Corporate Finance
Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
Question
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Chapter 13, Problem 21P
Summary Introduction

To determine: The way to construct a positive-alpha trading strategy.

Introduction:

Stock alpha is overabundance risk of the required return, which implies that it is controlled by subtracting the required return of the stock as per security market line (SML) from the expected return of the stock.

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