Ch.10 · Risk Measures and Ratios · medium
What is 'alpha' in mutual fund performance measurement?
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EXPLANATION
Alpha measures the excess return a fund generates over what would be expected given its beta (market exposure). Positive alpha (e.g., +2%) means the fund outperformed its benchmark by 2% after accounting for the risk taken. Negative alpha means underperformance. Alpha is the key measure of active fund manager skill.
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