Alpha = Return of the fund - [Risk free rate + Beta * (Return of the market ptfl - Risk free rate)]

Hey, plz refer to the above, you see the second part on the right is the return predicted by the CAPM. so alpha on the left (Jensen's alpha, to be precise) is the excess return of the fund relative to the return of the benchmark (the market ptfl). For instance, if CAPM estimates that a portfolio should earn 6% based on the risk of the portfolio but the portfolio actually earns 8%, the portfolio's alpha would be 2%. This 2% is the excess return over what was predicted in the CAPM model. ppl usually use it as a measure of fund manager's skills

{:3_60:}怎么米有人来回答捏。。。。。

顶顶顶顶顶~~~不能就这么沉了啊~~~~

PS: Most finance theories are based on the efficient market hypothesis, and under this assumption, the alpha would be zero. But in reality, it's never the case, alpha could be negative or positive

I think the up floor tell the answer,  CAPM only works on specified assumption .