No, we aren't a frat (yet) and we don't have free beer for you, sorry 
... instead, we are going to feature Greek symbols used in the FRM.
Let's start with alpha
In the FRM, alpha signifies two variables, at least.
... instead, we are going to feature Greek symbols used in the FRM.Let's start with alpha
In the FRM, alpha signifies two variables, at least.
- First, alpha is the RESIDUAL RETURN which is sometimes called (outside the FRM) the exceptional return. In the FRM, we refer to active return versus residual return; alpha is residual return. Ex ante, the expected value of alpha is zero; ex post, it is a regression INTERCEPT.
- Second, alpha happens to be the weight that John Hull assigns to .... [you tell me for an entry into our regular Friday prizes?!].
