Editing Abnormal return (section)

==Stock market==
In [[stock market]] trading, abnormal returns are the differences between a single stock or portfolio's performance and the expected return over a set period of time.<ref>{{Cite web |url=http://economics.about.com/cs/economicsglossary/g/abnormal_return.htm |title=Definition of Abnormal Returns |access-date=2008-08-07 |publisher=About.com - Economics |archive-url=https://web.archive.org/web/20080917160612/http://economics.about.com/cs/economicsglossary/g/abnormal_return.htm |archive-date=17 September 2008 |url-status=dead |df=dmy-all }}</ref> Usually a broad index, such as the [[S&P 500]] or a national index like the [[Nikkei 225]], is used as a benchmark to determine the expected return. For example, if a stock increased by 5% because of some news that affected the stock price, but the average market only increased by 3% and the stock has a [[Beta (finance)|beta]] of 1, then the abnormal return was 2% (5% - 3% = 2%). If the market average performs better (after adjusting for beta) than the individual stock, then the abnormal return will be negative.

:<math>\textrm{Abnormal}\ \textrm{Return} = \textrm{Actual}\ \textrm{Return} - \textrm{Expected} \ \textrm{Return}</math>