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Information Ratio

Definition:

The ratio of annualized expected residual return to residual risk. A central measurement for active management, value added is proportional to the square of the information ratio.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Domestic bonds

Bonds issued and traded within the internal market of a country and denominated in the currency of that country.

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