02:28 Jun 3, 2019 |
English language (monolingual) [PRO] Bus/Financial - Economics / FX markets | |||||||
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| Selected response from: Ronald Cryer Colombia Local time: 06:51 | ||||||
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SUMMARY OF ALL EXPLANATIONS PROVIDED | ||||
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4 | measure of investment performance compared with a suitable market index |
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3 | excess returns |
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2 | active return |
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alpha active return Explanation: Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole. It is usually referred to with mutual funds. Example sentence(s):
https://www.investopedia.com/terms/a/alpha.asp |
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alpha excess returns Explanation: https://www.investopedia.com/terms/a/alpha_generator.asp |
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alpha measure of investment performance compared with a suitable market index Explanation: the important thing to note is that alpha investments give an excess on return AFTER fees so equals a real return I think this explains it a bit better than investopoedia https://en.wikipedia.org/wiki/Alpha_(finance) "...In modern financial markets, where index funds are widely available for purchase, alpha is commonly used to judge the performance of mutual funds and similar investments. As these funds include various fees normally expressed in percent terms, the fund has to maintain an alpha greater than its fees in order to provide positive gains compared with an index fund. Historically, the vast majority of traditional funds have had negative alphas, which has led to a flight of capital to index funds and non-traditional hedge funds..." |
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