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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use