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Excess Returns is the difference between what was gained on a risky investment, versus what one would have gained if they had not taken the risky investment and instead had invested in a risk-free investment. Any more they made taking the risk than they would have otherwise is considered to be a positive excess return.

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βˆ™ 11y ago
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βˆ™ 1y ago

To calculate excess returns, subtract the risk-free rate of return from the actual return on the investment. Excess returns show the additional return earned above the risk-free rate, which represents the compensation for taking on additional risk. It is commonly used to evaluate the performance of an investment or portfolio.

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Q: How do you calculate Excess Returns?
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