Sharpe Ratio Definition Example | InvestingAnswers How to Calculate the Sharpe Ratio -- Formula Example The Sharpe ratio is a ratio of return versus risk The formula is: (Rp-Rf) ?p where: Rp = the expected return on the investor's portfolio Rf = the risk-free rate of return ?p = the portfolio's standard deviation, a measure of risk For example, let's assume that you expect your stock portfolio to return 12% next year If returns on risk
Markowitz Efficient Set Definition Example | InvestingAnswers The efficient set is the result of an evaluation of the expected returns, standard deviation and the covariances of a set of securities An example appears below Note how the Markowitz efficient set allows investors to understand how a portfolio’s expected returns vary with the amount of risk (standard deviation) taken
Roys Safety-First Rule Definition Example | InvestingAnswers How Does Roy's Safety-First Rule Work? The mechanics of the formula are simple: Input the investor's minimum required return, the expected return for the portfolio, and the standard deviation for the portfolio
CAGR | Meaning, Formula Definition | InvestingAnswers CAGR is simply a way to calculate the internal rate of return, and doesn’t incorporate or consider periodic returns’ variability or standard deviation CAGR Formula The CAGR formula provides a growth rate in the form of a percentage