Two Measures Used to Determine the Capability of a Process

question 153

Essay

Two measures used to determine the capability of a process are ______ and ______ .

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Definitions:

Information Ratio

A measure of portfolio returns beyond the returns of a benchmark, relative to the volatility of those excess returns.

Risk-Free Return

The theoretical return on an investment with no risk of financial loss, traditionally associated with government bonds or bills.

Information Ratio

A ratio used to measure the return of an investment relative to the risk taken, comparing the asset's returns beyond the benchmark to the volatility of those returns.

Risk-Free Return

The expected return from an investment that carries no risk of losing money, usually linked to government securities.