Why do we call alpha a “nonmarket” return premium? Why are high-alpha stocks desirable investments for active portfolio managers? With all other parameters held fixed, what would hap-pen to a portfolio’s Sharpe ratio as the alpha of its component securities increased?
Why do we call alpha a “nonmarket” return premium? Why are high-alpha stocks desirable investments for active portfolio managers? With all other parameters held fixed, what would hap-pen to a portfolio’s Sharpe ratio as the alpha of its component securities increased?
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 12QTD
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Why do we call alpha a “nonmarket” return premium? Why are high-alpha stocks desirable investments for active
pen to a portfolio’s Sharpe ratio as the alpha of its component securities increased?
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