- Time horizon
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 orrisk management regime to assign such a fixed horizon time so that alternatives can be evaluated for performance over the same period of time. A time horizon is a physical impossibility in the real world.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 simplestmark to market processes that take place at these short term horizons. Noscenario 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 commonterm of office and election cycle) and five years (in corporate planning). More far-sighted companies and government agencies may also use between ten and one hundred years. Thirty years is often used inmortgage contracts and US Treasury bonds such as thelong bond . One hundred years, sometimes considered equal to seven generations, is a time horizon often cited by the ancientIroquois and modern Greens. TheForestry Commission in the UK plans over a century into the future. There are Japanese corporations rumoured to have five-hundred year plans, which amount to a sort of officialscience fiction story or myth to which the company commits itself - these are highly secret and have not been confirmed to exist.Agreeing on a common time horizon for action is particularly important in global policy, as each participant will have very different time horizon habits. Achieving
simultaneous policy is quite difficult without an agreement, as those taking action early may be seriously disadvantaged in competition with those taking action late on a regulatory matter.ee also
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Gap financing
*Long term
*Race to the bottom
*Timetable
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