Appraisal Ratio Calculation

Appraisal Ratio Calculation | Formula

The alpha of a portfolio divided by the non-systematic risk of the portfolio. The ratio measures the abnormal return per unit of risk that in principle could be diversified away from holding a market index portfolio.

In Russell Style Classification (RSC), the appraisal ratio is calculated as follows:

Where	Equals
$image\ebx_1232661717.gif$ p	Jensen alpha
$image\ebx_438050777.gif$ (e p)	Standard error

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