COMPARATIVE ANALYSIS OF EFFICIENCY VALUATION IN AGRICULTURE: EXCESS RETURN APPROACH

Vilija Aleknevičienė

COMPARATIVE ANALYSIS OF EFFICIENCY VALUATION IN AGRICULTURE: EXCESS RETURN APPROACH

The article deals with the efficiency measurement in agriculture and selected economic activities and its comparative analysis through the approach of excess return. The excess return means returns in excess of the risk-free rate of interest. The efficiency is measured using the Sharpe ratio, which is a measure of the excess return per unit of risk. The Sharpe ratio, also known as reward-to-variability ratio, is broadly used to evaluate the efficiency of financial investments. The author of the article uses this method to evaluate business investments by types of economic activities. To calculate the performance, the excess return is divided by the stan-dard deviation representing a total risk measure and the standard deviation representing the business risk measure.

Key words: realized return, risk-free rate of interest, excess return, business and total risk, Sharpe ratio, economic activities.

JEL codes: D81, Q14, M21.

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