From a financial point of view, loan guarantees can be seen as put options on parts of the company's value. Usually, loan guarantees are valued by the model by Merton. This model, however, assumes that there are neither interest payments nor repayments of the loan itself (be it guaranteed or...

A popular argument states that most of the diversification in a portfolio can be obtained with a rather small number of securities. In this paper we present three algorithms to approach the underlying NP-hard problem of portfolio optimization with a cardinality constraint. All three of these...