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Mathematical ratio used in investing
The risk–return ratio is a measure of return of investment in terms of risk for a specific time period. The percentage return (R) for the time period
Risk_return_ratio
Formula for measuring financial risk
standard deviation of returns. This ratio is just the Sharpe ratio, only using minimum acceptable return instead of the risk-free rate in the numerator, and
Sharpe_ratio
Tradeoff between investment return and risk
line drawn from the risk-free rate on the vertical axis to the risk–return point for that investment has a slope called the Sharpe ratio. On the lowest end
Risk–return_spectrum
Measure of an investment's return vs risk
active return of the portfolio, given the amount of risk taken, and the better the manager. The information ratio is similar to the Sharpe ratio, the main
Information_ratio
Measurement in finance
The Sortino ratio measures the risk-adjusted return of an investment asset, portfolio, or strategy. It is a modification of the Sharpe ratio but penalizes
Sortino_ratio
Profitability measurement framework
return}} \over {\mbox{Value at risk}}}} Broadly speaking, in business enterprises, risk is traded off against benefit. RAROC is defined as the ratio of
Risk-adjusted return on capital
Risk-adjusted_return_on_capital
Calculation of investment performance
measure of risk-adjusted performance. Modigliani risk-adjusted performance Omega ratio Risk return ratio Sharpe ratio Sterling ratio Sortino ratio Young,
Calmar_ratio
Measure of financial risk
excess return over the risk-free rate to the additional risk taken; however, systematic risk is used instead of total risk. The higher the Treynor ratio, the
Treynor_ratio
Measure of the profitability of a business
the return available from a lower risk investment". List of business and finance abbreviations Return on assets (RoA) Return on brand (ROB) Return on capital
Return_on_equity
Risks arising from movements in market variables
building. Systemic risk Cost risk Demand risk Valuation risk Risk modeling Risk attitude Modern portfolio theory Risk return ratio Financial risk management § Banking
Market_risk
Risk that a borrower or counterparty fails to meet financial obligations
aspects of the risk including, but not limited to, operating experience, management expertise, asset quality, and leverage and liquidity ratios, respectively
Credit_risk
Topics referred to by the same term
2003 film Risk–return ratio of investments Risk–return spectrum in finance This disambiguation page lists articles associated with the title Risk and reward
Risk_and_reward
Global banking standard
risk-adjusted return on capital. Various methods are then proposed here. SA-CCR is also input to other regulatory results such as the leverage ratio and
Standardized approach (counterparty credit risk)
Standardized_approach_(counterparty_credit_risk)
Wagering something of value on a random event
acceptable is a matter of debate: Emotional or physical risk-taking, where the risk-return ratio is not quantifiable (e.g., skydiving, campaigning for political
Gambling
Overview of finance and finance-related topics
identified risks Risk return ratio – Mathematical ratio used in investing Risk–return spectrum – Tradeoff between investment return and risk Security management –
Outline_of_finance
Measure of the risk-adjusted returns of some investment portfolio
downsides apply to all risk-adjusted return measures that are ratios (e.g., Sortino ratio, Treynor ratio, upside-potential ratio, etc.). M2 has the enormous
Modigliani risk-adjusted performance
Modigliani_risk-adjusted_performance
Concept in financial risk modeling
The Omega ratio is a risk-return performance measure of an investment asset, portfolio, or strategy. It was devised by Con Keating and William F. Shadwick
Omega_ratio
The Sterling ratio (SR) is a measure of the risk-adjusted return of an investment portfolio. While multiple definitions of the Sterling ratio exist, it measures
Sterling_ratio
Estimated potential loss for an investment under a given set of conditions
value at risk Financial risk management § Banking Profit at risk Margin at risk Maximum downside exposure Liquidity at risk Risk return ratio Tail value
Value_at_risk
Approach to investment management focusing on allocation of risk
portfolio can achieve a higher Sharpe ratio and can be more resistant to market downturns than the traditional portfolio. Risk parity is vulnerable to significant
Risk_parity
Numerical value to determine the financial condition of a company
industries, which face different risks, capital requirements, and competition are usually hard to compare. Financial ratios may not be directly comparable
Financial_ratio
British investment management firm
its strategy and combines uncorrelated strategies to maximize their risk-return ratio. According to the firm, it uses the same mathematical tools, for research
Winton_Group
Hypothetical interest rate on a risk-free investment
The risk-free rate of return, usually shortened to the risk-free rate, is the rate of return of a hypothetical investment with scheduled payments over
Risk-free_rate
The Rachev Ratio (or R-Ratio) is a risk-return performance measure of an investment asset, portfolio, or strategy. It was devised by Dr. Svetlozar Rachev
Rachev_ratio
Measure of profitability relative to invested capital
Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability
