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Investment Dictionary:

Excess Returns

Returns in excess of the risk-free rate or in excess of a market measure (such as an index fund).

Investopedia Says:
In other words, when you have excess returns you are making more money than if you put your money into an index fund like the Dow (DJIA).

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Total Return of an asset or security portfolio less the risk-free return (usually defined as the return on the 90-day Treasury bill) for the period being measured. In modern portfolio theory, excess return represents the Risk Premium-the reward for taking risk-and is correlated with Beta-the measure of market risk-to produce a risk-adjusted return. Excess return is sometimes used to mean abnormal return the difference between the expected return, given beta, and the actual return.

 
Wikipedia: abnormal returns

In stock market trading, abnormal returns are the differences between a single stock or portfolio's performance in regard to the average market performance (usually a broad index s.a. the S&P 500 and EURO STOXX 50 or a national index like the Nikkei 225) over a set period of time. For example if a stock increased by 5%, but the average market only increased by 3%, then the abnormal return was 2% (5% - 3% = 2%). If the market average performs better than the individual stock then the abnormal return will be negative.

In contrast, excess returns are returns above the risk-free rate, as used in the CAPM. It is Also the way you increase the market at the height of the overall portfolios


 
 

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Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Financial & Investment Dictionary. Dictionary of Finance and Investment Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.  Read more
Wikipedia. This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Abnormal returns" Read more

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