Important Points for IC 99 - Asset Management Exam
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Net Value of Scheme = (Market Value of all investments + Receivables + Other Accrued income + Other Assets) - (Accrued Expenses + Other Payables or Liabilitiies)
The Sharpe ratio is a ratio between return and risk. This ratio measures the risk-adjusted return by way of determining the excess return (or risk premium) over and above the risk-free rate of return (normally Treasury Instruments) on a portfolio or instruments to the portfolios total risk.
The Treynor ratio is also called the reward-to-volatility ratio. The Treynor ratio is a measurement of the returns earned in excess of that which could have been earned on an investment that has no diversifiable risk (e.g. Treasury bills).
Treynor ratio shows the risk adjusted performance of the fund. Here the denominator is the beta of the portfolio and takes into account the systematic risk of the portfolio.
Jensens Alpha is used to determine the abnormal return of a security or portfolio of securities over the theoretical expected return. It is basically the difference between a funds actual return and the returns that could have been made on a benchmark portfolio with same risks or beta.
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