# 1.2. Why ALPHA ?

ALPHA is an NFT token whose underlying asset is a contractual agreement with an institutional fund product, issued in the form of a security token, proving such. The NFT token has been named ALPHA and is further detailed in the hedge fund portfolio return calculation formula below:.

**Rp = Rf + B1(R1-Rf) + B2(R2-Rf) + …. + Bk(Rk-Rf) + …. + E**

* **Rp : Portfolio return**
* **Rf: Risk-free asset (return)**
* **Rk : Rate of return for risk factor k**
* **Bk : Beta (sensitivity to the risk factor k)**
* **E : Vehicle variance (error term) alpha**

The Capital Asset Pricing Model (CAPM) is generally used as the theory of price formation of investment assets. According to this model, the return of a portfolio is formed by a linear combination of alpha and beta. To put it simply, we call the excess return that circles the market rate of return “alpha”. The primary objective and goal of this project is to generate alpha for all participants.


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