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How do you compute the risk-adjusted return on an investment?

Updated: 8/16/2019
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Snoopyjc

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15y ago

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The risk-adjusted return is a measure of how much risk a fund or portfolio takes on to earn its returns, usually expressed as a number or a rating. This is often represented by the Sharpe Ratio. The more return per unit of risk, the better. The Sharpe Ratio is calculated as the difference between the mean portfolio return and the risk free rate (numerator) divided by the standard deviation of portfolio returns (denominator).

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Q: How do you compute the risk-adjusted return on an investment?
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