The value of alpha in the efficient market. Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

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Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 12, Problem 4MC

Summary Introduction

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

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Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 12, Problem 4MC

Summary Introduction

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Expert Solution & Answer

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Answer 3

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Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 12, Problem 4MC

Summary Introduction

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

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Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 12, Problem 4MC

Summary Introduction

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

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Answer 5

Chapter 12, Problem 4MC

Summary Introduction

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Answer 6

Chapter 12, Problem 4MC

Summary Introduction

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Answer 7

Chapter 12, Problem 4MC

Summary Introduction

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Answer 8

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Ch. 12 - Prob. 1CQ Ch. 12 - Prob. 2CQ Ch. 12 - Prob. 3CQ Ch. 12 - Prob. 4CQ Ch. 12 - Market Model versus APT What are the differences...Ch. 12 - APT In contrast to the CAPM, the APT does not...Ch. 12 - CAPM versus APT What is the relationship between...Ch. 12 - Prob. 8CQ Ch. 12 - Data Mining What is data mining? Why might it...Ch. 12 - Prob. 10CQ

The value of alpha in the efficient market. Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Solution Summary: The author explains the value of alpha in the efficient market. Market efficiency is characterized as a condition in which the market has access to all information that could influence the stock's price.

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Want to see the full answer?

Chapter 12 Solutions

The value of alpha in the efficient market. Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Solution Summary: The author explains the value of alpha in the efficient market. Market efficiency is characterized as a condition in which the market has access to all information that could influence the stock's price.

To determine: The value of alpha in the efficient market. Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.

Want to see the full answer?

Chapter 12 Solutions

To determine: The value of alpha in the efficient market.

Introduction: When compared to a market index or other wide benchmark, an investment's performance is measured by its alpha or relative return.