Stocks Flashcards
1
Q
Define
“Alpha”
A
Alpha is the difference between the actual return on a portfolio and its expected return as outlined by the capital asset pricing model.
2
Q
Define
“Benchmark Portfolio”
A
- A portfolio that has similar securities, similar risk characteristics, and similar return expectations as an invested portfolio.
- It is used as a comparison performance metric.
- Also called a normal portfolio.
3
Q
Define
“Tactical Asset Allocation”
A
Changes in a portfolio allocation to capture short-term price movements.
