The profit, often but not always expressed as a percentage rate of return on allocated capital, after recognizing applicable costs for credit risk, interest rate risk, liquidity risk and/or other financial risks. In some measures, risk costs are treated as expenses. In other measures, they are reflected in the amount of capital allocated in the denominator of the return on capital ratio. American Banker Glossary
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Often we subtract from the rate of return on an asset a rate of return from another asset that has similar risk. This gives an abnormal rate of return that shows how the asset performed over and above a benchmark asset with the same risk. We can also use the beta against the benchmark to calculate an alpha, which is also risk-adjusted performance. Bloomberg Financial Dictionary
+ risk-adjusted return
Financial and business terms. 2012.