Enter the average excess returns over the period ($) and the standard deviation of the returns into the Calculator. The calculator will evaluate the Modigliani Ratio. 

Modigliani Ratio Formula

MR = AER / SD

Variables:

  • MR is the Modigliani Ratio ()
  • AER is the average excess returns over the period ($)
  • SD is the standard deviation of the returns

To calculate Modigliani Ratio, divide the excess return of the period by the standard deviation of the returns.

How to Calculate Modigliani Ratio?

The following steps outline how to calculate the Modigliani Ratio.

  1. First, determine the average excess returns over the period ($). 
  2. Next, determine the standard deviation of the returns. 
  3. Next, gather the formula from above = MR = AER / SD.
  4. Finally, calculate the Modigliani Ratio.
  5. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

average excess returns over the period ($) = 500

standard deviation of the returns = 2.5