Question: Explain how to construct a positive - alpha trading strategy if stocks that have had relatively high returns in the past tend to have positive
Explain how to construct a positivealpha trading strategy if stocks that have had relatively high returns in the past tend to have positive alphas and stocks that have had relatively low returns in the past tend to have negative alphas.
Select the best choice below.
A You buy stocks that have done poorly in the past and sell stocks that have done well.
B You buy stocks that have done well in the past and sell stocks that have done poorly.
C You cannot construct a positivealpha trading strategyriskadjusted returns can never be predicted.
D You cannot construct a positivealpha trading strategya positivealpha trading strategy is an arbitrage opportunity.
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