Investor Glossary-jensen indexInvestor Glossary-jensen indexInvestor Glossary-jensen indexInvestor Glossary-jensen indexInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Jensen Index

The HTML to link to this page
 

The Jensen index is an index that compares the performance of investment managers by allowing for portfolio risk. The Jensen index uses the capital asset pricing model (CAPM) as its basis for determining whether or not a money manager outperformed a market index. The CAPM determines the required rate of return, and the Jensen index helps investors see if the calculation yielded expected results. The formula for the Jensen index is as follows: Portfolio Return - [Risk-free Return + (Market Return - Risk-free Return) * Beta Measurement]. A high Jensen index suggests a high level of return given the level of risk (systematic or market) on the investment. A low Jensen index, such as a negative number, indicates inferior performance when compared to the risk. Jensen index is also known as Alpha.



Rate this Jensen index definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: labor relations, in escrow, command economy, class C shares, ex-dividend date, limit order, balance sheet, LIBOR, implied volatility, required rate of return, stock market close, APR, margin rate, Zero Cost Collar, phantom income, 1035 exchange, retained earnings, inflation, diluted share, VIX, real GDP, annual return, current ratio, dividends payable, risk management, quality assurance, FTSE, EBITDA, irrevocable trust, deferred revenue, stock split, deferred tax, FICO score, reverse mortgage, option premium, wholly-owned subsidiary, average price per share, debt service coverage, 1031 exchange, cancelled check, minority interest, liquidity ratio, 401a, 144a, covered put, Key Rate Duration, ex-dividend, open position, per diem


Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use