corporate planning). More far-sighted
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