Discover how to evaluate risk in investments using Sharpe, Treynor ratios, alpha, and beta for better portfolio performance compared to risk-free benchmarks.

A risk premium is the return over and above the risk-free rate (generally thought of as the return on U.S. Treasuries) that investors demand to compensate them for the risk of owning an asset. Because ...

Learn what active risk is and how to calculate it. Understand the methods to evaluate active risk in portfolios and explore examples of funds outperforming benchmarks.

Required rate of return (RRR) gives investors a benchmark to determine the minimum acceptable return on an investment considering the risk involved. By calculating RRR, investors can assess whether an ...

One simple but powerful method investors can use to assess the risk and reward of a stock portfolio is using the Capital Asset Pricing Model, or CAPM, model for expected returns. The basics of CAPM ...

Benzinga explains the various measures used by smart investors to measure risk and return more accurately. Investing is about getting the most bang for your buck. Average investors chase high returns, ...

Every investment involves a possible gain and a possible loss. The risk/reward ratio compares how much you could lose to how ...

Maturity risk premiums increase with bond term length, influencing interest rates. Investors require higher premiums for longer-term bonds due to increased risk. Calculate maturity risk premium by ...

Investors demand higher returns from illiquid assets due to greater selling difficulty. Liquidity premium can be calculated by comparing yields of similar liquid and illiquid bonds. Real risk-free ...

Downside risk refers to the potential for an investment to decrease in value. Unlike general risk, which considers both upward and downward price movements, downside risk focuses solely on the ...

Security practitioners have to figure out how to accomplish their security goals with the budgets they have. They also must show that their security programs are effective at protecting their ...