Adjusted Returns
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Adjusted returns by the risk-free rate is a measure that takes into account the risk-free interest rate in the calculation of the returns of a portfolio or a financial asset. The risk-free rate represents the return that can be obtained without taking any risk, for example, by investing in government bonds.
Adjusting for the risk-free rate is useful for comparing the performance of a portfolio or an asset with that of a risk-free investment. To calculate the adjusted returns by the risk-free rate, the risk-free interest rate is subtracted from the total return of the portfolio or the asset.
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