Return_on_capital
Measure of the decline from a historical peak
1}\Delta _{\alpha }(x)} is the maximum drawdown Linear programming Risk measure Risk return ratio "What Is A Drawdown? – Fidelity". www.fidelity.com. January
Drawdown_(economics)
Financial calculation
ratio and the Treynor ratio. α J Jensen's alpha = R i portfolio return − [ R f risk free rate + β i M portfolio beta ⋅ ( R M market return − R f risk
Jensen's_alpha
Indicator in finance
first defined by Adil Abdulali, a risk manager at the investment firm Protégé Partners. The concepts behind the bias ratio were formulated between 2001 and
Bias_ratio
Portfolio theory
return, t = the target return, d = downside risk. The following table shows that this ratio is demonstrably superior to the traditional Sharpe ratio as
Post-modern_portfolio_theory
Information ratio Jaws ratio Jensen's alpha Modigliani risk-adjusted performance Roy's safety-first criterion Sharpe ratio Sortino ratio Sterling ratio Treynor
List of financial performance measures
List_of_financial_performance_measures
Stock market valuation measure
not take into account prevailing risk-free rates of return. Thus, a common debate is whether the inverse CAPE ratio should be further divided by the yield
Cyclically adjusted price-to-earnings ratio
Cyclically_adjusted_price-to-earnings_ratio
Financial metric
price–earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share price to the company's earnings per share. The ratio is used for
Price–earnings_ratio
Concept in financial mathematics
accounting Risk management Risk metric - the abstract concept that a risk measure quantifies Risk return ratio RiskMetrics - a model for risk management
Risk_measure
Finance model linking expected return to systematic risk
calculate the reward-to-risk ratio for any security in relation to that of the overall market. Therefore, when the expected rate of return for any security is
Capital_asset_pricing_model
Representation of the capital asset pricing model
displays the expected rate of return of an individual security as a function of systematic, non-diversifiable risk. The risk of an individual risky security
Security_market_line
Risk-adjusted measure of the so-called active return on an investment
return adequate for the risk taken α i > 0 {\displaystyle \alpha _{i}>0} : the investment has a return in excess of the reward for the assumed risk For
Alpha_(finance)
Investment strategy
merger is the more attractive option in a given situation. The risk-return profile in risk arbitrage is relatively asymmetric. There is typically a far
Risk_arbitrage
Price/earnings to growth ratio, a stock price analysis tool
investment risk. The PEG ratio is commonly used and provided by numerous sources of financial and stock information. Despite its wide use, the PEG ratio is only
PEG_ratio
Risk management technique in investing
Expected Return ) − ( Risk-Free Return ) standard deviation of Return {\displaystyle {\text{Sharpe ratio}}={\frac {({\text{Expected Return}})-({\text{Risk-Free
Roy's_safety-first_criterion
Mathematical framework for investment risk
portfolio of financial assets such that the expected return is maximized for a given level of risk. It is a formalization and extension of diversification
Modern_portfolio_theory
Ratio between net income and investment
Return on investment (ROI) or return on costs (ROC) is the ratio between net income or profit to investment (costs resulting from an investment of some
Return_on_investment
called the reward-to-variability ratio because the expected return increases continually with the increase of risk as measured by the standard deviation
Capital_allocation_line
Graphical aid to investment analysis
combination of the market portfolio and the risk-free asset (the point L). All points along the CML have superior risk-return profiles to any portfolio on the efficient
Capital_market_line
Vulnerability to significant events that affect aggregate outcomes
In finance and economics, systematic risk (in economics often called aggregate risk or undiversifiable risk) is vulnerability to events which affect aggregate
Systematic_risk
Expected change in price of a stock relative to the whole market
idiosyncratic risk. Beta is the hedge ratio of an investment with respect to the stock market. For example, to hedge out the market-risk of a stock with
Beta_(finance)
Set of actions with the intent of earning profit
from riskier investments. When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with a chance of high losses
Investment
introduction of a new risk-return ratio, the "Rachev Ratio", designed to measure the reward potential relative to tail risk in a non-Gaussian setting. In
Svetlozar_Rachev
The upside-potential ratio is a measure of a return of an investment asset relative to the minimal acceptable return. The measurement allows a firm or
Upside_potential_ratio
Overview of corporate finance and corporate finance-related topics
Operating ratio – Operating expenses as percent of revenue P/B ratio – Financial ratio comparing stock price to company book value Abnormal return – Difference
Outline_of_corporate_finance
In investing, value premium refers to the greater risk-adjusted return of value stocks over growth stocks. Eugene Fama and Kenneth French first identified
Value_premium
Financial ratio of dividends to share price
the return horizon in their tests (see Fama–French three-factor model). Campbell and Shiller developed a framework in which the dividend–price ratio reflects
