Active Return: Return relative to a benchmark. If the portfolio's return is 8%, and the benchmark's return is 5%, then the portfolio's active return is 3%.

Active Risk: The risk (annualized standard deviation) of the active return. Also known as Tracking Error.

Alpha: The risk-adjusted excess return of a portfolio. Specifically, Alpha= Rp - rfr - (Beta * (Rb - rfr) where Rp=Portfolio Return, rfr=Risk-free Rate, and Rb=Return of the Benchmark. See Beta.

Benchmark: A reference index that serves as a basis for performance comparison.

Beta: One measurement of a portfolio's volatility relative to a broad market index.

Breadth: The percentage of stocks advancing relative to those unchanged or declining.

Capital Asset Pricing Model (CAPM): A valuation model meant to describe the relationship between risk and return.

Correlation: The degree to which factors influence each other.

CUSIP: A unique identification number assigned to a security. Developed by the Committee for Uniform Security Information Processing.

Dividend Yield: The dividend per share divided by the price per share. Also known as Yield.

EAFE Index: The Morgan Stanley Capital International Europe Australasia Far East Index.

Earnings Yield: The earnings per share divided by the price per share. The inverse of P/E ratio.

Efficient Frontier: In mean/variance analysis, the curve where the set of efficient portfolios lie. That is, those portfolios of risky assets which have the highest level of expected return for their level of risk.

Excess Return: Return relative to the risk-free return. If an asset return is 10% and the risk-free return is 5%, then the asset's excess return is 5%. The benchmark's return can be substituted for the risk-free return.

Information Ratio: The ratio of annualized residual return to residual risk. A measurement for active management.

Payout Ratio: The ratio of dividends to earnings. The percent of earnings paid out as dividends.

P/E Ratio: The Price/Earnings Ratio. The price of a security divided by earnings per share.

R-Square: The fraction of variation in the dependent variable that is explained by variation in the independent variable. A high value indicates a strong relationship between the two variables.

Residual Return: Return independent of the benchmark. The residual return is the return relative to beta times the benchmark return.

Residual Risk : The risk (annualized standard deviation) of the residual return.

Risk-Free Return: The return achievable with absolute certainty. In the U.S. market, short maturity treasury bills exhibit effectively risk-free returns.

Sharpe Ratio: A risk-adjusted measure of return. Calculated by dividing the annualized excess return of a portfolio by its total risk.

Total Risk: Total Risk is measured as the standard deviation of a portfolio's returns.

Tracking Error: See active risk.

Volatility: The standard deviation of security price changes. The annualized standard deviation of return.