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Q » Explain risk-adjusted return.
06 Dec, 2025
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A » Risk-adjusted return measures an investment's potential profitability relative to its risk, providing a more comprehensive view of performance. By comparing returns to the risk taken, investors can evaluate and compare different investments more effectively. Common metrics include the Sharpe ratio, which divides excess return by volatility, and the Sortino ratio, which focuses on downside risk. These metrics help in making informed decisions by balancing the pursuit of returns with the risk incurred.
06 Dec, 2025
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