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Options
-
It is a measure of outperformance after adjusting for the risk taken
Correct answer
- B
It is a measure of risk, and outperformance is related to returns
- C
It is a measure of simple outperformance, irrespective of the risk taken
- D
None of the above
Why this is the answer
Jensen's Alpha is a risk-adjusted measure of a portfolio's performance. It shows the return of the portfolio beyond the expected return as per the Capital Asset Pricing Model (CAPM), accounting for the risk taken.
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