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Modigliani-Modigliani Measure Formula

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Modigliani-Modigliani measure, also known as the M2 measure shows the return on an investment adjusted for risk in comparison to a benchmark. Check FAQs

M 2 = R ap - R mkt

M₂ - Modigliani-Modigliani measure?R_ap - Return on Adjusted Portfolio?R_mkt - Return on Market Portfolio?

Modigliani-Modigliani Measure Example

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Here is how the Modigliani-Modigliani Measure equation looks like with Values.

Here is how the Modigliani-Modigliani Measure equation looks like with Units.

Here is how the Modigliani-Modigliani Measure equation looks like.

20.1 = 25 - 4.9

20.1 = 25 - 4.9

20.1 = 25 - 4.9

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Modigliani-Modigliani Measure Solution

Follow our step by step solution on how to calculate Modigliani-Modigliani Measure?

FIRST Step Consider the formula

M 2 = R ap - R mkt

Next Step Substitute values of Variables

∴

M 2 = 25 - 4.9

Next Step Prepare to Evaluate

∴

M 2 = 25 - 4.9

LAST Step Evaluate

∴

M 2 = 20.1

Modigliani-Modigliani Measure Formula Elements

Variables

Modigliani-Modigliani measure

Modigliani-Modigliani measure, also known as the M2 measure shows the return on an investment adjusted for risk in comparison to a benchmark.

Symbol: M₂

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Modigliani-Modigliani measure

Return on Adjusted Portfolio

Return on Adjusted Portfolio is adjusted to show the total risk as compared to the overall market.

Symbol: R_ap

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Return on Adjusted Portfolio

Return on Market Portfolio

Return on Market Portfolio represents the excess return of the market portfolio over the risk-free rate.

Symbol: R_mkt

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Return on Market Portfolio

Credits

Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Formula and 100+ more formulas!

Verified by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has verified this Formula and 200+ more formulas!

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How to Evaluate Modigliani-Modigliani Measure?

Modigliani-Modigliani Measure evaluator uses Modigliani-Modigliani measure = Return on Adjusted Portfolio-Return on Market Portfolio to evaluate the Modigliani-Modigliani measure, The Modigliani-Modigliani Measure is used to characterise how well a portfolio's return rewards an investor for the amount of risk taken, relative to that of some benchmark portfolio and to the risk-free rate. Modigliani-Modigliani measure is denoted by M₂ symbol.

How to evaluate Modigliani-Modigliani Measure using this online evaluator? To use this online evaluator for Modigliani-Modigliani Measure, enter Return on Adjusted Portfolio (R_ap) & Return on Market Portfolio (R_mkt) and hit the calculate button.

FAQs on Modigliani-Modigliani Measure

What is the formula to find Modigliani-Modigliani Measure?

The formula of Modigliani-Modigliani Measure is expressed as Modigliani-Modigliani measure = Return on Adjusted Portfolio-Return on Market Portfolio. Here is an example- 20.1 = 25-4.9.

How to calculate Modigliani-Modigliani Measure?

With Return on Adjusted Portfolio (R_ap) & Return on Market Portfolio (R_mkt) we can find Modigliani-Modigliani Measure using the formula - Modigliani-Modigliani measure = Return on Adjusted Portfolio-Return on Market Portfolio.

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Modigliani-Modigliani Measure Formula

Modigliani-Modigliani Measure Example

Modigliani-Modigliani Measure Solution

Modigliani-Modigliani Measure Formula Elements

Credits

Other formulas in Risk Management category

How to Evaluate Modigliani-Modigliani Measure?

FAQs on Modigliani-Modigliani Measure

Variable Name