Dividend_yield
Any of various types of risk associated with financing
market risk, liquidity risk, credit risk, business risk and investment risk. The four standard market risk factors are equity risk, interest rate risk, currency
Financial_risk
Stock market risk measure
excess return (return above a safe cash rate) against risk, is: Sharpe ratio = return − risk-free return SD {\displaystyle {\text{Sharpe ratio}}={\frac
Ulcer_index
Financial ratio
accounting rate of return, also known as average rate of return, or ARR, is a financial ratio used in capital budgeting. The ratio does not take into
Accounting_rate_of_return
Protecting economic value by managing risk exposure
Financial risk management is the practice of protecting economic value in a firm by managing exposure to financial risk - principally credit risk and market
Financial_risk_management
Financial term for a collection of investments
concentration risk, although it does not eliminate the risk of investment losses. The monetary value of each asset may influence the risk/reward ratio of the
Portfolio_(finance)
Technique to assess process effectiveness
effectiveness of their risk management and control processes. A "control process" is a check or process performed to reduce or eliminate the risk of error. Since
Control_self-assessment
Process of selecting a portfolio
objective typically maximizes factors such as expected return, and minimizes costs like financial risk, resulting in a multi-objective optimization problem
Portfolio_optimization
Type of financial risk
implications of liquidity risk. Risk-averse investors naturally require higher expected return as compensation for liquidity risk. The liquidity-adjusted
Liquidity_risk
Use of borrowed funds in the purchase of an asset
rest in a low-risk money-market fund, he or she might have the same volatility and expected return as an investor in an unlevered low-risk equity-index
Leverage_(finance)
Total amount of debt owed to lenders by a government/state
repaid at maturity) is used. A country's general government debt-to-GDP ratio is an indicator of its debt burden since GDP measures the value of goods
Government_debt
Measure of investment risk
risk (return) from market timing decisions. Dividing portfolio active return by portfolio tracking error gives the information ratio, which is a risk
Tracking_error
Ratio of males to females in a population
human sex ratio is the ratio of males to females in a population in the context of anthropology and demography. In humans, the natural sex ratio at birth
Human_sex_ratio
Banking regulation framework
Validating Risk Rating Systems under the IRB Approaches, HKMA Return of capital adequacy ratio (final version) – Completion instructions, HKMA Return Templates
Basel_II
Measure of rate of return on equity
efficiency and risk-adjusted returns. It is also referred to as Return on average Tangible Common shareholders' Equity, ROTCE. Return on Tangible Equity
Return_on_tangible_equity
Machine learning framework for portfolio construction
given rise to risk-based allocation methods, among which risk parity is a widely cited example (Jurczenko, 2015). While eliminating return forecasts mitigates
Hierarchical_Risk_Parity
Mix of funds used to start and sustain a business
ratio can be calculated as shown below. The debt-to-equity ratio and capital gearing ratio are widely used for the same purpose. Capital bearing risk
Capital_structure
Ratio of the probability of an event happening versus not happening
algorithm. The odds are a ratio of probabilities; an odds ratio is a ratio of odds, that is, a ratio of ratios of probabilities. Odds-ratios are often used in
Odds
Required return compensating shareholders for the risk of investing in a company's equity
the return (often expressed as a rate of return) a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they
Cost_of_equity
investment managers. The active return and active risk of individual investment strategies can be used to calculate information ratio, which can be used to allocation
Active_return
Bet sizing formula for long-term growth
= g l {\displaystyle {\mathit {RRR}}={\frac {g}{l}}} is the reward-to-risk ratio of outcome sizes, which is the winning skew. It is clear that, at least
Kelly_criterion
Age-population ratio of those in the labor force to those not in the labor force
Dependency ratios are ratios of the numbers of dependents (youths aged 0–14 and/or elderly aged 65+) to the number of working-age adults (15–64). They
Dependency_ratio
Real estate valuation measure
Taking into account risk and how much interest is available on investments in other assets, an investor arrives at a personal rate of return he expects from
Capitalization_rate
Form of funded credit derivative
risk overlay. The core function of a CLN is to transfer a specific credit risk, knows as reference entity, from the issuer to the investor. In return
Credit-linked_note
Investment strategy that adds active features to passive strategies
Liquidity: Amihud ratio – median ratio of absolute daily return to daily traded value over the previous year Momentum: residual Sharpe ratio Quality: composite
Smart_beta
Method of assessing bank capital requirements
Under the Basel II guidelines, banks are allowed to use their own estimated risk parameters for the purpose of calculating regulatory capital. This is known
Internal ratings-based approach (credit risk)
