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Rate of Return

Rate of Return

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If you have been following our recent blogs, you are by now familiar with the concepts of alpha, beta, and the Efficient Market Hypothesis.  Our final goal is to evaluate the role of alpha in hedge fund investing, and to look at trading strategies that do not rely on alpha.  Before we can discuss these topics, we need to better understand financial asset pricing models, the role of alpha and beta within these models, and how the models apply specifically to hedge funds. In this installment, we’ll review the concept of rate of return (ROR).

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Copyright 2010 Eric Bank, Freelance Writer