SHARPE RATIO Definition

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SHARPE RATIO, named after William P. Sharpe, is a measurement of portfolio trading performance. It is calculated by subtracting risk free rate from total portfolio return, then dividing by the standard deviation of the portfolio:Sharpe ratio = Total portfolio return - Risk free rate / Portfolio standard deviation.

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NOMINAL INTEREST RATE is the stated, or named, interest rate in a note or contract; the nominal interest rate may differ from the true or effective interest rate. See EFFECTIVE INTEREST RATE.

INCORRECT ACCEPTANCE, in accounting, is the risk the sample supports the conclusion that the recorded balance is not materially misstated when it is materially misstated.

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