Internal_ratings-based_approach_(credit_risk)
Finance term; profit on an investment
also takes into consideration the effects of price volatility and risk of loss. Ratios typically used by financial analysts to compare a company's performance
Rate_of_return
Ratio of operating income to net sales
income margin, operating profit margin, EBIT margin and return on sales (ROS) - is the ratio of operating income ("operating profit" in the UK) to net
Operating_margin
Bond issued by a corporation
between its required return and the yield to maturity (YTM) of the benchmark; see § Risk analysis below. This increased required return is then used to discount
Corporate_bond
Economic model
model (SIM) is a simple asset pricing model to measure both the risk and the return of a stock. The model was developed by William Sharpe in 1963 and
Single-index_model
Statistical model for asset pricing in finance
Here r is the portfolio's expected rate of return, Rf is the risk-free return rate, and Rm is the return of the market portfolio. The "three factor"
Fama–French three-factor model
Fama–French_three-factor_model
Measure of the total cost of an investment fund
The total expense ratio (TER) is a measure of the total cost of a fund to an investor. Total costs may include various fees (purchase, redemption, auditing)
Total_expense_ratio
Valuation in finance
flow i is the discount rate, i.e. the return that could be earned per unit of time on an investment with similar risk R t {\displaystyle R_{t}} is the net
Net_present_value
Investment approach in stock returns
of securities, known as factors, which help explain differences in risk and return. Commonly studied equity factors include size, value, momentum, quality
Factor_investing
Specialized financial model
service cover ratio Repayment cover ratio Standard profitability metrics are also considered - most commonly, Internal rate of return (IRR), Return on assets
Project_finance_model
Topics referred to by the same term
Internal rate of return, a profitability metric Iranian rial, currency of Iran by ISO 4217 code Interest rate risk, financial risk from fluctuating interest
IRR
the V2 ratio is to improve on existing and popular measures of risk-adjusted return, such as the Sharpe ratio, information ratio or Sterling ratio by taking
V2_ratio
Type of financial collateral used to cover credit risk
Leverage LIBOR Margin at risk Portfolio margin Repurchase agreement Short selling Special memorandum account Supplementary Leverage Ratio x-Valuation Adjustment
Margin_(finance)
Privately pooled investment fund using diverse strategies to seek high returns
including: modified Sharpe ratios; the Omega ratio introduced by Keating and Shadwick in 2002; Alternative Investments Risk Adjusted Performance (AIRAP)
Hedge_fund
Method of valuing a project, company, or asset
appropriately reflects the risk, and timing, of the cash flows. This "required return" thus incorporates: Time value of money (risk-free rate) – according
Discounted_cash_flow
Liquid component of blood
trauma (e.g., trauma centers, hospitals, and ambulances) or that pose a risk of patient blood loss such as surgical suite facilities. Blood plasma volume
Blood_plasma
Mathematical economic formula
Profitability index (PI), also known as profit investment ratio (PIR) and value investment ratio (VIR), is the ratio of payoff to investment of a proposed project
Profitability_index
Analysis of a business's financial statements, health, and market
the E/P rate, is the discount rate appropriate to the risk of the business. Usage of the P/E ratio has the disadvantage that it ignores future earnings
Fundamental_analysis
Economic theory that asset prices fully reflect all available information
sell stocks until the price drops enough so that the expected return compensates for this risk. How efficient markets are (and are not) linked to the random
Efficient-market_hypothesis
Analysis standard for investment property
property. Debt coverage ratio: Finds out whether the property generates enough money to cover the debt. Cash break even ratio: Estimates how vulnerable
Real_estate_benchmarking
Concept in finance
several types of Individual risk factors; pure risk, liquidity risk, speculative risk, and currency risk. Pure Risk is a type of risk where the outcome cannot
Risk_factor_(finance)
Ratio between turnover and profit
generated. Profit margins are generally distinct from rate of return. Profit margins can include risk premiums and monopoly profits. Profit margin is calculated
Profit_margin
Highly liquid, short-term assets
companies cash and cash equivalents are generally counted to be "low risk and low return" investments and sometimes analysts can estimate company's ability
Cash_and_cash_equivalents
Arbitrage strategy
swings. While the risk that might occur are: Complex trading environment for beginners. Thinly traded markets can have liquidity risks. Leverage misuse
Basis_trading
Theoretical financial instrument
A risk-free bond is a theoretical bond that repays interest and principal with absolute certainty. The rate of return would be the risk-free interest
Risk-free_bond
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RISK RETURN-RATIO
RISK RETURN-RATIO
Surname or Lastname
English and Scottish
English and Scottish : unexplained. The name has been recorded in Glastonbury, Somerset, since 1705.Perhaps a variant of Czech LiÅ¡ka, (see Liska), Slovak LÃÅ¡ka, or German Liske.
