Recommendations & StrategiesQuestion 61 of 100
The alpha of a portfolio measures:
a.The portfolio's total risk
b.The correlation to the benchmark
c.The dividend yield
d.The excess return relative to what its beta would predict
Explanation
Alpha represents the return earned above or below what the portfolio's market risk, or beta, would predict under a model such as CAPM. Positive alpha suggests value added by the manager. It is a common measure of active management skill.
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