Alpha Equation

Business, Legal & Accounting Glossary

Definition: Alpha Equation


Alpha Equation


Full Definition of Alpha Equation


Equation used to compute the alpha of a fund. It is calculated as follows: [ (sum of y) – ((b) (sum of x)) ] / n where n equals the number of observations (36 – 60 months), b = beta of the fund, x = rate of return for the S&P 500 or another benchmark index, and y = rate of return for the fund.


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Definition Sources


Definitions for Alpha Equation are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.