Surname or Lastname
English
English : topographic name from Old English hrÄ«s ‘brushwood’, or a habitational name from Rise in East Yorkshire, named with this word.Norwegian : habitational name from any of over twenty farmsteads named Rise, from Old Norse hrÃs ‘brushwood’. The name also occurs in Sweden and Denmark.
Male
English
 Pet form of English Richard, RICK means "powerful ruler."
Boy/Male
German American Norse English
Hard ruler.
Boy/Male
Hindu
Brave & dominant ruler
Boy/Male
Australian, Danish, French, German, Italian, Latin, Portuguese, Spanish, Swiss
Reborn; Reaper; To Rise Again
Female
Greek
(ΛάÏισα) Greek name derived from the name of an ancient city, possibly LÃRISA means "fortified town."Â
Male
Icelandic
Icelandic form of German Frideric, FRIÃRIK means "peaceful ruler."
Boy/Male
Tamil
To rise, Honest
Girl/Female
Latin
Laughter.
Male
English
Variant spelling of English Rick, RIK means "powerful ruler."
Boy/Male
Czechoslovakian
Surname or Lastname
English
English : variant of Rich 2.German : from a short form of any of the Germanic personal names formed with rīc ‘power(ful)’.
Boy/Male
Hindu
To rise, Honest
Boy/Male
British, Czech, Czechoslovakian, English, German
Czechoslovakian Form of Richard
Surname or Lastname
English (East Anglia)
English (East Anglia) : metonymic occupational name for a fisherman or fish seller, or a nickname for someone supposedly resembling a fish in some way, from Old Norse fiskr ‘fish’ (cognate with Old English fisc).
Boy/Male
Bengali, Indian
Honest and Clever
Boy/Male
Swedish English
Fisherman.
Boy/Male
Indian, Sanskrit
Sage; Saint; Brave and Dominant Ruler
Surname or Lastname
English
English : habitational name from Priske in Cornwall.
RISK RETURN-RATIO
RISK RETURN-RATIO
RISK RETURN-RATIO
RISK RETURN-RATIO
RISK RETURN-RATIO
RISK RETURN-RATIO
RISK RETURN-RATIO
n.
An official account, report, or statement, rendered to the commander or other superior officer; as, the return of men fit for duty; the return of the number of the sick; the return of provisions, etc.
v. t.
To bring, carry, send, or turn, back; as, to return a borrowed book, or a hired horse.
a.
Lively; brisk; frolicsome; frisky.
n.
The act of returning (transitive), or sending back to the same place or condition; restitution; repayment; requital; retribution; as, the return of anything borrowed, as a book or money; a good return in tennis.
n.
That which is returned.
v. t.
To lead in response to the lead of one's partner; as, to return a trump; to return a diamond for a club.
n.
To expose to risk, hazard, or peril; to venture; as, to risk goods on board of a ship; to risk one's person in battle; to risk one's fame by a publication.
n.
An account, or formal report, of an action performed, of a duty discharged, of facts or statistics, and the like; as, election returns; a return of the amount of goods produced or sold; especially, in the plural, a set of tabulated statistics prepared for general information.
n.
To incur the risk or danger of; as, to risk a battle.
a.
Attended with risk or danger; hazardous.
v. t.
To repay; as, to return borrowed money.
n.
A day in bank. See Return day, below.
n.
To return, as an argument, accusation, censure, or incivility; as, to retort the charge of vanity.
imp. & p. p.
of Return
v. t.
To render, as an account, usually an official account, to a superior; to report officially by a list or statement; as, to return a list of stores, of killed or wounded; to return the result of an election.
v. t.
To give back in reply; as, to return an answer; to return thanks.
n.
The act of returning (intransitive), or coming back to the same place or condition; as, the return of one long absent; the return of health; the return of the seasons, or of an anniversary.
v. t.
To retort; to throw back; as, to return the lie.
n.
An answer; as, a return to one's question.
v. i.
To return; to recur.
travel, tourism, insurance