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Excess Return
Term category: Finance/Accounting
In 10 words or less:  Returns in excess of the risk-free rate of return.

Definition: The excess return is the rate of return above and beyond that of the risk-free rate, which is usually the t-bill rate.

StockJargon Advice: Excess returns are used in CAPM when calculated the cost of equity or the expected return on an equity investment.  The ability for equities to generate higher rates of return help to compensate for the additional risks of investing in them.

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