What is Alpha in Finance? - Definition & Formula

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question 1 of 3

Alpha is _____.

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1. _____ is the term used to calculate a fund's expected returns.

2. Which of the following is NOT used in the formula for alpha?

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About This Quiz & Worksheet

The questions contained in this short multiple-choice quiz will test your knowledge of how to calculate alpha in finance. The quiz is scored right away and can be taken multiple times.

Quiz & Worksheet Goals

You'll be tested on the following:

  • Definition of alpha
  • Term used to calculate a fund's expected returns
  • Formula for alpha
  • Final result of calculating alpha
  • Effect of a high beta on an alpha

Skills Practiced

  • Knowledge application - use your knowledge to answer questions about how to calculate alpha in finance
  • Information recall - access the knowledge you've gained regarding the formula for alpha
  • Reading comprehension - ensure that you draw the most important information from the related lesson on calculating alpha in finance

Additional Learning

To take an even closer look at this topic, review the related lesson titled What is Alpha in Finance? - Definition & Formula. This lesson covers the following:

  • Understanding the value of your return
  • Determining the reason for a positive alpha
  • Sample formula for calculating alpha
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