RISK ADJUSTED RETURN Definition

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RISK ADJUSTED RETURN is when we subtract from the rate of return on an asset a rate of return from another asset that has similar risk. This gives an abnormal rate of return that shows how the asset performed over and above a benchmark asset with the same risk. We can also use the beta against the benchmark to calculate an alpha which is also risk adjusted performance.

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BEST EXECUTION is NASD Rule 2320 The obligation of Market Makers, broker/dealers, and others to execute customer orders at the best price available at the time the trade is entered.

RESPONSIBILITY CENTER is a subunit in an organization whose manager is held accountable for specified financial results of its activities.

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