Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 8, Problem 4PS
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To discuss: Alpha as a nonmarket return premium and reason for considering investments with high alpha. Also, the effect of increase in alpha on Sharpe ratio needs to be discussed.
Introduction: An investor may invest in various stocks to reduce the risk of losses. Such a theory is called correlation theory. It is believed that an investor takes a lot of risk to achieve higher
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