Various Trading Strategies Appear to Offer Non-Zero Alphas When We

question 36

Multiple Choice

Various trading strategies appear to offer non-zero alphas when we examine real world data.If indeed these alphas are positive,it could be explained by any of the following EXCEPT:

• A)Investors are systematically ignoring positive-NPV investment opportunities.
• B)The market portfolio is inefficient,but the market portfolio proxy used to calculate the alphas is efficient.
• C)A stock's beta with the market portfolio does not adequately measure a stock's systematic risk.
• D)The positive alpha trading strategies contain risk that investors are unwilling to bear but the CAPM does not capture.

Understand the principles of financial statement analysis.

Calculate and analyze cash flows and financial metrics.

Understand the concept of net capital spending and its impact on financial statements.

Analyze earnings per share and its significance for stakeholders.

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Definitions:

Activities and Outputs

Refers to the tasks performed and the results achieved or produced in a work or project environment.

Feedback

The process of giving constructive information to individuals or teams regarding their performance and behavior to encourage improvement.

Distributional Errors

Mistakes made in performance appraisals where an evaluator's rating of an employee is biased towards certain ratings across the spectrum.

Raters

Individuals involved in assessing the performance or competencies of employees, often as part of performance evaluations or research studies.