Various trading strategies appear to offer non-zero alphas


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 positive alpha trading strategies contain risk that investors are unwilling to bear but the CAPM does not capture.

C. A stock's beta with the market portfolio does not adequately measure a stock's systematic risk.

D. The market portfolio is inefficient, but the market portfolio proxy used to calculate the alphas is efficient.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Various trading strategies appear to offer non-zero alphas
Reference No:- TGS01176448

Expected delivery within 24 Hours