Appraisal Ratio

An appraisal ratio is a measurement which compares the alpha of an investment fund with its residual standard deviation. This ratio indicates the balance between the return on investments made by an investment fund and the risk associated with the investments.

Low appraisal ratios indicate that a fund has a high level of risk in relation to the returns it delivers, which is negative. High appraisal ratios indicate that a fund has high returns on investments compared to the level of risk it carries, which is positive.

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